Thoughts on Debt

Recently I was appalled to find out that the company I hold my student loans with, Sallie Mae, would no longer allow me to consolidate my student loans.  By doing this, they are in effect forcing people’s loans into repayment, and with the economy being so unstable, there are a lot of people who will be unable to make the payments on their student loans.  This can seem a very desperate situation, and I think that perhaps this new rule was made in effect to get more people paying off their Federal Student Loans, because after all we all know that the government is in some serious need of funds.

If you find yourself in this situation, there are other options available to you that you must be aware of.  One of which is to consolidate your loans with an independent company.  This would allow you more forbearance and economic hardship time while also allowing you to consolidate your loans at a lower interest rate, and this option can also allow you to extend out your repayment period from 10 years to 30 years, thus significantly reducing your monthly payments.

There is also another option to pay on the interest of your loan for 4 years, with then an option that if you still can’t afford to pay it off, then there is some type of option to free you from your loans, but I am not really clear on the terms and conditions, and would need to look into further before I could recommend this as a workable alternative.

It is my opinion that consolidation is the way to go and finding a company with a reasonable fixed rate that can extend out your payment terms and reduce your monthly payments is probably the best way to go.  Just be sure that the company you are dealing with will allow you to keep your loans federal status, turning them into private loans can be a big hassle and can cause you to lose a lot of the benefits you have from Federal Student Loans.

Today it was announced that Bush and the government are bailing out Citibank or Citicorp, because they are in debt and in danger of going under.  I just need to ask one question, how far in debt is Bush going to leave us when his reign of terror is over.  Seriously, I can’t really understand why they are continuing to allow these bailouts over and over again.  What is going to happen is that we are going to crash harder than ever before with the way he is going, and then there is going to be no one to bail us out.  We can’t keep pretending that there is not a problem here, nor can we keep pretending like these companies didn’t put this on themselves.  After years and years of giving too much credit to people, now they are surprised that they can’t pay it back? I think that was probably foreseeable.

I guess my biggest concern, which I think is a genuine one is being with how simple it is to get Bush to give out money, how many more companies are going to jump on this band wagon before January, and how many more bailouts are we going to let him do?

My fear is that all these bailouts are just holding off the inevitable depression we are heading for and are going to make it worse in the long run.  I really think that all Bush is trying to accomplish is to save face and hold off the depression in this country until after he leaves office.  Then that will make the Democrats look like they are the ones who did it and will more than likely guarantee that the Republicans will be back in control in four years.

Well, the government has been on this band wagon for years.  They have been looking to rid themselves of the payday loan industry claiming that they are ripping people off.  Don’t get me wrong they do charge exorbitant rates on their loans, there is no doubt that this is true, however I can’t help but wonder if they really are just angry because that is money that they are losing each year, and they don’t want the competition.  Think about it, you can pay $15.00 per hundred to borrow from a payday loan place, or you can possibly bounce a check and be charged $35.00 so really is that so unreasonable.  Plus many of the people who choose to take out payday advances are people who can’t get approved for government loans with lower interest rates, so what are they really losing, if they aren’t providing services to these people.

Now many states have completely banned payday loans making them illegal, but many more states are trying not to completely do away with them, but merely limit the terms, interest rates, and number of loans a person can take out.  One such reform in the state of VA has a lot of payday loan companies scrambling to find new services to provide and new ways to get around the coming laws.  With many people paying them millions in interest every year, they are not sure how they will make it, and many people are worried because a new database will not allow you to have more than one loan at a time.  The concerns are great, but the best advice I can give to you is if you currently hold a payday loan, find out about the changes in your area, and be sure to get the facts.  It is a good idea to begin paying your loan or loans back now, so that you don’t get stuck after the first of the year.  Some companies will change the game in 2009 and others may have to close their doors completely, so be sure you get out of this system before it is too late!