Student Loans and Traveling? - TravelPUNK Backpacker College Student Budget Travel Message Boards!



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Travel Budget, Money Matters, Financial Talk Mom, can I borrow ten grand?! Gimme yo mastercard! How the heck can I pay for my trip?! Ideas for making money. How much dough do I need?

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Old 01-23-2008, 09:21 AM   #1
 
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Default Student Loans and Traveling?

So it's going to be inevitable... When I graduate (next December), and 6 months after. I will have to start paying student loans back.

For you all who have taken trips that have lasted longer than a month. How have you planned for such things as still having to pay the student loan back.

The reason I ask is if I do get the chance to work/holiday abroad in Australia, who knows how long it could before I find a job and be able to handle rent/food/other expenses, although I do have a free place to stay for a bit, and then responsibilities back home(credit card[abt $1000]/student loans). Obviously I don't plan on sticking around here to be a slave to my debt and paying in off in half the time(or sooner) than it normally would take.

Any personal experiences or tips? I think it would be smartest to pay off my credit card with an extra student loan, being that I don't use the Stafford to it's fullest potential. Good idea?

Thanks!
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Old 01-23-2008, 10:26 AM   #2
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I guess student loans are different in the US to the UK. Over here almost everyone gets the loan (it's generally decided on how much your parents earn and the level of financial support you get from them). Then once you graduate, you only start paying back once you're earning a certain amount of money. I think it's £15k, but I'm not sure, but whatever it is, it automatically starts to come out your pay cheque.

Basically, what I'm saying is that on my 3 month trip, I didn't have to worry about paying it back, as I wasn't earning anything! And now I'm back doing another uni course (without a loan this time), I'm getting stung by the bloody interest.
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Old 01-23-2008, 11:04 AM   #3
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It sounds like you've got only Stafford loans, no private loans? If so I think you're in pretty good shape. I'm in a similar situation right now and I'm working hard to get rid of my private loans ASAP since they're a much higher interest rate.

As for the federal loans keep in mind you get 6 months after graduation before repayment begins. Come to think of it the private loan companies usually offer this benefit as well. Then once you're in repayment you have a few options. First, the standard payment plan would repay your loans over 10 years...but you can switch to a variety of other plans at any time with no cost (and you can switch as often as you like so no worries about getting on some weird plan). If you can't avoid payments while traveling the best option is the graduated plan, which extends the time for repayment up to 25 years and also makes the payments start extra low and then increase every 2 years.

The other payment plan that might be helpful is the Income Contingent Plan, which (if I understand it right) would allow you to pay nothing if your income is at the poverty level. Income is based off the AGI you reported on your taxes so this is most likely if you only work a bit during the year.

The other possibility is to try to get a forbearance or deferrment. You can get a 1 year forbearance for a "financial hardship." The application just asks you to explain what your hardship is and says they might request documentation. I haven't found any info at all on what constitues a hardship. I think your best bet here is to just call the direct loan servicing center at 1-800-848-0979 and ask them. I've called them before a few times and it is one of those rare government agencies where the people really seem to know their stuff and are really helpful. Just tell them what you want to do and what your visas will allow in terms of work if any, and ask what your options are.

Overall I think the best strategy is probably to figure out how much your payments will be on the lowest cost repayment plan you can select. Ideally you'll have enough saved that you can just pay it and still be able to afford your trip. I have over $30k in federal loans and my payment on the graduated plan started at $120. So over the course of a year that really only amounts to the cost of a medium priced international plane ticket, I've just build into my bugdet the fact that I need to pay for this. Then, hopefully you can get a forbearance approved or stop payments due to the income contingent plan or something.
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