Private College Student Loan

High high interest student loans (Sallie Mae)?

When my fiancé was originally starting school fresh out of high school he attended a private art school which was funded by Sallie Mae loans little did he know when he signed his life away at 18 was that the loans were private not federal and so they now are accruing a whopping 10 percent interest which does not sound high but is unmanageable on loans of 40000. The problem is that we are both still in school without real careers and cannot pay more that 100 dollars a month on them which does not even cover interest at this point. I do not understand how the company can charge 20000 dollars of interest in 4 months if the lendee is still enrolled in school full time. Can someone please please help how we can pay this or get rid of it or lower or freeze interest somehow because it is ruining our future- thanks

Public Comments

1. I wasn't a math major but 10% on $40,000 is not $5,000/month. You need to seriously seek some serious financial advice. Start w/ the Financial Aid office of your school. Something isn't right.
2. I agree with Tom... either your math is wrong, and you're looking at the loans the wrong way, or there's been a serious mistake. So you're saying that 4 months ago, he owed 20,000 and now, he's owing 40,000??? Unfortunately, all students should receive more financial counseling before they enter school, there are workshops available, but this only works if the student chooses to go. This is why the federal loans are beneficial because it's a low fixed-interest rate, and there's a maximum yearly limit (and lifetime limit) so students aren't allowed to go severely in debt. Even if you're in school and your loans are deferred, on unsubsidized loans the interest continues to accrue from the day you take out the loan. You can choose to pay the interest-only each month, so that your loan doesn't grow "out-of-control" by the time you finish. It sounds like your fiance needs to get a stable job (and finish school) so that he can keep up with the payments. He can try to refinance the loan at a lower-fixed interest rate (and maybe with a different lender), but he'll need to have a good credit score. Is he even making the minimum monthly payment on the loan at $100/month? If not, his loan is probably close to going into default status -- which is not good. He will not be able to refinance, and his credit score will suffer. Once you're married, his credit score effects you too. When you go to purchase your first home, both of your debts will be taken into consideration, and the person with the lowest credit score will be the one that the banks base the interest rate off of -- not good. The only way to pay it is to do just that... pay it. It's going to mean both of you getting stable jobs (and finishing your degrees) and putting all extra money towards this loan. You're going to have to live a frugal life for a few years (go without cable and internet, cut down a cell phone, use coupons, eat at home, etc). He definitely needs to try to refinance at a lower fixed-interest rate. Good luck!!!