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Slow and Steady – Another “G” Down…

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Slowly (almost excruciatingly so), I’m reducing my student loan debt. It was just in October that I announced how my student loan debt was down to $98 thousand and change. Well, today I can announce that it is down to $97 thousand and change. Sure, that might not seem like a big accomplishment, but when you’re in my position and you’re writing $1,000+ checks every month in an effort to speed up the repayment process, that’s big news.

It would be great if these damn loans were out of the way and I didn’t have to worry about them. The more that I repay and the more that I learn about student loans, the more I wish that I had started to pay them back when I was in school. Out of control student loan debt can really stifle a person’s ability to move to the “next step” in life. For example, I was talking with one of my coworkers the other day about our 401k plan and how we all lost a large percentage of money last year, but we’re making it back this year. Well, I found out that she’s contributing 10% of each paycheck to the 401k. Ten percent! That’s pretty significant. The truth is that I spent the last year contributing 0% of each paycheck into the 401k plan – I just couldn’t afford to do it (and I make good money). I opted to take the money that wasn’t going into the 401k and, instead, put it against my student loans. I’m not sure if it helped at all (especially with the NJHESAA loan accruing interest at an outrageous 7.33% rate), but it’s what I had to do.

Extreme student loan debt is stifling – even for a guy like me who works a day job and teaches at night. In the coming year, I’m going to have my day job and I’ll be teaching at night during both the spring and fall semester as well as teaching online for the first time; I’ll also have my website company, which is growing a little bit bigger each month. My hope is that with all of these irons in the fire that enough income comes in where I can make a larger dent in at least one of my student loans (the NJHESAA one so I can be done with that organization once and for all). In the mean time, though, I’m wearing myself thin by working seemingly around the clock and not accumulating savings at the same rate that I could be accumulating them. Just think about it – since 2006 I’ve repaid about $25,000 in student loan debt and that’s just the principal. When you tack on interest, I’ve written student loan checks for over $35,000 in the last three years!

Pretty disgusting, huh?

I’m not overly bothered by it because I know that I have a plan to repay this debt quickly and efficiently. I am, however, annoyed that it seems more and more that I won’t be able to take advantage of the current housing slump due to the student loan debt. It’s not that I wouldn’t get approved for a mortgage by a bank (I think that I would be approved), rather it’s that the $35,000+ that I could have used as a down payment is gone. Yeah, I have some money sitting in the bank and I’m actually doing very well with my personal investments in the market and in my savings account, but $35,000+ is a lot of money!

Oh well. I leave those thoughts for another day. Today, though, I celebrate knowing that the student loan debt is down to $97 thousand and change. And I also “celebrate” knowing that an additional $1,300 payment is already in the mail – so I should have another post announcing how the debt is down to $96,000 very soon!

Another “Grand” Bites The Dust…

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Yesterday, my latest check to the United States Department of Education was cashed by the government. This brings the total of my student loan debt below $99,000 to $98,993; when my next check to the New Jersey Higher Education Student Assistance Authority hits I’ll be at the $98,700 or so mark. As you can see, another “grand” of my student loan debt bites the dust.

To some degree I have to consider this progress. Yet, when I look at that number it is still staggering. Even if I liquidated some assets and made a large payment to NJHESAA I’d still owe multiple thousands of dollars. Due to the new public service forgiveness program, I don’t plan on overpaying my USDOE student loan payments to any great degree (I think I send in an additional $50 each month).

But it’s that private loan from NJHESAA that keeps me up at night sometimes. I have to get that thing paid down or paid off completely. Right now it sits at a little bit more than $43,000. That’s a big nut to crack in a short period of time, but I’m going to make it one of my financial priorities to completely pay that thing off sooner rather than later.

Some of you may know that I plan out my budget on a yearly basis and then adjust my weekly and monthly budgets on an almost daily basis to figure out where my funds can be best utilized throughout the year in order to meet my financial goals. In the coming year, I’m going to really zero in on that NJHESAA loan and find a way to make a major dent in it.

Anyway, I’m in the $98,000 range now and my student loan debt continues to slowly, but surely, get lower.

Repeat: Take Action for Real Student Loan Forgiveness

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You may remember that in June I posted an entry talking about real student loan forgiveness. In that entry, I asked that you contact your Representative in the House to demand that a ridiculous clause in the public loan forgiveness program be fixed. Here is more information from the folks at IBRinfo:

In addition to lowering monthly student loan payments, IBR forgives any remaining debt — including interest — after 25 years of payments. Most borrowers will pay off their debt before then, but under current law, if there’s anything left after 25 years, the amount forgiven would be taxed as income to the borrower.

A bipartisan bill in the U.S. House of Representatives, H.R.2492, would prevent debt forgiven through IBR from being taxed as income. Loan forgiveness is supposed to wipe the slate clean for responsible borrowers, not create a new financial obligation.

Many of you have already taken action, helping to persuade over 20 Members of Congress to sign on in support of the bill. We need your help to bring more on board! If you haven’t already, please take a moment to urge your representative to support H.R. 2492.

If you are interested in taking action (and I really hope that you DO choose to take action), you can click over to the IBR website and use their pre-formatted web page to send a message to your Representative. Please do so and help fix a bogus loophole in this Bill!

The Latest and Greatest with My NJHESAA Loan

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Ah yes… Time once again to take a quick look at my student loan for the New Jersey Higher Education Student Assistance Authority. This loan aggravates me for a variety of reasons (which I’ll state below). I am pleased to announce, though, that I’ve made somewhat significant progress in paying down this loan to a less unruly level than when my repayment began. Since I began repaying the loan, I’ve reduced the principal due by a few thousand dollars, which is pretty good considering the interest rate.

Anyway, some things about this loan just make me (and thousands of others, I’m sure) mad:

  • Interest Rate: I’m paying some 7.33% interest on my NJCLASS loan. That’s just too high of an interest rate for a borrower like me, who has an 800 credit rating. For comparison’s sake, my Direct Loan from the federal government has a 4.25% interest rate – much more acceptable.
  • No Online Payment: I’m not sure how, in the year 2009, NJHESAA does not have an online repayment option. That’s crazy. When I graduated from Rutgers with my Masters Degree I had three student loans. One of them was to CitiBank. I was able to pay back the entire CitiBank loan (which was probably $8,000+) in less than a year because of the online payment options. NJHESAA is really missing out on getting an extra $50 here or $250 there in online payments. Either that, or they’ve strategically opted to not have an online payment gateway.
  • Balance Inquiries: In a related point, the NJHESAA has no active online resources for borrowers in repayment. In other words, I can’t log-on to their website and check my balance or see my previous payment history. All of this is available with the federal government’s Direct Loans program.
  • You’re Stuck: However, one of the most aggravating parts of the NJCLASS repayment is that you’re stuck with NJHESAA. I can go out and find better repayment terms from another lender, but I would not be able to pursue the improved terms without NJHESAA approving me taking out their entire loan. Let me rephrase that so everyone understands… I can go to Bank of America and get approved for a 4.5% loan specifically to repay my NJHESAA loan. However, I cannot repay my NJHESAA loan in full by switching to Bank of America without NJHESAA’s approval to do so. Talk about dealing in a fair marketplace…

One of the things that really irks me about this loan, though, is more of a historical aggravation in that NJHESAA once reported me to the credit bureaus as having paid 30 or 60 days late…while the loan was still being deferred because I was still in school! Talk about complete insanity!? And when I called them up to complain, they said that while they agreed that the report to the credit bureaus was an error on their part, there was nothing they could do about it. This negatively affected both my credit score and my Mother’s credit score since she was a co-signer at the time. Bear in mind that both my Mom and I have never made a late payment on any account at any point in time ever. Thankfully, I’ve disputed NJHESAA’s erroneous report with all three credit bureaus and they’ve removed the late payment error.

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While the entire student loan industry needs a vast amount of reform, at this point I’d settle for a company like NJHESAA getting itself into the 21st Century with an online payment and loan balance/information portal!

It’s Important To Check Your Credit Report

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The other day I went up to Roxbury to see my Mom and brothers and while I was up there my older brother went online to get his free annual credit report from AnnualCreditReport.com (not freecreditreport.com from the commercials, which actually does NOT give you a free credit report). The last time I checked all three of my credit reports was in December 2007 so after seeing my older brother pull his reports, I thought that now was as a good a time as any to do the same. Plus, in these uncertain economic times it pays to spend a few minutes checking your credit report to ensure accuracy.

And, as always, the credit report is an interesting thing. I should note that I didn’t ask for my credit score because 1) they charge you for that and 2) when I moved into the new apartment in the summer they ran a credit score on me and it was 790 – I’ll take that number any day! However, there were two discrepancies in my credit report that needed immediate attention.

First, the New Jersey Higher Education Student Assistance Authority (NJHESAA) once reported that I paid 30 days late on one of my student loans (back in 2006). The problem, though, was that the loan was still in deferment and was not due for payment at the time. Back in 2007 when I pulled my credit reports, I noticed this problem and called NJHESAA and while they agreed that this was a mistake on their part, they also said that they couldn’t contact the credit bureaus to have it fixed. So I contacted Experian to get the mistake removed from my report and they took it off without any problems. My mistake in 2007, though, was that I didn’t ask TransUnion or Equifax to remove the discrepancy. So when I pulled up my reports the other day – guess what was sitting there staring at me on those two reports. That’s right – the NJHESAA mistake strikes again!

I sent messages to both TransUnion and Equifax and as of today, Equifax removed the problem and TransUnion is still investigating. I pulled up my Equifax credit report to confirm that they fixed the mistake and I can confirm that they, in fact, did fix the problem. They were very quick and very efficient at addressing this problem.

The second interesting thing that I found on my credit report was an open credit card account that was actually a sub-account off of one of my mother’s credit cards from many years ago. This account was only reported on two of the three credit reporting agencies. Since this account was closed and replaced with a different sub-account (not for me), I submitted disputes with the two agencies that still listed it as open. To date, both agencies are still looking into this one.

The reason for this post is to encourage you to go online and check your credit report at AnnualCreditReport.com. Even if you have excellent credit and a perfect credit history like I do, you may be surprised at what you find.