What Are My Options With Dealing With Student Loan Debt?
On Monday 4/27/15 I had the pleasure once again of being a guest of Dr. James Gore on his radio show New Urban Unlimited on 1150AM KKNW in the Seattle area. I will be on the show which airs M-F at 6am, the last Monday of every month in 2015. You can listen to the most recent show on the link above. During this show Mr. Gore and I have a candid conversation about student loans and how borrowers can get their student loan debt under control.
Here are the highlights from our conversation.
Student Loan Statistics
According to the National Consumer Law Center there are $1.14-1.32 trillion dollars in outstanding student loan debt and 90% of that debt are from Federal student loans. The average debt load upon graduation is $29,400 and there are over 7 million borrowers in default nationally.
What options are there for people who have Federal Student Loans?
a. Pay as You Earn
Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans made to graduate or professional students, and Direct Consolidation Loans that did not repay any PLUS loans that were made to parent borrowers. Loans that are currently in default, Direct PLUS Loans made to parents, Direct Consolidation Loans that repaid PLUS loans made to parents, and Federal Family Education Loan (FFEL) Program loans are NOT eligible for repayment under Pay As You Earn.
You must be a new borrower. You are a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan as of Oct. 1, 2007, or if you had no outstanding balance on a Direct Loan or FFEL Program loan when you received a new Direct Loan or FFEL Program loan on or after Oct. 1, 2007. In addition, you must have received a disbursement of a Direct Subsidized Loan, Direct Unsubsidized Loan, or Direct PLUS Loan for graduate or professional students on or after Oct. 1, 2011, or you must have received a Direct Consolidation Loan based on an application that was received on or after Oct. 1, 2011.
This plan offers a 20 year repayment forgiveness or 10 years if borrower is in public service. Payments are determined by household size and household income.
b. Income Based repayment (IBR)
Similar to Pay as you earn and it comes with a 25 year cancellation (0r 20 years if your loan was received after 7/2014) or 10 year public service and payments determined by household income and size. Your payments will be 15% of your discretionary income. This option makes sense and is preferable to a forbearance because even if your income is $0, your payment will be $0 and you will get credit towards your cancellation should be noted that any debts forgiven you will have to pay federal taxes.
c. Loan Consolidation
With loan consolidation borrowers can make one payment a month and then you don’t have to make several payments or track down all of your different loans.
d. Income Contingent Repayment
If you don’t qualify for IBR or Pay as you earn. ICR payments are for a maximum of 25 years and then they are forgiven.
e. Disability Discharge
Qualifying for a disability discharge requires borrowers to have a permanent disability.
f. Debt Settlement or modification
With some lenders if your loan is in the recovery department for non payment or being collected upon by third party debt collectors you may qualify for settling your debt for less than you owe. Federal loans will generally reduce your loans by 10% if you pay with a lump sum although I have obtained settlements of more than 70% of a debt due to several years of non payment and hardship.
If your federal student loan is currently in default you may be eligible to rehabilitation your student loan so that negative marks on your credit will be deleted after payments of about 10 months that are based on your disposable income. Rehabilitating your loan will also make you eligible for future federal student loans.
What options are there for people who have private student loans?
a. Loan Modifications with demonstrated hardship
b. Debt Settlement
c. Possible consolidation
Are there many companies out there that assist people with student loan issues?
All information is public knowledge and can be provided by your student loan provider should you ask. With that said there are many private companies who are not being regulated who are taking advantage of consumers. Recently the Washington State Attorney General cracked down on a company for violating the Washington Consumer Protection Act and Washington Debt Adjusting Act.
With that said most people just like any legal matter are not confident in dealing with lenders and need professional help in dealing with their lenders and knowing their rights and options. If borrows need to seek out help, I would advise that an attorney be retained as you know attorneys are regulated by the state bar and consumers will not be taken advantage of.
How can Symmes Law Group assist people with student Loan Debts?
Symmes Law Group offers an initial consultation to learn about circumstances and go over possible options available. From there an attorney can negotiate with lenders to get best optimal result depending on borrowers needs. In some circumstances negotiate lower payoff amounts, rehabilitate or or obtain modifications of loans.
If you have additional questions regarding student loans and how you can rehabilitate your situation, give Symmes Law Group a call at 206-682-7975 to learn about your options.