With rising costs of college, trade schools and higher education student loans are becoming common place and can become paralyzing when you fall on hard financial times. Jacksonville’s debt relief lawyer, Matthew C. Bothwell, Esq., can help relieve your burden. We can help you take control of your debt through student loan consolidation and student loan deferment. We can help you with student loan forgiveness, assist in cure defaults and defend your rights when lenders try to collect. If you have questions about student loan debt please contact Jacksonville’s debt relief lawyer, Matthew C. Bothwell, P.A., for your FREE CONSULTATION.
Student Loan Consolidation
Student loan consolidation may help reduce your monthly payment, create a once a month student loan repayment option and offer more flexible loan arrangements by combining all of your student loans into one. Both private student loans and federal student loans can be consolidated, although federal consolidation programs are not available for private loans and private loan consolidation is governed by your private lenders and loan agreements.
Consolidation of loans allows you to take all of your separate student loans and combine them into one single loan. Doing so enables you to make one payment per month on a single loan and may result in a lower interest rate. Consolidating student loans can also reduce your monthly payment by extending your loan payment to a 30 year payment period, thereby extending the number of payments you will make on the loan and reducing the amount of the payment each month. Federal loan consolidation programs offer fixed interest rates and there is no charge to apply for or fee for consolidating your loan. Private student loans are governed by the policies of the lending bank but can generally be consolidated as well.
Student Loan Deferment
Student loan deferment refers to a period of time during which your obligation to repay the loan is suspended or stayed. During the period of deferment you are not obligated to pay on the loan and, with some types of federal loans, interest will not accrue during the deferment period. As a general rule, loans may be deferred when:
• you are still in school taking at least a half course load;
• you are in a post-graduate fellowship programs;
• you are unemployed (for up to 3 years);
• you are experiencing economic hardship (for up to 3 years);
• you are active duty military during periods of war, military operation or national emergency; and
• you have been discharged from military service within the last 13 months.
Deferments are requested through your loan servicer and there should be no charge associated with your request.
Student Loan Forbearance
Student loan forbearance may be an option if you do not qualify for loan deferment. Loan forbearance allows you to stop making monthly payments or reduce the amount of your payment for up to a year. While interest will typically continue to accrue, the brief hiatus of payments may be your best option to get back on your feet.
There are two types of student loan forbearance: discretionary and mandatory deferments. Discretionary loan forbearance is granted upon your request based on your financial hardship or illness and requires approval of your lender. Mandatory student loan forbearance guarantees forbearance if:
• You are in a medical or dental residency program or internship and
• Your monthly student loan payment is 20% or more of your total gross income (before taxes).
• You are serving in a national service position and received a national service award.
• You are a teacher preforming teaching service that would qualify you for teacher loan forgiveness.
• You qualify for repayment of part of your loan under the U.S. Department of Defense Student Loan Repayment Program.
• You are an active member of the National Guard and activated by a state governor.
Student Loan Discharge
It may be possible to discharge or cancel some types of federal student loans in whole or in part if you meet certain criteria. Discharge for these loans typically involve your school closing, public service loan forgiveness, teacher loan cancellation, or if you become permanently disabled or die. If you have questions about discharging student loans Jacksonville’s debt relief lawyer, Matthew C. Bothwell, Esq., can help. Please contact us for your FREE CONSULTATION.
Closed School Discharge
If you have federal student loans and your school closes while you are enrolled and before you have completed the program, you may be entitled to complete loan forgiveness. This applies even if you were on an approved leave of absence or withdrew within 120 days of the schools closing. However, if you have transferred your credits to another school or are completing your chosen program through a teach-out agreement you will not be eligible for a closed school discharge.
If you have private student loans your private lender will control your qualification for a closed school discharge, if any.
Public Service Loan Forgiveness
The Public Service Loan Forgiveness Program (PSLF) is designed to encourage people to enter and continue to work full-time in public service. Public service jobs include any employment with a federal, state, or local government entity, agency or organization or not-for-profit organization. To qualify for this program you must work full time and make 120 qualified payments in full and on time. This means you must make all of your required student loan repayment payments for a period of 10 years before you are eligible for loan forgiveness. Note that this program is only available to borrowers who took out their student loans after October 2007.
Teacher Loan Forgiveness
Teacher loan forgiveness is designed to encourage individuals to become teachers in lower income school districts. Under this program you are eligible for student loan forgiveness if you are a full time teacher for 5 complete and consecutive school years in designated low-income school districts, and meet other qualifications. If you qualify you are eligible to discharge up to $17,500 of student loans. Only certain types of student loans qualify for this program and you must have completed your 5 years of service prior to October 30, 2004.
Total and Permanent Disability (TPD)
If you are designated total and permanent disabled you may qualify for a student loan discharge of certain types of federal loans. You must be able to prove your disability and the federal department of education will make the ultimate decision as to your eligibility.
If you die your student loan debt will be discharged or forgiven. Also, if your parents took student loans on your behalf and they die, the loans will be dismissed as well. Knowing your student loans will be discharged after you death should leave you with some peace of mind that your family and estate will not be burdened with federal student loans.
Bankruptcy and Student Loans
Bankruptcy will typically not discharge student loans unless you have a significant financial hardship will continue indefinitely. To determine if your financial situation constitutes a hardship necessary to discharge a student loan the bankruptcy judge will apply the “Brunner Test.” To satisfy the Brunner Test you must show that (1) you cannot maintain a minimum standard of living for yourself and your dependents if you’re required to continue making student loan payments; (2) that your current financial situation is likely going to continue through your student loan repayment period; and (3) you have made a good faith effort to repay your student loans.
Discharging student loans in bankruptcy is not easy and there is no guarantee that you will be successful.
If you have questions regarding student loans Jacksonville’s debt relief lawyer, Matthew C. Bothwell, Esq., is here to help. Please contact us for a FREE CONSULTATION.
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