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Public, private, and a student loan not in my name

Posted 31 May 2014 02:29 AM

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I have a federal student loan, a private loan through Sallie Mae, and third loan that I pay, but is in my father’s name (Parent PLUS loan).  The minimum on each loan is about $200/month and that will take about 20 years to pay off.

What are my options for improving my repayment plan?  Ideally, I would like to combine all three loans into one, under my name, but I’m not sure if that is possible with the loan in my father’s name.

I looked into income based repayment but it would not make much of a difference.  What are my options?  Would it be a bad idea to get a personal loan (non student), and use it to pay off all three loans?  That way I only have one loan to worry about?

Posted 03 June 2014 12:14 PM #1

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Well, first of all it is hard to qualify for a personal loan with terms that are better than those of federal student loans.  Not impossible, but hard.  If you have really good credit, you can investigate credit unions or banks for refinancing options but be VERY CAREFUL about repaying federal student loans with a private loan.  Federal loans have important borrower protections that you would lose.

You can’t refi your dad’s loan.  He “might could” (as we say in the south), but again only if he has really good credit and he would lose very important protections that accompany federal loans.

As for your private loan, you should get and read the promissory note to look for any flexibility in repayment or opportunity to postpone payment.  Usually there isn’t much.  You can try to negotiate with the lender but they are notorious for not modifying loans much.

For your own federal loan, you are right to consider IBR.  If that’s not going to help, forbearance can temporarily postpone your obligation to pay, but you’ll end up paying more interest over time and increase your costs.

There are some forgiveness and cancellation possibilities, mainly for people in certain professions, people who are totally disabled, and people who experienced specific problems with their schools.  If that sounds like you, find out more at http://studentloanborrowerassistance.org

     

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