~Regina

SpousalConsolidation.DoUsPart! member

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My husband and I got married before finishing our bachelor’s degrees in 1988. We both had a few small loans at that time. We had one child between undergraduate and graduate school, and when entering graduate school in 1992, I had a 15 month old and was 3 months pregnant at that time.  

At the time we took out the maximum allowable for each year of graduate school - $7500 per year for each of us because although we would have qualified for grants based on our income, there were only loans for graduate students. We managed to finish graduate school in May of 1995 after our internships out of our home state, and at that time my father in law unexpectedly passed away. I should mention that, before moving out of state in our last semester of graduate school before our internships, my husband had to have two back surgeries, one of which removed a small spinal cord tumor. In the fall of 1995, since my husband had to take care of his father’s affairs and it was 2000 miles away, neither of us got full time employment the first year out of graduate school. 

In 1996, I got a full time job in the public schools for a measly salary of a little over 23,000 per year (with my master’s degree) while my husband worked part time from home as he couldn’t find a full time job in his field. All the while, since 1992 (and really before if you count undergrad loans) the student loans are gathering interest. After a year at my small salary job, we had to file bankruptcy because we had no health insurance for the first two surgeries he had (two ruptured disks and a small spinal tumor). 

We moved again in 1998 and by this time I was in the upper 20,000 per year and my husband took a job at the local YMCA, again for very little money. All the while the student loans were gathering interest while we could not afford the monthly payments. The reason we could not afford the monthly payment was simple - the “income sensitive plan” always, at that time, had to include the interest. So the payment would have been affordable, but because of the interest, was WAY too high for our meager income. So again, we kept applying for and getting hardship deferments and forbearances, while the balance kept growing and growing and growing.

Then in 2000, my husband had a very large spinal cord tumor, which we didn’t know if it would be cancerous or even if it wasn’t he was going to have to have chemo and radiation so it wouldn’t grow back. Well, through some miracle, he came through the surgery fine and this time we did have health insurance thank God. It was one of the reasons we moved in 1998 - the school district we worked at had a very high insurance premium that we could not afford.

Somewhere along the way - and it’s been so long that I don’t even remember, we were advised to consolidate our loans into one. I know that our loans have changed hands a couple of times - I  believe ACS had it once but now it’s with Nelnet. In 2007, my husband had yet another major back surgery with another large spinal cord tumor that had to be removed. By then he was working as a carpenter because working in the field of youth services wasn’t going to pay well enough to support us. Shortly after that, the bottom fell out of the housing market and he was laid off and started going to school to learn enough to work in IT. In the meantime we had bills piling up and had to file bankruptcy yet again. In 2009 with him going back to school, my own daughter started college and the transmission on our vehicle went out. It was a perfect storm and we almost lost our house that year. 

About that time, Obama revamped the income based repayment program and we were able to FINALLY get into a payment plan that was affordable, because it was only a certain percentage of your disposable income, and the interest was not tacked onto the payment. By this time, I am sad to say that our student loan balance (joint spousal) had ballooned to $430,000. But we were making payments. We made payments for a couple of years, and we then heard about the PSLF, but were told that since we had consolidated our loans once, we could not re-consolidate them into a direct loan and then be eligible for PSLF. I have worked in the schools for over 25 years as I write this.

Our youngest daughter did need some help going to college, and we did take out Parent PLUS loans, and I did consolidate those into a Direct Loan and am on PSLF for that one, which is good. But our Spousal Consolidation loan continues to be a dark cloud hanging over our heads and will be until we die unless we get some relief and are able to consolidate those into the Direct loan that I have.

We do file our taxes separately so that the Direct loan payment isn’t too high since the other payment is huge, but with our spousal loan we have to go by our combined income. And to add insult to injury I’ll add this- when we first started on our income based repayment, it was around $800 per month, which was okay. But then after I started filing separately, for two years our spousal loan payment was only $300 per month. We didn’t know why, and when we inquired about it we were never given a reply. Then suddenly they calculated the payments using both of our incomes and our payments quadrupled overnight. It’s now $1287 per month. We had made financial decisions based on the $300 per month payment, and had to ask for a forbearance for a year so that we could pay off some debts in order to make the $1287 per month payment. 

I believe that student loans in general should be revamped. The interest should be low. Ours is now about 8%. And I think that with income based we will have to pay taxes on the balance not paid if we ever get to a point of forgiveness. There’s just no end to this. We didn’t borrow over $400,000 to go to school. I think we should only have to pay back what we actually borrowed plus a low amount of interest. We shouldn’t have to pay taxes on what we “gained” when we are forgiven because it’s not like we suddenly get that much in our pocket. 

I feel like it is not fair that we are in this position. We’ve never been without employment, and even though my husband has had five back surgeries and deals with pain on a daily basis, he has always worked, and a lot of years at a very physical job. It is not fair that the income based repayment program was not available when we first started to try to pay, and also that PSLF was not available and we were given the bad advice to consolidate AND that we cannot re-consolidate them into my one Direct Loan. 

I have written a letter to the Ombudsman as well because I feel like we have been caught in a Catch-22. I feel like we got caught in a catch-22 because when the income sensitive payment plans were available early on in our loan period, we simply could NOT afford them because they had to include interest, and that made our balance huge and pushed back when we could even start paying. We also wouldn’t have consolidated our loans into a spousal consolidation if we had known that we would have been in this boat later. Also, the PSLF did not even exist when we first started making payments.
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