30 something and in Default

I rode the emotional roller coaster with all of my student loan lenders today. Since I started taking stock of all my loans including their balances and monthly payment amounts, I said to myself “why stop there?” So I called Sallie Mae and found out what type of loans I had – private or federal.  I had a slight glimmer of hope in my tone as I had read about extended repayment terms being able to lower payments.  So I asked the rep if any of the loans qualified for extended repayment terms. The rotten fruits of my labor are in the chart below.

Ugh. Now, I’m even more depressed. Two of the loans don’t have a cosigner and are already at the max repayment term so I have no choice but to default on those loans. Not because I don’t want to pay, but because I can’t afford to pay. Unfortunately, those 2 loans are also federal loans so they’ll probably end up garnishing my wages and my professional license could be in jeopardy (seems ridiculous b/c I need my license to make money and if I don't have it I can't pay you anyway). But right now, my focus has to turn to the loans that my parents are cosigners on. I absolutely can’t default on those and those are the loans with the highest payment amounts. The only loan I’m not worried about is Access Group as that balance is reasonable and I can afford the $60 a month payment even if I end up working at Target. I'll see what I can do about paying that balance off in the next 9 months (270 days) – which coincidentally is how long it will take for the two federal loans to be considered “in default.”

I stumbled upon some decent resources so I could know what to expect during the default process: The US Department of Education Debt Collection Service publishes a guide called Guide to Defaulted Student Loans and Defaulting on Student Loans on www.Finaid.org.  FinAid.org also has information on Student Loan Debt Settlements. I was quite surprised to find Student Loan Borrower Assistance as it provided the most useful information. Definitely bookmarked that site. I also have to say I was super excited when I stumbled upon IBRinfo.org.

IBRinfo.org was created by the nonprofit, nonpartisan Project on Student Debt to help student loan borrowers learn about two new federal loan programs: Income-Based Repayment (IBR) and Public Service Loan Forgiveness (PSLF). Like the tension build up before the slaughter in a horror-film, I ecstatically filled out IBRinfo's web-based calculator. I put in all the information, which I conveniently had at my finger-tips thanks to my nifty spreadsheet (softly play music from Jaws). I eagerly pressed calculate and awaited my fate (volume of Jaws music increases). Then suddenly, the fatal bite from the unyielding student loan beast – “Based on the information you have provided, you would probably not qualify for IBR.” Damn! Damn! Damn James! On a whim, I kept increasing the number of dependents to see how many kids I would have to have in order to qualify. 3? No. 4? No. 5? No. 6 – Ding! Ding! Ding! Correct!! I would have to have 6 kids in order to qualify for a payment of $640!!! Does this reinforce a welfare mentality or what? Because if I had 6 kids I certainly would not be able to have a job other than my own reality show about having 6 kids and not being able to afford anything (I must note that reality shows pay WAAAAAYYYY more than any career in the legal profession so this is now a viable option for me; I wonder if I can get my husband drunk enough).

I would almost be better off with 6 kids and taking a lesser paying job (but seriously, is $86K a lot these days? That’s before taxes and deductions – after all that is taken out I’m bringing home about $57K THEN all the bills start). Just another reason why I can’t afford to be middle class.  I am living the statement that Today's generation will most likely NOT be  better off than their parents.  Forget the 20 somethings - what about the 30 somethings!!

Cosigner Nightmare and Plan C

Many parents dread having "the talk" you know, about S-E-X, with their kids.  But trust me, nothing is more dreaded by the kid than having "the talk" with their parents about you know, the student loan debt that they can no longer afford to pay that their parents cosigned.  Well, I just had "the talk" with my parents last night followed by a 6:30 am continuation phone call by my father which ended in me crying, talking about suicide, and dropping F-Bombs (soooo out of my character, well at least in front of my parents).

I thought I was being smart by calling my Mom on Tuesday and letting her know that I would call her later (meaning 2-3 days) to discuss a strategy for paying the student loans since the payments increased so drastically.  I completely had my business professional hat on and was focused on laying out the issues and developing a plan of attack.  I was being proactive for a change by attempting to get out in front of the problem before the next bill was due instead of hiding the unopened bills in a shoe box like I usually do.  Well my mom, being the awesome parent she is was one step in front of me.  She called me last night while I was playing with my son on the porch and said, "Is now a good time?"  I really didn't have a good reason to delay any longer so I promptly emailed her the spreadsheet I created. 

I diligently explained my personal budget and how the increased student loan payments weren't going to work (I had been paying them regularly until the increase occurred).  I empathized with them and expressed that I understood that their credit was important and that I could care less about mine at this juncture.  I was purposely being stoic so as not to bust out crying as the whole situation frustrates me when it comes to my parents involvement in this hellish matter.  Then she drops it on me...she tells me that the reason why their credit is so important is because the loan on their home is reviewed periodically and if their credit is bad, their rate increases.  Now couple a new higher mortgage payment along with these high ass Sallie Mae payments and not only is my life ruined, but so are the lives of my retired 60 year old parents.  Shit, I was counting on moving in with them after Sallie Mae takes my house and now they may not have a roof over their own heads! Damn you Massa Sallie Mae - Damn you!!!! How do you fuck up my Plan A life and my Plan B life in one fell swoop! Not to mention my parents' lives as well!  This company is definitely the Devil's Spawn!! Dave Ramsey's voice and the scripture "Borrower is Slave to the Lender" keep replaying in my head.  There is no way the birds and bees talk is more difficult than this discussion because at least you don't have to explain taking it up the butt!

The conversation concludes when I restate the obvious, "So where are we if we can't default and we can't afford to pay the bill?"  An unsettling silence follows and my mother states, "Well, that's the end of that conversation."  We both hang up.  Three minutes pass.  Then a flash of brilliance.  My mother calls back and says, "How many loans are we the cosignors on?"  I tell her I think all of them, but that I would call in the morning to confirm.

The next morning arrives with a phone call from my father at 6:24 am first my cell phone, then my house phone where he leaves a message to call him back as soon as I get the message.  Clearly, I ignore it and go back to sleep.  He calls me again at 7:09, same scenario - cell phone followed by house phone.  I ignore it again.  I finally get up and get dressed and call him back.  He tells me that he didn't sleep at all and that he and my mother walked through the house after the conversation last night trying to figure out what they could sell.  My heart drops.  Then he says that he was even thinking about finding a job and coming out of retirement.  My heart stops.  NOW MY WHOLE FAMILY IS SALLIE MAE'S BITCH!!!  He then chastises me for not apologizing for this situation and not sounding remorseful.  I understood his point, but I'm $190K past remorse.  Plus, remember I had my business professional hat on so I could focus on a solution so all my emotions were checked at the door.  Anyway, I told him I did say I was sorry, but honestly, I can't remember if I said it or not.  He backhandedly berates me by saying I'm a smart girl and I should have kept better tabs on this loan situation.  I try to be my stoic self and appease him by cheerfully saying, "Yes, you're right." (Um, not sure if I should feel bad about not being smart enough when there is a whole movement and thousands of articles and web comments about predatory lending practices of Sallie Mae and other lenders.)  Then it happens.  I lose it.  I go off talking about I have no F-ing life whether I'm dead or alive b/c of this shit and that no one signed up for this and F-this and F-that.  Damn, the one thing I didn't want to happen - I didn't want to lose my cool.  I feel like Sallie Mae takes even more from me when I do that.  My father is clearly not moved by any movement or other people's situations no matter how similar to ours because none of that is going to help him keep his house.  I quickly gather myself and say, "yes, you're right" to his remaining statements.  I end by telling him I'm glad he was able to get it off his chest (it being "shit" which is now all over my face, but hey, at least one of us feels better).

Today I received the best news I've ever heard from my lenders - matter of fact, its the only good news I've ever gotten from them.  It almost tops when the doctor told me I was pregnant!  My parents are cosigners on only two of my loans!!!!!  Default city here I come!!!  I am smiling ear to ear!  Go Mommy for making me check!!!  My parents are cosigners on the smallest loan which is $6,889 and has a reasonable payment of $60 a month.  They are also cosigners on the 2nd largest loan of $63,760 which payment increased to $506.65 from $282.40.  (I want to reiterate that Sallie Mae added $17,596.00 worth of capitalized interest to this loan that's 36% of the original loan amount - THE DEFINITION OF PREDATORY LENDING.)  Now I have a new outlook, a second wind and fresh perspective!!  I will reprioritize my payments to make these 2 loans the most important and default on everything else. Now, that's a strategy!!  My parents get to keep their home and I'll have a place to live when they come for my house!!  If I can execute this strategy for the next 14 years which is how long it will take to pay this Sallie Mae loan off then I will be able to pick up a payment on another loan.  Oh, by the way, in 14 years I'll be 48 years old.  Thank ya Massa Sallie Mae for my freedom! Boy, am I feeling good and riding high!  Now, I just need to figure out how much money I can scrounge up to help make this payment for the next 14 years.