One of the most common issues I have faced in the last 10 years of providing bankruptcy and other legal services to clients have been student loans. Bankruptcy does not discharge student loans except in extreme circumstances. So the question is then “Well what can I do about my student loans?” The good news is that there are a lot of options, most of which to not require the help of an attorney.
Initially, let’s get one thing straight, going to college is a good thing. Even if you have to take out student loans, the investment you make in your self will be worth it. With a college degree you will earn more and face less unemployment than you would if you only had a High School diploma.
The First step in addressing your student loans is to determine what type of student loan you have. Is your student loan a Federal Student loan or a Private student loan? Since late 2010 only the Federal government has been able to issue Federal Student loans. That means that if you got a student loan after 2010 and you got the loan at a bank, then you have taken out a private student loan. You can also look on the National Student Loan Data System to find more information out about your federal loans. https://www.nslds.ed.gov/nslds/nslds_SA/ I also suggest your get a copy of your credit report. www.annualcreditreport.com
Once you have determined what type of loan you have, you can then look into your repayment options. For Federal Student Loans there are several options
Standard Repayment- Set amount paid over 10 years
Graduated Repayment- Repayment amount increases slightly every 2 years. The loan is still repaid over 10 years.
Extended Repayment- Set amount paid over 25 years. The loans must be over $30,000 and may have other requirements to qualify.
Graduated Extend Repayment- Repayment amount increases every 2 years over a 25 year time frame. The loans must be over $30,000 and there may be other requirements to qualify
Income-Contingent Repayment- payment is recalculated every year over 25 years. At the end of 25 years some of the debt may be dropped.
Income based Repayment- The most popular income based repayment plan. Payment is set at 15% of you adjusted gross income or 10% for newer borrowers, and repaid over 25 years. The unpaid balance at the end of 25 years may be wiped out.
Pay As You Earn- PAYE sets payments at 10% of your adjusted gross and adjusts annually for 20 years. There are several restrictions as to when you took out your student loan that effect whether or not you can qualify for this program
Revised Pay as You Earn- REPAYE- very similar to the PAYE program but it will cover Parent Plus Loans
Private student loans can be more difficult to address because they do not have government mandated programs to help with repayment. However private student loans do have more latitude to negotiate a settlement once the loans go into default.
This is just touching on the surface of the student loan epidemic that our country faces. I would love to hear about your questions or problems regarding student loans. Give me a call at 817-494-3344 or email me at email@example.com.