Student loan payments choking new grad

With payments taking up the majority of her paycheck, she's ready to bail

Opening Credits columnist Eric Sandberg
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for

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Question Dear Opening Credits,
After making the major error of attending a private college at the age of 18, and four years of diligent student loan repayments, I am at a total loss. My current loan repayments are 57 percent of my income, and I'm driving myself crazy trying to form some semblance of a life while keeping up with them. If I stop paying my loans and they are eventually reduced to wage garnishment, what is the maximum amount that Sallie Mae or the eventual owner can garnish from my wages?  -- Shamus 

Answer Dear Shamus,
It's hard to graduate from college with such a financial burden at such a young age. Naturally you begin to question not just the degree, but your own intelligence in making the decision to borrow in this way. Try not to beat yourself up, though. It's done. Chances are good you will value your higher education and it will pay off in an enjoyable career that's also well-compensated -- down the road a bit.

At this moment, however, the payments on that student loan are beyond your real capability. They are eating into your essential expenses. While you may be able to exist this way for short time, in the long run the emotional effect is bound to be depression and frustration. I can understand your desire to just give up and say, "I've tried, but I can no longer do this. Have your way with me, lender!"

But don't, please. You may have recourse. As soon as you're done reading this, call Sallie Mae or whoever is servicing your loan and find out if you can enter into an alternative payment plan. Explain your situation and ask if  the loan can be rewritten so you pay less each month, but for a longer period of time. If that works, you'll experience some relief immediately. Ultimately, the total added interest will be higher because of the extension, but restored sanity is probably worth the extra cost. Besides, you can always pay more when you are in a better financial position to do so.

If you just need a short-term break so you can have some breathing room while you work to secure a higher paying job, that is also a possibility. According to the Sallie Mae website, they are "the only nationwide private student loan offering a 'Graduated Repayment Period' feature." As long as you've graduated and kept your loans in good standing, you can request a year of interest-only payments. Because you won't have the principal added during that time, your payments should shrink to a comfortable level on a temporary basis.

Whatever you do, don't just not pay and allow any of your student loans to go into default without a fight. The repercussions for that would be quite bad. You can be sued and, if permitted by state law, your wages could be garnished. Just how much can be intercepted? Up to 25 percent of your paycheck. Ouch. Not to mention the credit report and score damage, which would negatively impact your ability to qualify for future loans for years to come.

In the event that you have trouble negotiating with Sallie Mae, reach out to the professionals. Recognizing that these are not always easy issues to solve, the Consumer Financial Protection Bureau has stepped into the fray, offering assistance to private student loan borrowers. If you don't get resolution on your own, consider calling the CFPB ombudsman for help.

See related: Restoring credit score after defaulting on student loan, Student loan repayment troubles? Don't delay

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Updated: 03-24-2019