Also, look into an income-based repayment plan. These work basically the way you might think they do, in that your payment is based on a percentage of your income. One nice thing about it is that if your income is low enough, your payment can end up being zero. The kicker on the income-based payment plan is that if you make payments for 25 years, the loans go away, regardless of the amount you've payed on them. If you're in for $100K+ and don't have a commensurate income, this can give you back some of your financial life (your debt-to-income ratio is going to be screwed up for the next 25 years, but at least you'll be able to make your loan payments on time).

Bottom line, contact your loan servicer IMMEDIATELY and ask about payment plans that are tied to your actual income. It's your best option. If you just let it go, you'll never see the end of it, as they can attach your bank account, take your tax refund from you, and probably worse.

1. Get a job, paying as much as you reasonably can.

2. Live as simply, and as cheaply, as you can.

3. Pay off your debt.

I don't know what has twice made you think you need to try "something entrepreneurial" as if it'll solve all your money problems, because it probably won't. Leave entrepreneurship for those who aren't in desperate financial straits (e.g. yourself in five years if you can pay off most of this debt in that time).

$150K is a lot of money, but it's not a lot of money. It's a small fraction of your overall life's earnings, if you can swallow your pride, forget everything you've ever read on HN about how being an entrepreneur is the only worthwhile thing in life, and start working for whoever will pay you money.

If that fails, join the military.

I have a good friend who enlisted for a number of reasons after college, and managed to negotiate something like a $60k payment against the principal of his student loans in exchange for his enlistment. Most of these deals don't apply to the principal, and as a result a lot of money winds up as interest which doesn't do the enlistee as much good.

After boot camp, my friend was recommended for immediate OCS and received a commission. This meant he was no longer "enlisted" and the Army considered this as a violation of his contract, so they refused to pay down his loans. After a protracted legal struggle, he wound up getting discharged, but it wasn't easy for him at all and wound up costing him quite a bit of time he's not going to get back.

I know that the plural of anecdote isn't data, but I think there's still a valuable lesson to be learned from this, and I'd hate to see someone else lose years on a false promise.

Also, your friend decided to get discharged because they offered him a much better and more lucrative job as an officer rather than as an enlisted grunt + $60K bonus?

PS: An O3 with 10 years exp is making less than 70k / year.

He left in the middle of a full-ride to law school, and when he left he was top of his class. The second person on the curve had something like a 65% average. He wound up getting the same scholarship back and is now putting up similar numbers. He's going to be fine monetarily speaking.

It's actually quite simple to get debt collectors to stop calling. Just tell them they are no longer allowed to. It's illegal to call someone if they requested to stop calling. Most people simply don't know this and take the abuse.

I did this recently. The debt collector threatened to call me everyday. I responded by saying she wasn't allowed to ever call me again unless she had a better offer. Debt collectors are actually quite educated with the law, so I made it clear to her that I also understood it.

Here is the Fair Debt Collection Practices Act which is actually an interesting read, and may be useful to know statutes of limitations, etc. Although, I do know that tuition loans are exempt from some things such as bankruptcy as previously pointed out.

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

I wish I had better advice, but hopefully you can be armed with more information to at least prevent harassment.

It sounds like you're running from stuff all the time. You need to break that habit now, especially if you are serious about running a business. Pretending that things will just go away if ignored sounds like a bad habit that you've picked up.

If the business isn't going to make money soon, dump it, mooch off your parents or girlfriend and start working multiple jobs for a few years.

All of the other solutions (income payment plans, deferring forever, etc) are just extending your pain and ultimately just screwing you and your future children out of a decent life. You had fun for a few years, pay for it.

Other than that, I think I am on the same page with Duff. You have a responsibility to your children, whether you have them already or not.

It sounds like you're insolvent, and that your student debt is causing "undue hardship", which has been the standard for discharging student debt since 1987 (Brunner v. New York State Higher Education Services).

It sounds like a free pass, and that makes me think this isn't any longer true. My search for a solution was always relegated to seeking out a way to change loan terms or consolidate so that I was paying less over a longer time.

At 40% of my income to student loans for a period of 20 years, I expect I won't be able to save any income or afford to have a child until I'm... eh, 45 or so. If there's actually a free pass, I'd take it.

The legal precedent you describe is different than what I've often heard and a simple Google seems to verify that you are correct.

It sounds like something that should get more attention than it does...

Given the power of the student loan industry, I suspect it would be hard to pull-off. But it still seems like something worth knowing.

Forget "the power of the student loan industry", how would you feel if you'd lent somebody $150,000 to get an education and they refused to pay it back on the grounds that "aw man, I don't wanna get a job..."

"... and requires a debtor to prove: (1) That the debtor cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and dependents if forced to pay off student loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans."

Now, compare that with the poster's narrative and you'll find that the advice is flawed and worthy of downvoting, not upvoting. To be specific, he's been able to hold jobs that produced enough funds to invest into a entrepreneurial effort and he's made no effort to repay the loans.

"Your stupid fault." "Should have done your research in choosing majors." "You brought it on yourself."

I understand the opinions, but that didn't add much to the conversation, nor help me to understand if there was something I might have been missing out on.

Some notes on what I did figure out would be:

- Loan agents will downright lie. Always do the math yourself. I called SM to explain I needed my payment below $200 and we worked together to make it $185. A month later they my bill came in and my payment was $240. The story was that some of the many small loans weren't included in a new payment plan and blah blah blah...

- The advice to pursue income based repayment is great, but many private lenders (which you no doubt have at with over $100k in debt) will simply say no. Working with private loans is a world different than working with public loans.

- Find out if any of your loans have an interest rate more than twice that of other ones (mine surely do). Request a deferment or forebearance on any loans with an interest rate of 4%, and pay all that extra on your loans at 18%.

- Umm... there's no easy way out to give up work and create a company. Sorry. I looked and looked myself. You likely won't be able to afford starting a company, but you can try to supplement your income with contracting or small 'muse' projects if you have the motivation.

- Don't expect help from the government. The new 'student loan reform' helps them far more dramatically than it helps you: http://i.imgur.com/vJm22.jpg

I pay around $800 a month in student loans on a $2000 monthly income. So, 40% of all my money. Welcome to the good life.

When you've brought your debt obligation to a less burdensome state, I urge you to seriously reflect on your attitude towards money. Taking on a ton of debt for a degree with low payoff is understandable (for the most part), but I find it extraordinary that you allowed yourself to reach this point, especially when you had an opportunity to pay down that debt and simply chose not to.

You cannot possibly be a credible entrepreneur with such a negligent, even reckless attitude towards money, not to mention a penchant for ignoring problems until they've snowballed into something disastrous. You mention in one of your comments that you still want to be the founder of your own company, and (it seems) you're still trying to be. You need to put those wants aside. You need to concentrate on your needs, not your wants, and you're also not ready to be a founder.

I am also a little disturbed that you think you can pay off your debt with a Kickstarter campaign. Do you realize that Kickstarter doesn't do that stuff? They're not a general-purpose crowdfunding platform. If you actually do understand that, I'm worried that you may attempt to get Kickstarter funding by way of promoting a project, but then using the money to pay off your debt instead. FYI, you can't do that.

I wish you the best, and there's lots of good advice here already, so please follow it. But get your head out of the clouds and learn a little fiscal responsibility while you're at it, or you may find yourself in a similar situation yet again.

As far as I can tell, having a little bit of recklessness is /required/ - I mean, when you start a funded startup, you go in with a 9 out of 10 chance of corporate bankruptcy; and that's not even your own money. If you personally co-sign anything big, you have a pretty good chance of personal bankruptcy. (and if you are a bootstrapper, in most industries, you won't be able to get very far without personally co-signing anything.)

I think the biggest difference between myself and my peers who have chosen the employee path is that I have more risk tolerance. I am comparatively reckless. I mean, what else can you call it when you turn down a very comfortable living as an Engineer at a large company for a small chance of making your marginal dollar worth, ah, very little?

I mean, I'm bootstrapped, and fortunately was able to pay off my mistakes that caused big debt without bankruptcy, mostly because I am able to charge reasonable rates as a contractor, but this willingness to risk financial ruin is absolutely /essential/ if you want to run a small company.

But, you say, most debt incurred as a entrepreneur can be dealt with through bankruptcy! Which is true... most. but if you screw up your taxes? It's pretty easy to get a low-margin, high revenue business going. If the IRS disagrees about what constitutes a profit, you can get in deep trouble rather quickly. Tax law is subtle and complex; it's not like most things in business or technology where you can try it and see what sticks; with taxes, you pay what you think you owe, then a few years later, maybe the IRS checks up on you, and maybe they don't. Maybe they agree with your calculations of what you owe... and maybe they don't.

I mean, personally, I have a professional handle as much of that as possible, just 'cause I see this as the largest downside risk to my future financial state. (The idea of becoming destitute, of having no money doesn't really scare me that much. I've been there before, and while I try to avoid that state, it's not terrifying. The idea of having tens or hundreds of thousands of dollars in debt and no resources? /that/ frightens me.)

I mean, right now I'm largely debt free, but if some disaster brought my business to a halt tomorrow? I'd have about $50K in data center leases I'm personally on the hook for, and at least that much in customer pre-payments. (on the other hand, my hardware would pay for that if I could get a good price for it, but usually desperate sellers get desperate prices.)

Now, sure, the op needs to be more careful. And maybe the OP isn't careful enough to be an entrepreneur? I mean, obviously, there is a level of carelessness that goes beyond "risk tolerance" and starts becoming harmful.

My point is just that /if/ you want to be an entrepreneur, you risk taking on this kind of debit and worse.

When I had my own debt issues (which were largely caused by me signing long leases for resources I'd only need if the product took off, then the product failed miserably. Big mistake) I ended up contracting myself out and running the business sort of in 'degraded mode' - while paying down the debt. It's still an open question if it would have been better for me to close up shop and declare corporate and personal bankruptcy, but it's a moot point now.

I think the most important bit of advice for the OP is to /do something/ about the debt. Talk to a professional in the area, perhaps? But yeah, just ignoring the problem is often the worst choice. On the other hand, the people I know who lost their shirts in entrepreneurship; who ended up with huge debits (relative to their earning power) to the IRS? they largely ended up ignoring the problem, and ended up just not having credit or significant assets ever. I mean, even the IRS isn't going to prevent you from eating, and it's quite possible to live a college student level lifestyle without credit at all.

I would bet money that Entrepreneurs have much higher median levels of debit compared to people with similar skillsets working for other people.

1. Go get a job. Ditch your company. It's not going to be profitable soon (or you wouldn't have posted). Make sure your job is in a city where you can afford to live and pay it off.

2. Find an apartment with 4-5 other people. It is a pain, but is cheap.

3. Kill your lifestyle. Don't eat out, don't buy music, don't go to Starbucks. Don't buy things new.

4. Work like a dog. Take two jobs if you can sustain it. Not everyone can.

\begin{rant} This sort of thing is the poster child for why humanities degrees are stupid for the vast majority of people. The OP would have been better served by being an electrician or plumber, then going into $150K in debt for a house.

It is sheer blinking idiocy not to do a cost/benefit analysis of your major decisions. There is no shame in not going to college, so long as you have a trade. All educators need to be aware of that. \end{rant}

Start reading the Simple Dollar (google it). You'll need it.

As far as I know, you can't bankrupt your way out of student debt. So you could just flee the country (likely not a good option), or else you're going to have to live with this for a long, long time.

You'll need to learn to negotiate with the debtors (is that what they're called?). After all, it's better for them if you pay of some debt slowly than no debt at all.

You'll probably also have to start paying this off, and unfortunately do this for many years to come.

I can't believe they let students take on these types of debts.

Since you work in the internet field, it's possible you might land a high-paying job with the right experience. That could help you pay this off in a reasonable amount of time (5 years perhaps).

OP is a debtor who needs to negotiate with his creditors.

Huge unfunded public pensions, student loans, ... Roll the dice. Borrow another $100k and figure out how to bet against the next bubble.

Also, OP, be sure to ask the five why's. Other people have six figures in debt but have very different stories to tell. You answered the question as to why you haven't been able to pay off your debt, but it leads to another question: when you had regular jobs, why weren't your salaries higher? Were you not an effective employee? Why? Were you not effective at finding a job? Why?

Best of luck to you.

You should get credit counselling and speak to a lawyer about your options. Bear in mind credit counselors are often paid by the credit card companies. If you have to or decide to fulling pay down the debt do the following:

1. Cut your costs - Use coupons, shop after 12pm at night (stuff at groceries stores goes on sale then), couch surf. You should be able to get your monthly costs down to $500 a month. Be really aggressive about keeping your costs low, sleep two a room if that's what it takes.

2. Stop being an entrepreneur - there is a time and a place for everything. You might be made to be an entrepreneur but you need to sort out your debt first.

3. Take the best paying job you can and then take another part time job. Basically the goal is to work 80 hour weeks. If you can do that at 10 you'll net $3200 a month.

4. Pay down the highest interest loan first.

5. Sell any and all assets that aren't necessary (computers and TV aren't necessary).

6. Write down everything you spend money on at the end of the day.

Assuming you hit $500 in monthly expenses, can average $10 an hour and have 8% interest rate on your $150,000, you can pay down $2,700 and you'll pay it off in 5 years 10 months. In reality you'll do it faster because when you get yourself back on track it will snowball.

EDIT:

7. Refinance to lower rates whenever possible

8. Ask for help and tell people about your problem. Don't necessarily ask for charity but you might end up with a better job out of it.

I have one year left in my undergraduate degree. My parents paid for the whole thing, including a semester in Europe.

Since I was old enough to understand my parents have made "the deal" very clear to me. My university education was promised, but it wasn't free. Whether I had children or not, it was my responsibility to pay for at least one young person to have a higher education.

It turns out this was a real gift. My life has at least one very real goal post. It contributed to my decision to choose a degree which would give me some marketable skills and it serves as a very tangible motivation to be financially responsible- I'm just a steward of the opportunity that was given to me.

I plan on making this expectation just as explicit with my kids and maybe some of you will as well. It may help keep your grandkids out of the OP's situation.

Edit: Maybe this will help the OP. Imagine helping your kids avoid your situation, you don't have to pay for all of it, but if you work your way out of this you will be able to help them. Think a few generations out from yourself, it could be the extra motivation you need to grind your way out of this.

I'm a bit unconvinced that this isn't someone playing politics, though if you are really in a bad situation, best of luck to you.

Edit: In addendum, if you're going to downvote, please do make note as to why, e.g. if you think there's sufficient evidence not to merit skepticism, or if you think it should be taken at face value regardless, at least for the benefit of others. I won't, though, argue the point, in the interest of consideration to the OP, in case he is honest.

I would recommend hitting up your library for a Dave Ramsey book or two. I don't follow his religion, but his "baby steps" for getting out of financial hot water are right on. Follow them - they aren't easy, but they work.

Sell stuff. Work your ass off. Live with tons of roommates. Eat beans and rice. Many people have gotten themselves out of worse situations with less means and education.

There will always be business opportunities. Solve your debt problem now. I rather live a debt-free "wage slave" life than be a scrappy entrepreneur who is always running away from creditors.

Second, let go of guilt&pity when/if it arises - it's destructive, along with any thoughts or opinions that condemn whatever got you in the situation you are. Ask better questions, like 'how is this a good thing and what is going well?' and 'what can I do better today?'. You can clear your debt with the same force you created it: compound effects over time. It's all about making small forward steps, every single day.

check out wealth dynamics to get some different ideas about mindset & money.

I personally dont consider Bankruptcy as a an option, you went for the college which you aspired for, you took a loan and knew you would have to end up paying for it. Adulthood is about taking responsibilities for your actions.

You have 2 seperate problems,lower monthly income and loan repayment. Many people have given suggestions for reducing/negotiating the interest rates, or deferred payment, talk to your debt collector, ensure at least the interest component is paid. If you can tell your skills and level of competency, people can suggest jobs or places you can make higher $/hr than your current employment.

Dont leave hope, you would surely overcome these challenges

At this point your loan has (almost certainly) already been sold as "bad debt" for pennies on the dollar, and given your description your credit probably reflects this. The good news is there are very few threats that can be leveled at you unless you somehow find yourself not broke. Here is the ticket to loosing the $150,000 debt. 1) Start hiding money in a "mattress" outside of the visible banking system. You need about 8-10% for a private loan 23-30% for one with government backing. 2) make it clear to the lender that they will never see regular payments on your loans that the debt truly has no collection value. 3) Once 1 and 2 are ready wait for a morning phone call from a debt collector. These folks are paid on commission and have quotas to meet. You need a hungry one! (you probably have gotten good at identifying them by now haven't you?) let on that you might have some money at the moment, but that you'd rather use it to buy a car/start a business mention that you've had to save up because you cannot borrow. The offer your looking for is making an immediate one time payment of $x in exchange for canceling your all debt. (check this several times to be sure) Get that offer in writing then make the large payment quickly. Your credit will recover in 7-10 years.

20 years later, I am happy that I was born in USSR precisely due to these nasty things. Everyone I know here were able to get free education, and are dept-free now. Such stories keeps my intent to continue debt-free life.

You are in an extreme situation, but one that many people find themselves in at various levels of severity and many more fear. This presents a unique opportunity for you. It will take a LOT of work and dedication but it will serve the greater good and might even help dig you out of your hole:

Tell your story. You are here on HN so you seem like you don't mind sharing.

Kids in high school need to hear this story: go speak to them in assembly. I am sure if you made a few phone calls to counselors, they'd welcome you with open arms. You might not get paid (but, hell, you might) but you'd be doing a service to those kids.

Blog about it. Cliche, I know but do it. Start now. You have gotten to the front page of HN. That is something but the clock is ticking starting 14 minutes ago. What will you blog about? First, everything that has happened up till now regarding this. Your background; how you went to school; your hopes; the ease of it all; the nightmare of realizing what was really going to happen. All of it. Give an abstract and start chronologically in very human detail. Keep reminding people where you are going with all of it.

In the meantime, try to do something about it. Chronicle EVERYTHING. Keep records. Post your struggle as it happens. Contact the debt holder. Contact your school. Contact support groups. Contact alumni. Contact your representatives. What do they say? What do they do? What /can/ they do?

If you can manage it, try to really do it in a thorough style. Perhaps you can get a hold of someone to bring it all together in a documentary. That can be powerful. Maybe not a blockbuster but if done well it could bring awareness and maybe some recognition. Perhaps you could sell it to schools for future college students to watch.

At some point in this process try to get a hold of others in the same boat or that are otherwise affected. Some that, perhaps, got lucky and paid it off. Some that never did. Maybe some that took the ultimate way out. Some that tried stuff that you'd never thought of to get out of it. Add that material to your blog and film. Keep moving.

Perhaps dig into the industry. Follow the money. Who benefits? By how much? How did these 'student loans are immune to bankruptcy' laws pass? When did they come about? Did it impact overall borrowing rates? Talk to economists, lobbyists, industry folks, the boots on the ground in terms of debt collectors etc, etc.

Find people who did it right. Find out how they did it. Include all of this in your material...

Once you have explored this from all angles and made a bit of a name, maybe you could write a good book about it. Go on some talk shows. Who knows.

If you do it right, I know I'd follow your progress.

Good luck.

Edit: I forgot the point: doing all of this is valuable. Reap some of that value and somewhere down the road you might find that you can get out of this hole. It won't be easy by a long shot, but, hell, what have you got to lose?

Would people in the education system (even just at high school) tolerate someone coming in and telling the kids how it really is and how a university education isn't the be-all and end-all of life? Certainly no visitor to my high school ever said that and the teachers were flat out disappointed if you expressed any inclination to not at least aim to go to university..

Since you're in a bit of a tough spot, and could continue your business efforts on your own time, you might consider seeking a job in those fields.

I hope that helps.

And, for the record, I thought the kickstarter idea was a great one. Certainly, I think you'd have to be quick about it, as that's the sort of thing where it pays to be first to market.

http://studentaid.ed.gov/PORTALSWebApp/students/english/PSF....

I quick Google search turned up this website: http://www.ibrinfo.org/index.php

1. Extend the payments to 30 years (instead of 15, this "saved" me about $600 a month in payments)

2. Do the income sensitive repayment plan that others have suggested.

Good luck.

I don't expect that this is advisable, but does anyone actually know if the government will come after you if you move to say, Thailand to escape your debt to the government?

That said, I do know that your credit rating in one country is not currently linked to your credit rating in another. For example, it's possible to have sterling credit in America and abysmal credit in Canada.

However, the issue in your original country doesn't go away. It may stop impacting your credit, and the debt collectors may write it off and stop pursuing it, but the debt is never cancelled.

An understatement, to say the least.

> but getting back into the US could be sticky to say the least

Really? They're not going to allow you back into the USA, or arrest you at the border for defaulting on a loan? That doesn't sound very credible at all. Any evidence to back that up?

http://www2.ed.gov/offices/OSFAP/DCS/treasury.offset.payment...

Defaulting on student loans is a civil debt. Filing fraudulent tax returns is a crime. I have never heard of someone being extradited or having their passport cancelled for defaulting on a civil debt (probably because governments have no direct interest in civil debts per se)

If I were in your shoes. I would look on-line for discussion groups of people with similar problems. You shouldnt trust the advice, but it might give you the lay of the land. (Dont trust me either. I'm thinking off the top of my head.) Try to find a class action law suit that you could join, especially against your school.

Often the collection agencies are subcontractors to the federal agency actually guaranteeing the debt. Maybe the feds can give you some relief, like forbearance. Unlike a private creditor, they are often able to give you reasonable courses of action.

If I were you, I would get some legal advice. Maybe they cant just have their way with you.

Fight back.

Sounds like an individual version of the recent financial crisis and you're siding with the banks.