What is the best way to handle an unconsolidated private educational loan with outrageous variable interest?
My friend and I are destitute and have nothing but a life of debt peonage ahead of us. I have a worthless Master’s degree from an uppity pretentious school. My consolidated federal loan will be over $300/month for 30 years at 5.3% fixed. The pigs who so “generously” gave me the private loan without which going to University of CHicago would have been impossible have risen the interest rate to over 8% and it goes up from here every 3 months with no way to lock it in. The feds will not let us consolidate private loans into our consolidated fed loans. I just got a 6 month deferment on the private loan but, considering the interest, should I be saving money rather than throwing it at this outrageous loan like I’m trying to put out a fire?
Don’t just stop making payments–it will ruin your credit and you won’t ever be able to get something better.
In the short term, suck it up and pay the bill even though it appears to be going down a rat hole.
I’m assuming you have a job since you are making payments with something. Work hard, live frugally until you can get some kind of debt-consolidation loan at a fixed rate.
If you are having trouble making ends meet, here are some pointers.
First, list all your bills/debts on a sheet of paper.
Second, list all your income for a month/pay period/whatever.
Find a way to increase your income or reduce your expenses until they match.
Take the shortest term debt or cheapest one and double the principle payments on it until it is paid off.
Then take the amount of those payments and add them to the next shortest/cheapest debt. After awhile, you will have paid things down and you will be able to refinance/consolidate if you still feel it is necessary.
Also, if you get any kind of “windfall”, a bonus, tax refund, etc. apply that to your bills as well instead of spending it.
Most of these kinds of problems can be resolved in a couple of years of discipline and hard work. You may feel like the light at the end of the tunnel is just a freight train, but it can and will get better.
