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I recently got a deferment expiration notice in the mail for my loan and am looking for consolidation solutions, since I am unable to make the current monthly payment at the moment in my freelance career. I am starting to get some steady, promising work and would like to continue freelance, but the loans are one of those expenses that can be distracting even though it's necessary to handle it.
In my senior year of school, I remember someone from Financial Aid mentioning a unique solution specialized for freelance artists in repaying their loans. I was curious to find out how other artists here, freelance, part time employed or un-employed, are dealing with your loan repayments?
I owe governement money because they gave me a juicy loan a while ago. I can't be bothered paying more than 50$ a month sinse as far as their ass is concirned, i am unemployed and there is nothing they can do about it.
There were never any freelancer specific solutions in the contract as far as payback is concirned, i simply went "i'll pay you when i get a stable job, good day" and that's the only plan i made with them..they certainly can't fight a deadbeat who has no line of credit anyway and who freelances for cash.
For more socialy integrated people however there should be many options, inlcuding loan forgiveness (they take off 50% of the loan or something like that), or even up to 8 months of no interest. I am in Canada though.. But i'm sure similar repayment options are available all over north america.
Any solution that reduces your monthly payment is simply going to expand the life of the loan and INCREASE the amount you pay in the long-run.
The interest these loans accrue is the killer, and the longer you put it off, the worse it is.
I consolidated my loan as soon as the deferment ended, and reduced the interest rate from 8% to 6%.
It may not seem like a lot, but that is YEARS worth of payments that I saved.
I payed about $450 a month for 10 years, and I am happy to say that I just finished paying it all off a few months ago.
If you make payments of $100 or so every month, you are going to be paying this loan for 30 years, easy.
In the end, you'll have paid 3 fold the borrowed amount just in interest.
Don't let that happen.
Make this your #1 priority, and cough up as much as you can, as fast as you can.
By making just one extra payment a year, you can knock off 10 years on a 30 year loan.
This is because that extra payment goes toward the principal, and thus there is less debt to accrue interest.
It may be worth contacting a family member that has some extra dough.
It's likely they are not investing heavily at the moment, and even if they are, may not be earning more than 4% interest on their money.
If your interest rate is say 6%, make a deal to reconsolidate with them, and give them 5%.
It's a win-win for both of you.
Just be sure to set up a monthly plan that you can stick to.
- Dan Dos Santos