I’ve just returned from a Student Loan Law Conference offered by student loan law gurus Josh Cohen and Jay Fleischman. The conference was a refresher/update course for those few of us who handle student loan issues. We discussed several topics, including changes to the Income Driven Repayment programs, how to get the word out about the Student Loan Public Forgiveness Program, and how horrible the lawsuits from National Collegiate Student Loan Trust have been. There was also alot of discussion about how the student loan servicers and debt collectors are not properly assisting borrowers in their time of need.
Believe it or not, if you are having problems repaying federal student loans, your servicer is required to assist you in finding a repayment programs that matches your budget. Often times, though, they do not offer much assistance at all, whether its through a lack of compassion or knowledge. There are several Income Driven Repayment programs available to those with federal student loans. Income Based Repayment, Income Contingent Repayment, Pay as You Earn, New Pay as You Earn. Each one of these programs is based upon the amount of disposable income that you have. These programs are designed to keep you out of default, to assist you if you do get into default, and to reduce the tremendous financial hardship that comes with having student loans. The application for these programs is somewhat complicated but not so much that its not worth doing. To the contrary, entering into one of these programs can change your financial world in a very big way.
If you have fallen into default on a federal student loan (default occurs when you are more than 270 days late on payments), then you may have the opportunity to either consolidate or rehabilitate your way out of default. Choosing the proper course out of default is essential for your loans moving forward. This is where most servicers fail you as a borrower. Its not as easy as just picking one of those two options and then doing it. Considerations have to be made as to which is the proper way out, which is affordable to you, and which is better for you long term. Once you are in default, you are also subject to Administrative Wage Garnishment. Administrative Wage Garnishment is a garnishment of your wages that can (will) occur without having a lawsuit and judgment entered against you. Its a very powerful tool for the lender to use and its something that no one wants to have happen to them. There are several ways to avoid AWG and we certainly can assist you with that if you find yourself in such a position.
The Student Loan Public Forgiveness Program was designed to promote entry into non-profit or governmental type jobs. Nurses, Teachers, any local, state or federal employees, anyone who works for a non-profit can be eligible when making 10 years worth of on time payments via one of the IDR programs or the standard 10 year repayment program. You must work at least 30 hours per week in such a job to qualify.
If you have any questions about federal student loans and/or any of the Income Driven Repayment programs, please contact our office at 412-823-8003.