I currently owe over $111,000.00 in college debt sending both my children to college.  It equates to paying over $660.00 per month alone in college loan repayments.  The sad news is my daughter still has two semesters to go before she finishes and when she finishes, I will need to assume the college loans that were given to her.   HELP!

The saddest news is that after 16 years of dedicated service, I was laid off from my company.  I am currently on unemployment and receiving a severance package from my company called a “sub pay” that allows me to still have my same salary for 16 weeks (a week for each year worked).  Hopefully, I will locate a job before this runs out, but if not, I plan to apply for an economic hardship deferment or forbearance which could suspend or reduce my monthly payments.  The interest will continue to grow because they are not federally subsidized.

Anyone out there who has federal loans and has lost their job or cannot make the current payments can go to http://www.finaid.gov to see if you qualify.  The advice is to try to at least pay the interest so that this does not get you more into debt.

If you have a Direct Loan, you may also qualify for an income contingent repayment plan.  Payments are based on your income and debt load.  There is also an income-based repayment program that works like the income contingent plan but it’s more generous because you can make a higher income, yet pay less per month.  Loan terms on the two programs require payments for up to 25 years and after that the remaining debt will be forgiven – sounds good!  If you are blessed to work in the Public Sector such as a teacher or public defender your loan debt is forgiven in 10 years if you are on these plans! 

The important thing to remember, however, is that you must plan ahead.  Don’t wait until you are in a bind before you call your lender to collaborate on an acceptance repayment plan.  If you are struggling with payments but are still in good payment standing, now is the perfect time to call and see what can be done to reduce your payments.