What are the best ways to pay off student loans exceeding $350,000?

I was a victim in the early 2000s of the EDMC (Art Institutes) student loan scam. These private loans are well over $150,000 and climbing, and I am expected to pay $2500 a month, though I'm currently paying $494 a month with only 2% interest (a "hardship program" they have me on). I also have a master's degree, which cost me another $200,000 in total when it was only supposed to be $80,000. Thankfully, though, my masters loans are federal, and thus have income-based repayment plans and forgiveness programs, that I can handle. It's the private loans that are taking up all of my funds.

I bring home about $35,000 a year after taxes. Rent is $1070 a month. I want to get into investing but with student loans and the cost of living, I don't know where to find the money to invest to help me pay off my loans faster.

There are no income-based repayment options with private student loans, and there are no forgiveness programs. You cannot write them off with bankruptcy (which I would gladly take over this  financial burden). What are my options? How can I invest, and where should I invest? I am a financial novice and that is why I am in this disastrous mess. Where can I go from here?

College Tuition, Debt, Investing
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December 2017

Yikes. Sorry to hear these miserable student loans got their hooks in you. You don’t need me to explain why your situation isn’t ideal, so let’s just look at the options.

Many people would pretend this loan never happened and spend the rest of their lives running from collectors. I don’t advise you take this route, as the repercussions will haunt you forever. You don’t want to deal with wage garnishment and constant collections calls, not to mention atrocious credit and having to explain your situation to employers and landlords.

The other option is to work 20 hours a day, live off ramen, and try to speed up the payment process. To me, that sounds impossible, and it certainly won’t be enjoyable. If that’s the type of work ethic you have, give it a try; I think life is too short to let these loans dictate every minute of your day.

The last option is to take this one step and one payment at a time. Keep paying the minimum and fight as hard as you can to stay on the hardship program. For the time being, you just have to think of the payment the same way you do a monthly gas bill; don't measure it against the total balance. Just keep working hard, do what you can to increase your earning potential, and stay away from borrowing more if you can help it. You might not be able to get rid of the debt anytime soon, but that’s just the reality of your situation. 

If you can earn enough to cover all your bills, pay the minimum loan amount and still put some money in an IRA or a Betterment account, go for out. It’s going to be hard to invest substantially, so you need to put your money somewhere with limited fees, and you need to remember not to compare your investment to your debt, as that will be very discouraging.

You’re in a bind. There are no two ways about it. However, this is the beginning of your miraculous comeback story. When you get to the other side of this, it won’t be because you bought a winning lottery ticket - it’ll be because you worked hard, managed your money wisely, took advantage of every opportunity to up your earnings, and chipped away until you beat the debt.

December 2017
December 2017
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December 2017