Daily Archives: October 11, 2010

Cannot Pay Your Student Loans?

A presentation on student loans Department of Justice lawyers, who oppose, quite fiercely, discharge of student loans in bankruptcy cases, but, presented lots of information on other ways to deal with repayment.

Contact the ombudsman! was there cry.  (Don’t bother us, we have enough to do.)

There are people in the Federal Student Aid Office to help you identify your loan repayment options, address arguments you have over payments made and amounts owed on loans, clarify student loan deferment, forbearance, and even some options to totally discharge the loan.

Best line: if you die, you do not have to repay, but, you do have some forms to file get the ddebt forgiven.

The starting point is:  which type of loan do I owe?

You cannot find out your options until you learn what program the loan is under.

So many flavors:  Higher Education Act, Federal Family Education Loan Program, Federally Insured Student Loan Program, Stafford loans, PLUS loans, Perkins loans, William D. Ford direct loans, and more.

Strange, but, student loan deferment or forbearance are only available for loans NOT in default.

Your loan can be rehabilitated, or re-financing or consolidated, after you mess up, which brings the loan back out of default status and potentially eligible for these student loan deferment and forbearance.

Best to check these options out before you fall behind on the payments.

Forbearance is a  temporary modification of the payment terms.

Deferment is a suspension of your obligation, nothing goes away, but your payments stop for a time, so also temporary.

For deferments for government subsidized Stafford loans, the government pays the interest that accrues during the time of the deferment.

This is just one example of the way different type programs restrict your options.

Contact the ombudsman!

The time periods, information required to be submitted, eligibility, all vary according to which program, or programs, if you have lots of loans, that you are in.

Most of my clients do not know.

As the government attorneys say, contact the ombudsman!

Before you fall behind and default.

Cannot Pay Your Student Loans?

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