Creating a Life Plan

May 23rd, 2011, by

Q: I’m 43. I have $120,000 in student debt and, frankly, I am just overwhelmed in how I am going to pay it. I’ve been searching for work and have not landed anything yet. Basically, I have no assets other than my talent for writing. Even though I have a degree from a good university, I just have a poor professional history.

My car died. I have been living at home; and I have been dealing with a rare skin disease, which has killed my confidence. It’s just not good. I am looking to blog to build a business and to freelance, because it’s been hard to get work.

I’ve just been frustrated, but I am wondering how I can reduce this debt quickly, once something comes through.

Orlando, FL

A: I can only imagine how overwhelming it must be to have such a high level of student loan debt and no means to pay it back. And, of course, having to deal with health issues doesn’t help.

So, what you need is a life plan, not just a budget.

Let’s talk about the life plan first. If I were you, I would go back to the career counseling office of that university that gave you that $120,000 education and see what help you can get in figuring out how to get a job based on your college education.

Also, contact your state’s unemployment office. For example, in your state, you can get help with your job search from Workforce Florida. On their Web site, you will find a number of resources, including the ability to research specific occupations, choose a new career or analyze your skills to find an occupation that best suits you.

As for your student loans, I hope you haven’t let them fall into default. You’ll find you have more options if you have managed to stay current. If not, contact the lenders as soon as possible to see what you can do to bring the loans current. Although you may have little in the way of assets for lenders to go after, that may not always be true. And those debts are nearly impossible to get rid of, even if you file for bankruptcy protection.

If you have managed to stay current, you may be eligible for the relatively new Income-Based Repayment program (IBR). This option, which is not available for private student loans, is intended to set a reasonable monthly payment based on your income and family size. If you earn below 150% of the poverty level for your family size, your required loan payment will be zero. Under IBR, after 25 years of qualifying payments, your remaining debt, including interest, will be forgiven. To get more details, go to the IBR info Web site.

You might also find help at the Student Loan Borrower Assistance Web site.

Right now, don’t worry about aggressively paying off that debt. You don’t have the resources. So, pay what you can and concentrate on covering your necessary expenses and looking for a job.

Last modified: May 23, 2011 at 1:31 pm