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Meet Dave
- Age: 41
- Income: $23,800
- Position: Social worker
- Schooling: Bachelor's degree from a 4-year university; master's degree in social work
- Loan debt: $58,000 federal, $12,000 alternative
Dave's situation
Dave can't pay his bills. He can barely afford his living expenses, let alone pay his student loans. He needs a break…
Read Dave's story
Dave became a social worker because he really wants to help people. It makes him feel good to make life a little easier for others. But at this point, Dave needs someone to make life a little easier for him.
Dave is really hurting financially. Once he shells out for his rent, utilities, and metro costs, he doesn't have a penny extra to spend on his $650 student loan bill—that's the amount of his entire paycheck! He hasn't paid his loan for more than 7 months now, and he's been ignoring calls from his loan servicer.
He's not irresponsible, he simply doesn't have the money to pay. And every time he sees that his principal is growing, not shrinking, he wants to weep.
Dave loves his job. But the educational requirements for social work don't match the pay. How on earth will he ever get out of this mess?
Dave has reached his breaking point.
Dave CAN deal with it
- Dave should answer his phone. Communicating with his servicer is going to work better for Dave than running away. Not only will his loan servicer be able to explain affordable solutions, like income-based repayment (IBR), the servicer can also talk him through the IBR application process. IBR will:
- Cap his monthly payment at an affordable amount based on his federal loan debt, household income, and family size
- Avoid capitalization of interest on his subsidized loans during the first 3 years on IBR
- Cancel any remaining loan debt (both principal and interest) after 25 years (300 payments)
- Dave should ask about the Public Service Loan Forgiveness Program. If Dave has any federal direct loans, he may benefit from the public service loan forgiveness program. This new program will discharge any remaining federal direct loan debt for borrowers who have been employed full time in a public service position for 10 years.
- Dave needs to make every effort to avoid default. Dave has not made any payments for 210 days. If he does not make any payments for another 2 months, his loan will go into default. Default can have devastating consequences. Dave needs to take steps now to avoid this.