+3 votes
by (7.7k points)
Opinions needed about my school loan. I'm near debt free. Single mom/income. I have a small savings account. I have life insurance, a trust with my house in it for kiddo, and have a solid mortgage with equity. I have an older car (2005) that's still going strong but showing age. I send my kiddo to private school (non negotiable). From experience, I think its sooo important to have a robust savings. I don't have that yet. I also have an old $26k school loan. It feels like a nag. I also know from experience that underwriters are pretty forgiving about school loans being on your credit. It would be neat to pay the school loan off some day and get that monkey off my report. It has about zero effect on my finances. I barely pay on it now but enough to keep it in good standing or defer it because I resent it. It came from a defunct school and I dont use it. It's not eligible for forgiveness because it's not in violation bit should be. If I were to really make an impact, I'd personally feel like I would need to pay minimum of $500 a month. Besides it being a financial and moral obligation to pay it would you: 1. Pay minimums forever and pump up the savings account? 2. Pay it off for 60 months and treat it as if I had a car loan? And then essentially be debt free by the time kiddo is 10yrs old barring any surprises? I will need another car in those 5 years. 3. Is there a known option for a settlement if I paid, say $15k today? I get that the non paid would be taxable as income. It's a Government loan. 4. Other. please explain.  
Opinions needed about my school loan.

1 Answer

0 votes
by (1.9k points)
If you can swing 3, I’d go that route then start saving for a new car for when your 2005 car dies
by (1.9k points)
@giddy I was blessed to not have to deal with student loans but from what I’ve seen on this page, they seem like a nightmare!  
by (7.7k points)
@find501 it's my only financial regret. I hope to never let me kid get into that situation. It was an online school. My then husband had to help me pass because just transcribing the algebra formulas in a word doc for example was so tedious. Failing meant loosing $800 on one class and maybe even the semester. So very stupid and expensive. Their sales people are incredible and so many lies. It's such an old loan that proving the lies would be a full time job if not impossible to find transcripts of the enrollment and conversations at this point. Live and learn. Fortunately, the loan hasn't really grown too much from interest over that many years.  
by (1.9k points)
@giddy that’s good!  
by (110 points)
@giddy For government loans, there is really no way to negotiate down the amount owed, with very few exceptions like proving school fraud. Government loans aren't sold to collection agencies, for pennies on the dollar, so the company is happy to setlle for less than full amount, because the government can do things like garnish wages or income tax refunds if it wants to get aggressive. Generally, only private loans will do loan settlements or forgiveness. If you have the loan forgiven, its treated like income and you have to pay taxes - so you would owe taxes on 26, 000 (so pretend your tax bracket is 22%, you would owe $5720 in taxes)
by (7.7k points)
@highjack I would love to pay the income taxes and have it written off. Lol. In reality, I get what you are saying. I just drew out a plan for it. If I am super aggressive, I can have it all. A savings or cash flow a nice used car. And pay off the school loan in 3 years. I came this far. literally the depths of hell to this in under 5 years. So this should fly by.  
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