I have a friend who was deliquent on her school loan for years. Her $14,000 loan ballooned to $50,000. A couple of years ago she inherited some money from her mom around $220,000. For some reason she's can't get a job. Shouldn't she pay this full amount off instead of paying all the interest in it. She wants to buy a house eventually.
2006-12-14 09:46:04 · 12 answers · asked by kim 2 in Business & Finance ➔ Personal Finance
The school loan will always show and it will show delinquent and effect her credit. It is not bad to owe a school loan that shows that you are paying. This loan as you see only gets bigger. This is probable be the only time she will have the money to pay and if she is concerned about a credit history she should pay it off. This loan will follow her like a bad dream.
2006-12-14 09:53:23 · answer #1 · answered by Nani 5 · 0⤊ 0⤋
Something sounds wrong about those numbers, she would have to have paid nothing for a very long time to run up that much interest on a student loan. Because they are guaranteed the interest rates are normally lower. How to handle it depends on who is in posession of the loan at this time. If it has been years and it is the Department of Education, they will entertain offers in compromise that will erase much of the interest. The other option is to begin making payments and apply for the Dept of Educations "rehabilitation" program. After making twelve timely payments, the loan will basically be re-written and will become good credit again. The interest rates are pretty low so it might make more sense to do this and invest the inheritance (but only if you have the self control to make the payments and not spend the inheritance).
2006-12-14 13:05:13 · answer #2 · answered by Scott C 2 · 0⤊ 0⤋
The first thing she should do is to go to a financial advisor. It may or may not make sense to pay off her loans. It may be better to refinance her loans at a better rate and invest the inheritance money some place where she can get a better return. My guess is that she doesn't handle money very well and if she just decides what she wants to do with inheritance all of it will soon be gone and she will have very little to show for it - and maybe still have the student loan. Check with a professional this forum isn't the best place to find out what to do with that kind of money.
2006-12-14 12:58:43 · answer #3 · answered by RichDaddy 2 · 0⤊ 0⤋
She needs to get it all taken care of as soon as possible. Defaulted school loans can't be discharged, even with a bankruptcy. She should call her debtor and offer to pay the full $14,000 in exchange for the interest being taken off. However, depending who she got the school loans from, she may have to pay the whole 50,000. Just as long as she pays it asap.
2006-12-14 11:45:25 · answer #4 · answered by Vadalia 4 · 0⤊ 0⤋
She now has the money and she is only considering paying it off?...of course she should pay it off...she has the resources now to fulfill her promise she made when she first took out the loans. I don't think hiring an attorney would help reduce the amount owing...I'm sure before reducing the obligation the note holder would ask for a statement of financial positon and see that she has the resources and require the full amount. Tell her to do the right thing, pay back the debt as promised and move on with her life.
2006-12-14 11:17:20 · answer #5 · answered by SmittyJ 3 · 0⤊ 0⤋
This could be effecting her ability to get a job, as it is becoming common to check credit to determine ethics.
If she contacts the school and offers to pay them the 14k in one lump payment if the waive interest the chances are pretty good they will take it. When they get paid through collections they receive only a small portion anyway. Even if they don't go for a full waiver they should negotiate a deal.
2006-12-14 10:07:16 · answer #6 · answered by Landlord 7 · 1⤊ 0⤋
Take your monthly income, minus your living expenses and some leisure expenses see how much is left and pay that amount on the loan the day you get paid before you spend it on anything else. Best is arrange for an automatic transfer with your on-line banking!! The bank always first handles all the deposits and then the withdrawals. Worked for me...
2016-05-24 05:39:19 · answer #7 · answered by Joanna 4 · 0⤊ 0⤋
She should contact an attorney. She may be able to get the $50,000 reduced considerably if she is willing to pay off the loan.
2006-12-14 10:32:05 · answer #8 · answered by Ambassador Z 4 · 0⤊ 0⤋
If she has the money...she can contact the school loan and work out the deal to pay it all off. If she owes $50,000 right now...she can offer to pay maybe $20.000. It will depend on how much they are willing to listen to her words.
2006-12-14 09:53:20 · answer #9 · answered by Anonymous · 1⤊ 0⤋
Yeah, she should pay it off ASAP or else it will just keep getting bigger. Tell her to try and invest some of the money in the stock market, so over time she will hopefully make some money back w/o any work.
2006-12-14 09:53:38 · answer #10 · answered by Lindsay 3 · 0⤊ 0⤋