Federal student loan borrowers facing financial hardship severe enough to not be able to make their loan payments have some options available to them. Rehabilitation or Consolidation Borrowers who default on payments can either “rehabilitate” their loan or “consolidate” into a new loan. After rehabilitation or consolidation, a borrower can get into an income based or income contingent repayment program. Rehabilitation requires borrowers to make nine monthly payments over a ten-month period. Payments must not be more than what isRead more
Discharging Student Loans in Bankruptcy
The high cost of a college education forces many people to take out federal and private student loans. Federal loans offer several repayment options, including some tied to a borrower’s income with forgiveness of the remaining loan balance after 20 to 25 years. Private loans can sometimes be obtained at lower interest rates than those available on federal loans. But even with flexible repayment options and favorable interest rates, the number of borrowers defaulting on student loans is high. TheRead more
Private Student Loan Borrowers Facing Lawsuits
To pay for college many students borrow money from the federal government or a private lender. Student loans made or guaranteed by the federal government usually offer the best terms. Some payment plans for federal student loans are tied to a borrower’s income and offer forgiveness of the remaining debt after 20-25 years. Federal student loans also offer subsidized interest rates and more options to borrowers who default on their loans. The problem with federal loans is that there isRead more
The Sallie Mae Empire
With over $1 trillion in debt, federal student loan debt now exceeds credit card debt and over $120 billion of that student loan debt is delinquent. A January 2014 report from the National Consumer Law Center (NCLC) called “ The Sallie Mae Saga: A Government-Created, Student Debt Fueled Profit Machine,” details the extensive role Sallie Mae plays in the student loan industry. What Is Sallie Mae? Sallie Mae was created in 1972 as a government-sponsored enterprise that could use publicRead more
National Collegiate Student Loan Trust Dismisses Lawsuits
Four lawsuits against two of my clients were dismissed last month after the National Collegiate Student Loan Trust (NCSLT) was unable to prove it was entitled to collect the private student loans my clients allegedly owed. After filing motions to dismiss in each of the lawsuits I argued NCSLT had failed to prove how it was the “real party in interest” when the original loans had been with JPMorgan Chase. What Did The Judge Propose? The judges gave NCSLT threeRead more
Student Loans in Your Budget
How much student loan debt is reasonable? For example, student loan debt of $25,000 is affordable for a single person with an annual income of $30,000 to $40,000. If the debt increases to $50,000 someone earning only $40,000 to $50,000 annually is going to face budget problems. At that amount of debt, student loan payments would be about $450/month, almost equal to what would be spent on food. Student loan balances of $75,000 require an annual salary of $60,000 orRead more
Student Loan Deferrments
Deferring payment on student loans is necessary when circumstances prevent a borrower from staying current on payments. There are many types of deferments available depending on the kind of student loan and the situation. For instance, deferments on private loans are completely discretionary to the lender. If a private lender wants to grant or deny a deferment they can, without consequences. But the lenders may also charge a borrower for seeking a deferment, For example, Sallie Mae often charges $150 forRead more
