Question for the Money Doctors
Question submitted on Nov 19, 2011.
QuestionI have a private loan with Sallie Mae that I took out for graduate school that I would like to pay down. The loan was originally for $20K, but I have paid half off so it I now owe $10K. The problem is that the interest is 11% and with it so high it will be very hard to get ahead. I paid a lot at once before but with my job now I would only ever be able to afford the interest, if that. Any advice on how to get a handle on this and possibly a lower interest?
Thank you so much!
Please contact Sallie Mae to see if you can refinance the loan. The range of interest rate is 2.25% to 9.88%, so it looks like you are on the higher end. Please talk to them to see how you can lower the interest rate. One way to lower the interest rate is applying with a creditworthy cosigner. Lowering the interest rate will help you pay off this loan sooner.
The President recently announced a new student debt repayment plan. You may be able to consolidate your loans between January and June 2012 into a single government loan at an interest rate of up to 0.5% less.
The new plan will also accelerate the start of the income-based repayment plan to 2012 from the original start date of 2014. The program caps the monthly student loan payments to 10% of income and forgives all remaining debt after 20 years.
You will need to determine if you qualify for this new program. Please call the office of Federal Student Aid at 1-800-433-3243 or visit www.studentaid.ed.gov.
For additional information visit http://www.360financialliteracy.org/