Question:
I'm currently making 37k a year. I've have already consolidated a student loan about 50k at an interest rate of 8.75% (held by SallieMae). Further, I have debts (credit card) of about 17k that are managed by CCCS. I make monthly payments of $400 for the student loan and about $370 for the other credit - so not really much money left over at the end of the month. - Does anyone have an idea if there is a way to reduce the interest rates of my student loan? SallieMae told me that it is not possible as I already consolidated and that there is no way to lower my interest on the loan. Is my only option to go to a bank and get a new loan (but I doubt a bank would do that)? - One idea that I had is, to go back to school - to take a couple of evening cles and get another student loan to pay for them and then try to reconsolidate. I haven't checked out if that could work out, or if that would be without success. - Another idea, (or in addition) is to declare bankruptcy to get rid at least the 17k in credit card debt. I know that there is no way to get rid of my student loan. But is there at least a chance to get better conditions for the student loan (like lowering the interest rates)?

Answer:
You are correct in that bankruptcy will not discharge student loans. Some banks are offering lower payments to those that make 12-48 monthly payments on time for consolidated loans, however this may only apply to new consolidation loan applications. Basically you are stuck with the rate you consolidated at, which is why one is advised to think carefully before going through the process.

When you consolidate student loans, the old balances are paid off, then a new account (loan if you will) is created from the sum of all balances of loans to be consolidated. Of course banks/providers are hoping one will take the new longer payment terms (20 years or so IIRC) because even if the interest rate is lower, one pays more interest over the life of the loan. Loan consolidation is basically a gamble that rates won't be lower in the future. As they are now at historic lows, many should consolidate now as one does not think they will go much lower nor return to these levels any time soon.

If you are having trouble paying your loan, speak to your provider, they may offer sometime of forbearance or deferment which will give you time to sort yourself out. Failing that returning to school at least half time will allow you to defer your loans, and get some breathing room. - Another idea, (or in addition) is to declare bankruptcy to get rid at least the 17k in credit card debt. I know that there is no way to get rid of my student loan. But is there at least a chance to get better conditions for the student loan (like lowering the interest rates)? Bankruptcy could have an effect on your interest rate, accrued interest, principal due, or anything else, if the judge felt like ordering a change in the terms. But s/he probably won't. How about buying a house and taking out a home equity loan in a couple of years, using the built-up equity?