Federal Student Loan Lawyer

FEDERAL STUDENT LOAN LAWYER

FEDERAL ADMINISTRATIVE PROGRAMS

Know the Players

Federal Student Loan Lawyer

As a Federal Student Loan Lawyer, I urge you to know the players in your Federal Student Loans.

Lender: The federal government makes educational loans to students. Types of loans include Consolidation loans, FFELP, Grad Plus, Heal, Plus loans, Parent Plus loans, Perkins loans, Stafford subsidized and unsubsidized loans, etc.

Servicer: Handles billing and other services such as repayment plans and loan consolidations. Servicers include CornerStone, FedLoan Servicing PHEAA, Granite State GSMR, Great Lakes Educational Loan Services, Inc., HESC/Edfinancial, MOHELA, Navient, Nelnet, OSLA Servicing, and VSAC Federal Loans.

Guarantor: Guarantees payment to the lender in the event the borrower defaults. Guarantors include the School that made the loan and the U.S. Department of Education. Some guarantors also service educational loans such asEducation Credit Management Corporation and Sallie Mae.

There are several federal administrative programs available to borrowers.

 

Forgiveness, Cancellation, and Discharge

The following is a list of the basic forgiveness, cancellation, and discharge requirements to statutorily discharging your federal student loans. As you can imagine, there are lots of conditions and restrictions that may apply that we are unable to list here.

Closed School Discharge: If a student is unable to complete their course of study because the school closed may be able to administratively discharge their federal loans.

Total and Permanent Disability Discharge: If you can prove total and permanent disability, you can statutorily discharge certain federal loans. Ways of proving disability include receiving social security disability, certification from your physician, etc.

Death Discharge: At first glance you may ask yourself what good is it to be forgiven of this debt if your already dead, but your heirs at law will benefit since your assets will not be used to pay your federal student loans. There are certain benefits for co-signers on parent-plus loans as well.

Discharge in Bankruptcy: Your probably asking why is a discharge in bankruptcy part of the federal statutory discharge outside of bankruptcy? The answer is simple. If you obtain a bankruptcy discharge of your federal student loans, then file for a statutory discharge of your federal student loans based on the loans being discharge in bankruptcy, then you will regain eligibility for federal student aid if you had previously lost it.

False Certification of Student Eligibility or Unauthorized Payment Discharge: Certain federal loans can be statutorily discharged if:

a) Your school falsely certified your eligibility to receive the loan based on your ability to benefit from its training, and you did not meet the ability to benefit student eligibility requirements.

b) The school signed your name on the application or promissory note without your authorization or the school endorsed your loan check or signed your authorization for electronic funds transfer without your knowledge, unless the proceeds of the loan were delivered to you or applied to charges owed by you to the school.

c) Your loan was falsely certified because you were a victim of identity theft.

d) The school certified your eligibility, but because of a physical or mental condition, age, criminal record, or other reason you are disqualified from employment in the occupation in which you were being trained.

Unpaid Refund Discharge: You may be eligible for a discharge of certain federal student loans if you withdrew from school, but the school didn’t pay a refund that it owed to the U.S. Department of Education or to the lender, as appropriate.

Teacher Loan Forgiveness: If you are a teacher, new borrower, and have been teaching full-time in a low-income elementary or secondary school or educational service agency for five consecutive years, you may be eligible to partially statutorily discharge certain federal student loans.

Public Service Loan Forgiveness: If you are employed in certain public service jobs and have made 120 payments on certain federal student loans during a certain time period, the remaining balance that you owe may be forgiven.

Perkins Loan Cancellation and Discharge: Individuals who perform certain types of public service or are employed in certain occupations may be eligible to cancel part, or their entire Perkins loan.

Finally, you should be aware that once a loan is administratively discharged or forgiven, this becomes a taxable event, which means to the extent a debtor’s assets exceed liabilities after the forgiveness; the forgiven debt is taxable income. This does not apply to a student loan bankruptcy discharge.

 

Deferment and Forbearance

Deferment and Forbearance allows you to temporarily postpone or reduce your federal student loan payments.

Deferment: is a period which principal and interest is delayed and (depending on the type of loan) the federal government might pay the interest on you loan. There are specific requirements to qualify for a deferment.

Forbearance: allows you to stop making payments or reduce your monthly payment for up to twelve months. Interest continues to accrue. Depending on the type of loan, there are mandatory and discretionary forbearances.

 

Loan Consolidation

Loan consolidation combines multiple federal student loans into a single loan with one monthly payment. As you may have guessed, there are specific requirements to qualify depending on the type of loan you have as well as various pros and cons of consolidating.

Beware! Private lenders are eager to consolidate your federal student loans into a (terrible) consolidated private loan. Borrower’s who do this lose all the benefits and repayment options the federal government offers.

 

Repayment Plans

Depending on the type of federal student loan you have, there may be several different repayment options available to you including:

The Standard Repayment Plan, Extended Repayment Plan, Graduated Repayment Plan, Pay As You Earn Repayment Plan (PAYE), Revised Pay As You Earn Repayment Plan (REPAYE), Income-Driven Plans such as the Income Based Repayment Plan (IBR), and the Income-Sensitive Repayment Plan including the Income Contingent Repayment Plan (ICR).

Most of the programs require that your loan not be in default. If your loan is in default, then you must rehabilitate your loan first (see below).

 

Handling Default

If you miss a payment, your federal loan may be “accelerated” which means the entire principal and interest may become due immediately. Thereafter, your loan may be placed in collections and you will be responsible for all collection costs as well as outstanding principal and interest (which continues to accrue). Tax refunds and federal government benefits may be intercepted, and up to 15% of your wages may be garnished without a court order.

This obviously is a crappy situation to be in. There are three steps you can take to get out of default.

1) Repayment in Full: If your loan is in default it is probably because you are not earning enough to make payment that renders this option fantasy;

2) Loan Rehabilitation: depending on the type of loan, and your monthly income and expenses, your monthly payment could be as low as $5. Like everything else, there are lots of conditions and restrictions. Remember, once your loan has been “rehabilitated” you are no longer in default and may qualify for other options such as deferment, forbearance, various repayment plans, loan forgiveness, qualify for additional student aid, as well as the default being removed from your credit report thereby improving your credit score; and

3) Loan Consolidation: combines multiple federal student loans into a single loan with one monthly payment. As you may have guessed, there are specific requirements to qualify depending on the type of loan you have as well as various pros and cons of consolidating.

Beware! Private lenders are eager to consolidate your federal student loans into a (terrible) consolidated private loan. Borrower’s who do this lose all the benefits and repayment options the federal government offers.

 

If you are in default, you should exhaust all options before considering bankruptcy.

Special Note: State educational loans have their own “administrative remedies” which are not the same as federal administrative remedies.

 

LOOK INTO THE FOLLOWING OPTIONS

1) Federal Student Loans—Federal Administrative Programs;

2) Private Student Loans—Programs and Strategies for Private Loans; and/or

3) Bankruptcy Discharge

Hello, I’m Attorney Neil E. Colmenares. For over a decade I have helped people just like you to get debt relief. My office serves the good people of Las Vegas, Henderson and North Las Vegas in the great state of Nevada. My firm handles Student Loan Cases, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Debt Settlement and Foreclosure Alternatives such as Foreclosure Mediation, Loan Modifications and Short Sales.

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