Student loan debt has been in the news lately as the amount of debt graduates have has skyrocketed at a time when good jobs are no where to be found. Congress and Obama have proposed ways to help students, but nothing has being enacted that would qualify as substantive relief.
In the meantime, shady operations are out there just like in the foreclosure crisis, promising help to strapped borrowers. Unfortunately, these scam artists are allegedly offering for a fee what is already available for free to borrowers if only they knew or contacted their lender. Regulators have taken notice and the state of Illinois is the first to file suit against such institutions. The state has sued several operations alleging fraud which includes lies about potential affiliation with the government to sell their services. For more on the suit go to Time.
As a result, I have put together this post so that you can know where to go for help to both save you from these crooks but also, hopefully, arm you with information you can use when engaging with your student loan lender.
Student loan discharge outside of bankruptcy
A discharge of your obligation to pay back your student loans is available on limited circumstances for those who meet the criteria. For more on this go to :
Student loan discharge in bankruptcy?
Discharging a student loan in bankruptcy is nearly impossible, but always consult with a knowledgeable bankruptcy lawyer. There are specific criteria you have to meet including a good faith attempt to pay back your loans.
Is a Deferment or Forbearance Available?
To qualify for deferment, the rules require that you are current on your payments. That rules seems ridiculous because if you could pay why ask for a deferment. For consolation, you may be eligible for a forbearance. Always talk to the your lender about your options. For more go to Sallie Mae.
Income based Payments or Lower monthly payments Available
Federal students loans are eligible for income-based repayment plans. Furthermore, if you pay for 25 years then the the government will cancel any remaining balance. Other programs such as “Pay as You Earn” plan) cancel payments much earlier saving those eligible thousands of dollars.
Additional resources include the wbesite Edvisors.com. The Department of Education maintains a toll-free number, 1-800-4-FEDAID, that offers loan information and has a ton of useful information on student loans such as payment plans, consolidation and deferments.