My Student Loans are Killing Me!!

Recently, I made the decision to purchase a new vehicle. Although my current car is quite usable, I feel that it is getting old and not meeting my needs anymore. I made the decision (based on where I live now) to purchase a vehicle that would benefit me more in ice and snow. The weather in Indiana is definitely a little more extreme than Tennessee. Unfortunately, the only SUV’s I seem to like (even used) are in the $30,000 range, which is far beyond anything I can afford at this point.

The more I started looking into the purchase of a new car, the more I realized I just wanted to buy a car that I love and would continue to love for the next 6 or 7 years. This car is the 2009 Pontiac G8! I currently have a 2004 Pontiac Grand Prix GTP, which was very nice in its early years. It still is a nice car, but I’m so afraid something expensive is going to break and then what?

My first visit to a car dealership came with some confidence. I walked in and test drove this beautiful car. I had a 50/50 chance of leaving with the car that day. If you are like me, buying a car is one of the most irritating situations EVER! You have to deal with high pressure salespeople, credit checks, and a drawn out process that takes hours.

I was kind of nervous about my credit score for a couple different reasons. Since my separation and divorce from my ex-husband, money has been an issue. When his income left the scenario, I was forced to default on a couple of credit cards (which I faithfully make payments to now). However, the 30, 60, 90 days past due does stick to your credit report for 7 years and brings your score down considerably. In some cases, having 30, 60, 90 days past due is worse than filing bankruptcy. Also, during the time of my separation from my ex-husband, I quit attending school. When this happens, your student loans become automatically due. What does this mean to your credit? This means that $54, 000 in student loans was reported to my credit report. My debt ratio was hit hard. My credit score, hit even harder. Between past due accounts and $54,000 worth of debt on my credit report, my credit score dropped almost 200 points! Wow, right?

The purchase of the G8 was the first time I had my credit evaluated in 3 years. Although I was somewhat confident that my score had gone up enough to purchase a car, I was still nervous. The salesman came back out and informed me that my credit score was a -1. A negative ONE!! That is not even a possibility (which is what I told him). I told him to run it again, thinking maybe they were having a problem with their software. Nope! Still came back -1. He discussed the fact I had $54,000 worth of student loan debt and this was probably causing the score. So, humiliated (because this guy was looking at me like I was a piece of crap), I almost gave up. I questioned whether or not my student loans mixed with some past due accounts was really bringing back a -1 credit score. I went to another car dealership.

The new dealership came back with a 0 credit score. The lady I worked with at the new dealership was awesome! She took a full week to research the problem (realizing that a 33 year old could not have a 0 credit score). Finally, she discovered that I had been reported DECEASED on my credit report! I was stunned! When you are reported as being dead to the credit bureaus, they wipe your credit score so others cannot falsely use a dead person’s credit. I contacted the Social Security Administration (who had me alive and well) and then I contacted all 3 credit bureaus to remedy the problem. The scary part (from my inquiries with the credit bureaus) was that anyone can report anything they want to your credit report and the bureaus do not have to verify it! If something is incorrect or false, it is up to you to realize the problem and dispute it. That is what I did. I disputed the fact I was still alive and within a couple weeks I was brought back to life (my credit score came back too). Getting a good look at my credit score after this ordeal made me realize that although I work hard to correct my delinquent accounts from my divorce, the $54,000 of student loans is killing me. As of right now, my monthly payment will be close to $600 a month when they come due. This is almost my rent payment for my house!

This whole situation got me thinking about several things. First, I’m over the new car thing for a bit. Second, my student loans ARE going to be a problem for me in the future. Finally, I’ve got to watch my credit report thoroughly, so this will not happen again.

My advice for those of you who borrow money to attend college is as follows:

1. Only borrow what you need! If I had realized that this debt was going to haunt me before I even graduated, I wouldn’t have got so excited about those refund checks from the school.
2. Sign up for a credit monitoring service. Most times they are only about $15 a month, but knowing what’s going on with your credit report and score will eventually be essential to using the college degree you worked so hard for. My problem with my student loans is that they are being reported to my credit report now, instead of later. Although they are all in good standing (because of their deference), it still puts a damper on my debt ratio.
3. If you can pay on your student loans or their interest now, do it!! Remember any unsubsidized loans are accruing interest daily at around 6%. By sending them money now for the interest, you can save you so much money in the end.

As of 2 weeks ago, the financial aid office at Purdue North Central has informed me that my loans have reached their aggregate levels. This means that I have capped out on student loans. The problem with this is that even though I get a lot of grant money, I was using the loans to supplement for out of state tuition and books. I will not be able to find out for sure what’s going on until November, so I’m keeping my fingers crossed that I will still be able to attend in the Spring.

Thanks for reading!