Getting Rid of My Debt: FINALLY some good news (I think)

I called up Navient today – they are the company that has recently taken over my loans from that EVIL BEE-ATCH, Sallie Mae. Have to say, it was nice talking to someone who didn’t sound like she was reading from a script and could actually answer questions. When she heard that I had already been paying my loans for 17 years (and she could see my balances), she said “oh, that makes me feel sick.” I said “trust me, if it makes you feel sick, you have NO IDEA how sad it makes me feel.”

Someone commented last week that they know about “student loans” and they hear about “student loans” but it’s another story to see them. So I need to put down some cold, hard numbers here. In addition to my LAL loan (which is private) and has a current balance of $13,390.70, this is what is sitting there for my federal loans:

BIG DADDY (consists of my federal law school loans):

Loan 1-09: $44,347.24, interest rate of 7.5% (fixed), unsubsidized
Loan 1-10: $30,821.51, interest rate of 7.5% (fixed), subsidized

TOTAL: $75,168.75

SIMMONS (consists of my library science school loans)

Loan 1-07: $9,106.26, interest rate of 1.62% (fixed), subsidized
Loan 1-08: $14,081.79, interest rate of 1.62% (fixed), unsubsidized

TOTAL: $23,188.05

GRAND TOTAL of FEDERAL LOANS: $98,356.80

GRAND TOTAL of ALL LOANS: $111,747.50 (including my LAL of $13,390.70)
Anyone depressed yet?? This is what the loan system has turned into! This is after 17 years of paying on the $75K portion of Big Daddy and the LAL loans, and paying for 10 years of paying on Simmons Loans!!  Ok, I digress and will stop ranting.

So, the good news: next year, when I change my living situation and move (probably south, but definitely someplace warmer), I will apply for what is called and Income Based Repayment or IBR plan. With this plan, I will never have to pay more than 15% of my AGI as long as I keep reapplying for renewal of the status every 12 months.  I know that as a veterinary assistant, my salary might be somewhere in the 20-30K range (and the 30K range is kinda pushing it.) So I asked the Navient person to run some numbers, if I had an AGI of $25K and 20K, respectively. Whereas right now I am paying $538 a month just to keep my loan from growing, my payments would go down to about $93/month and $33/month, respectively.

What’s the catch? You know there had to be one, right? Of course there is. The catch is that the IBR plan will last for 25 years. At the end of the 25 years, whatever amount is not paid off will be forgiven. (There is some question as to whether that amount would then be imputed to you as taxable income for that year or not.)  So if I were to do something like that, it could be conceivable that I could be paying off law school (and Simmons) loans for 42 years. You read that right. 42 years. And that’s if I changed to that plan right now. However, changing to that plan right now would actually raise my monthly payments, likely to something around $700, so if I do switch repayment plans, it’s not going to happen right now. I’d be paying something like $1800 to save myself somewhere around $360 or $1080 (depending on how low my salary is) to end the loan 25 years from today instead of 25 years from next fall.

So here’s where I am at. I don’t love the idea of paying loans for another 25 years, obviously. I’m already 42. Who wants to pay until they are almost entitled to social security and are almost three times the age they were when they first got out of law school? (I was 24.)  However, since I feel like I have paid for these loans already at least twice, I don’t feel too badly about making the government wait and wait and wait to be paid these amounts, and to then be paying  smaller amount overall. I know as a vet assistant, it’s not like my salary is going to drastically change over the years. It’s not like I could ever make it back to the salary I am making right now, I know that for sure. And, since I have learned to live simply, I could maybe afford to save a bit at the same time too, so I’m not living hand to mouth. I still want to be able to save for retirement, even if it’s at a smaller rate per year. And keep away from the credit cards, because those can bury you. Luckily, I don’t have any of that debt right now. And I would hope that working as a vet assistant, I could maybe get a break on vet care for my herd. 🙂

Unfortunately, society just doesn’t place such a huge monetary value on those who care for animals. It’s not like I’d be running a huge investment bank or anything important like that, right? (Don’t even get me started on that kind of rant about executive compensation getting out of hand…again, I digress. Sorry.)

I do still plan on paying off that LAL loan by the time I move. I could pay it off right now – I have enough in savings, but it would definitely put a damper on what I have saved. And it feels good for  me to mentally keep looking at the savings balance I do have and know I’m getting somewhere. Right now, so much of my payment on that loan goes to principal, that my financial advisor suggested I keep hoarding cash and then take a look at things in the spring or summer and decide to pay it off then. That way if anything else happens in the meantime, expected or not, I’m prepared and have some liquidity.

I find it somewhat sad, but this actually seems like good news to me right now.  Any thoughts from any of you? If so, please drop me a note below.

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9 thoughts on “Getting Rid of My Debt: FINALLY some good news (I think)

  1. Do you know how much interest you’ve paid over the years?
    That 15% ‘deal’ sounds like a good one, it put’s an end to the bondage. Admittedly freedom is a long ways off but as it sits now you could keep paying until you died or got a really high paying job.

    Hang in there!

    • Oh Rob, I don’t know, but I am sure if I saw the figure in black and white, it would literally make me nauseous. With Big Daddy, most of what I have paid over the years has been interest. At one point, I was making $700 payments every month and the needle barely moved. At one point, I know my loans have gained interest at the rate of $15/day. Yes, per day. I know at least over the past two years, the interest paid, alone, on Big Daddy has been over 12K. It’s like all I’ve done is work to pay loans. No more. I want a life.

  2. Ouch! That’s a really tough pill to swallow for an education that did not deliver a viable career 😦 Good for you building a savings with all that hanging over you for so many years. Glad to hear there’s some hope for relief – and that you’re still looking to move to a warmer, and cheaper, locale!

    • Well, I guess it does deliver a viable career to some, just one that made me miserable. When I got out of law school, the going rate for big firms was about $72K in DC and $83K in NYC. However, those were for people only on law review and while I was in the top third of my class, that’s not good enough for the big snooty firms. And you know what? That’s fine with me. Working for a big firm, you have no life. I value that more than money. And yes, I feel so much more secure knowing there is that savings. It’s why I’m not immediately paying off the student loan and moving south right now. Btw, I’m thinking Savannah, Georgia!

  3. Get mad at those student loans. I did a few years ago, (mine were not quite as big but I had about the same total debt as you do. $ 98,000.00) and worked 3, sometimes 4 jobs and paid everything off in 48 months. Debt free as of June 23, 2011. The feeling of not owing anyone anything is liberating. Being debt free allows you to take the job that you want and not the one you have to. You are 42 now. Imagine being debt free by your 46 birthday.

    • Mike, I totally understand where you are coming from. I’ve paid off about 20K or so in the past two years and have saved almost as much as that. That’s awesome for you that you have them paid off. As for me, I already work a full time job, and a part-time job and was doing a lot of freelance work for an author up until about October of this year. There may be more with her, but I may be completely done, it all depends on the comments she gets from expert readers on her manuscript. Tomorrow, I’m planning on taking a transcription test so I can do transcription from home, so wish me luck! Only pays about $10/audio hour but it’s still better than nothing.

      The reason I’ve thought of this news as good news (that which I posted about) is because I have calculated that by changing the repayment plan next year, the lenders will actually get LESS from me in the long run, even if I take out another 25 year loan. They might only get $27K from me over those 25 years. Right now, I pay them (easily) about $6600 per year (that’s just the federal loans, not including the LAL loan, which is a private loan I have from law school.) I don’t want to stay in the career path I’m in now for another 4 years. I’d rather make less money and do something I love which is to work with animals. And if the lenders end up getting less in the long run, I’m fine with that. I know I’ve already repaid these loans, and repaid them, and repaid them, when I add up all the payments I have made over 17 years. I hope my logic makes sense to someone other than me, anyway. 🙂

      Thank you for commenting!

    • Thanks, Jeff, I will check it out! One of my favorite students here was formerly with PETA so she has had some of them come and have discussions with us here. (In fact, she came to law school so she could do animal law in the future.)

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