In the United States, the debt accrued by student loans now exceeds that of credit cards at over one-trillion dollars. As parents and students alike buy into the scare, individuals sacrifice a decent college education for something that is sub-par, yet “cheap.” For you, this does not have to be the case, read below, and see how you, too, can effectively repay your student loans.
1. 40% of Debtors who Attempt to Discharge their Debt are Successful
Many people think that filing bankruptcy for your student loans, as well as attempting to get them discharged, is a waste of time and effort. The common idea is that loan companies will take no measures to help you discharge your student loan debt, and that you are fighting a lost cause.
No idea could be more wrong. In fact, several former students have been able to have their loans discharged through providing evidence that their repayment would cause “undue hardship.” However, if you are forced to declare bankruptcy without a discharge, filing for a Chapter 13 bankruptcy could aid you in repayng your student loans. While the time you will be paying them will be greater than the initial twenty-or-so years, it is better than living your life in debt.
2. You Can Discharge Your Debt Outside of Bankruptcy
It is possible, although you must qualify under a very specific set of circumstances: you must be, or have been, disabled, to the point that you are incapable or working to earn a living wage or repay your student loans.
Please note, though, that this should not be done if your situation does not meet the criteria listed above. If you do, you are taking advantage of those who may need the service more than yourself. Should you be unable to find work, there are plenty of other resources available that can work to keep you from filing bankruptcy.
3. You May Qualify for Loan Forgiveness
If you work for one of the following, you might have the opportunity for your loans to be forgiven by the government after making only half of the required payments:
- Government, which can be tribal, local, state, or federal.
- Service, including non-for-profit agencies, that works to benefit the lives of children or families.
- Military, such as the army or navy. Your loans will be forgiven regardless of whether or not you are active, as well.
- Education, in private or public schools and universities.
- Public Agencies, typically associated with safety, law enforcement, or health.
- Americorps or Peace Corps
Should your path take you to any of these career sectors, you will have a better chance of having your loans repaid for you.
4. Student Loan Lenders and Collectors are not Exempt from any Rule
These laws include the Fair Debt Collection Practices Act and the Fair Credit Reporting Act, which ensure that loan debt is reported correctly and collected in a fair and timely manner. You will have an easier time repaying your student loans, as long as your lender abides by these policies.
If you believe your lender is not in-line with the laws above, contact your local Consumer Financial Protection Bureau and speak to a lawyer, as well. As long as you can provide ample evidence, you could be on your way to better monetary protection.
5. You Can Avoid Default by Paying Once Every 269 Days
To default on a student loan, you must neglect to make payments for a full 270 days. Following the default, however, your wages can be garnished and you can be pulled out of the qualification pool for future loans, credit cards, or other financial assistance.
If you are struggling to repay your student loans, you can save yourself from default by making one payment every 269 days. While it may not make you seem as reliable in the eyes of your creditors, it is better than making no payments at all. Through the contribution of even a little, you are saving yourself from what could be decades of financial hardship.
6. There is no Minimum Payment for a Defaulted Loan
If you must rehabilitate a defaulted loan, you will typically work with a servicer who will help you negotiate an amount with your lender. While the servicer may tell you you must make a minimum payment, you should know the Federal Student Loan Program of the United States does not have one. In essence, the suggested “minimum payment” is negotiable.
If you feel as though you are not able to pay the amount set by the servicer, suggest something lower. This way, you can more quickly repay your student loans.
Student loan debt affects millions of Americans every year and, in the depressed economy, they may not be able to make their payments as they wished. Before you default, remember these facts and, as always, be wise in your financial decisions.