Hey guys, I know it’s been a while since I brought you some new key tips for living in Spain as an auxiliar de conversación. By now you’ve probably been working for exactly a month, getting settled in for your new year in Spain, making new friends, trying new foods, learning some important (read: naughty) words in Spanish and planning some fun trips, you know, the usual.
But if you are anything like me during my first year in Spain, you are probably worried about money. Now is the in between time of getting paid for the first time and spending a hefty chunk of your savings to follow your dreams to Spain. You probably want to plan all these crazy trips around Spain and Europe, but then silly things like rent and budget get in the way (If you haven’t already checked it out, you should read my post about how to make extra money as an auxilar). If this is your first year out of college, or even if it’s not, November is the time when you have to worry about paying back your student loans.
How many times in your life do you get to live in Spain? Putting off my loans for a year or two wouldn’t make that much of a difference in the long run; I could pay them now, not travel, be dirt poor and lose out on a once in a lifetime experience while in Spain and finish paying them off when I was 80, or I could defer them, have the best 2 years of my life and pay them off when I’m 82. For me, this experience was my number one priority.
However, even with the extra income I earned working outside my schools, it still wasn’t enough to cover my living expenses (ie. travel and tapas) and my student loans. So I made a choice to defer them for the 2 full years I was in Spain. I went to a fancy smancy private New England liberal arts college, got my self a fine education and enough debt to sink the Titanic twice over. Paying my loans back on 700+ euros a month was not an option; I had to defer them.
I thought if I had to defer student loans in Spain, it was going to be tricky, but it wasn’t. I have every kind of loan you could imagine and I was able to put them off. I know many of you might not be in the same situation as me, or you might make it a priority to continue paying your loans while in Spain, especially if you have low payments, but if you want to put them off, I can help you. I have gotten dozens of emails and messages over the years asking this very question, so I figured I’d share my answer with all of you! So here are my tips for helping you defer student loans in Spain.
To begin, you have to understand our unique position as an auxilar de conversación: we are students, first and foremost. We have student visas, we get a student NIE, we receive a monthly scholarship/stipend, but we are NOT permanent residents, we are NOT working, we DON’T receive an income and we DON’T pay taxes. 700 euros is our stipend, which covers living expenses, and it is around $900 USD (900 euros in Madrid=$1150). The Spanish Ministry of Education considers us to be doing a post-graduate internship or sorts. You will have to call all your loan providers to see what exactly your options are for your specific loans, every loan has different terms, but they, más o menos, will fall under one of these following options. Just make sure that this is the mindset you must have when you call your loan companies because it works in our favor: we are students.
Federal loans with the US Dept. of Education
My Federal direct student loans were pretty easy to take care of, and the customer service people over the phone have been very nice and helpful in my experience (unlike the complete asshats who work for the private lendors). Every time I’ve called them, I’ve been able to take care of it all over the phone, no paperwork.
There are two options that you might qualify for: Economic Hardship Deferment or Economic Hardship Forbearance. In case you are wondering the difference between deferment and forbearance is the interest on the loan. If you qualify for the deferment (lucky you) and your loan is “subsidized” then you just postpone payments for up to 3 years with no added interest. Otherwise you’ll definitely qualify for forbearance because of the 700 euros a month, i.e. we are too poor to pay back the loan. You will get interest added on the loan if you put it into forbearance but what’s an extra grand or two when you already owe $80,000, eh?
For me, the government didn’t see this program as a continuation of higher education because we don’t enroll in course credits and it doesn’t fall under their specific “internship” categories, but it doesn’t hurt to try.
So call them and explain that you are doing a postgraduate unpaid teaching internship in Spain where you get a small stipend of 700 euros a month, untaxed, and see what your options are.
Ugh, private loans, the bane of my existence and the giant wall in the way of me following my dreams of becoming a professional travel blogger. Where I’ve found the Federal loans relatively easy to work with, the private lenders are the complete opposite. And of course I have mostly private loans. Typical.
You’ve got to be smart and savvy and have a plan before calling them; there is nothing worse than calling them, being on hold for 45 minutes only to not have your facts straight and have to call them back again later. Now I have all my private loans with 2 companies, Sallie Mae (grrrrr) and MEFA/ACS.
For MEFA/ACS I filed for Forbearance. After I called them, they emailed me a Forbearance Request Form that I filled out, scanned and emailed to my mom to fax to ACS along with a copy of the letters sent to us by the Spanish Ministry, translated. This type of forbearance with ACS is limited to 24 months, but two years of this program are only 16 months. Here are the possible ACS deferment options and here for forbearance.
Now for the beast, Sallie Mae. I had some of the worst possible loans to have with them, including a Signature Student Loan and a Smart Option Student Loan. I was able to defer them both while in Spain after many phone calls and tricky maneuvering. Sallie Mae is one of the biggest private lenders, but I am sure that many other lenders have a similar policy called a Internship, Fellowship or Residency Postponement for both loans. After literally hours haggling and harassing various people over the phone, I finally was able to talk to someone who mentioned this possibility.
Here is one big tip, if you call them and they are very unhelpful or do not mention or disagree with any of these above plans, hang up and call again to talk to someone else. Or ask to speak with their supervisor. Works like a charm. There are so many people working for these companies, sometimes they don’t know or aren’t as helpful as someone else might be. Try til you find someone helpful.
Now, my Smart Option Student Loan has always been a big pain in the ass. Whoever named it Smart Option? Good joke. This a loan that you pay the interest on while you are still in school and then pay the whole amount when you graduate. So I was paying a couple hundred bucks a month just for the interest while I was still in school. Ridiculous. The same goes for when you put it in deferment, you still are going to be paying the interest on it, which is probably preferable to paying the whole damn thing. However, you can put it into forbearance for 3 months at a time, when you DON’T have to pay the interest but you have to pay a fee to put it into forbearance and the interest gets added on the loan at the end anyways.
The first good step to take with private student loans is to see if you can log into your account online and see what your status is, what your deferment/forbearance options are, and what you qualify for. Then make the phone call. If you want to do what I did, you’ll get emailed paperwork to fill out, go ahead fill it out, get it signed by your school director or principal and mail/fax it to the lender.
Of course another option you have is to consolidate your loans and begin an income-based repayment plan, but that is a lot of paperwork and something that takes a lot of time; it also all depends on what type of loans you have. I am in the midst of doing this now that I am back home, and I literally want to bang my head against the wall.
Again, start with your federal loans and then talk to your private lenders to see if they will work together and exactly what your options are.
So in the end, don’t fret! There is some option available for you with your student loans while you are in Spain. The best thing you can do is get a handle on what exactly your loan situation is, and then call and talk to people. If you are in Spain, call from Skype, and talk with them to see what your options are.
The Sallie Mae Internship, Fellowship or Residency Postponement form you’ll be sent
The ACS Forbearance form you’ll be sent
Have you lived abroad with student debt? How did you manage it? What options did you have?
*Also, be sure to check out my post about how travel experiences are the best benefit of learning another language. I am competing in a contest for Kaplan, and the top three entries with the most facebook likes are judged this Friday, Nov. 9th. So if you like my post, be sure to click “like” on the floating bar next to it!