Student Loans Causing You Problems? You May Be Eligible For Relief.

Student loan debt is rising at alarming rates.  It accounts for over $1 trillion in national debt.  The student’s hope is that if all goes well, education will lead to a better economic situation.  However, some graduates find that their professions are not as lucrative as they hoped they would be, or they end up losing their jobs with the changing economy.  Some graduates will also face major life changes, such as death of a family member, divorce or disability.  Some will also choose career paths that promote social good, but that don’t pay well (i.e. teachers, social work).
Meanwhile, their payments on their student loans become due, and if they can’t be timely made, they go delinquent and default.  The calls and letters then start.  The service providers are required to outline options for borrowers, but a lot of times don’t.  Collection attempts begin, and the borrower gets overwhelmed not knowing which way to turn.

If the loans are federal loans, the government has great collection powers far beyond those of other unsecured creditors.  They can garnish wages without a judgment, they can seize tax refunds and portions of federal benefits like Social Security, and they can deny eligibility for new student loans.  They are also allowed to charge large collection fees and interest that when re-capitalized create an ever-increasing loan balance.  A student can pay on loans for many years and still owe more than the original loan balances.  A bankruptcy can be filed to temporarily stop collection attempts but in most cases, a bankruptcy will not discharge the debt.

The good news is that if the loans are federal loans, there are numerous options available that may result in substantial relief.

1. If you are in default, there are consolidation and/or rehabilitation options available to get you out of default and back onto a repayment plan.  Some of the repayment plans are based on your income.  If you have low income, your payment could be reduced dramatically (in some instances it can be literally a $0 monthly payment). Once you’re on one of the repayment plans, your loan could be forgiven in 20-25 years, depending on the type of loan.  (Without being on a repayment plan, you may be looking at paying on your student loans for the rest of your life.)  Keep in mind, you must re-submit your income every year to verify your eligibility for the repayment programs.

IMPORTANT:  Do not consolidate your federal and private loans into a new loan.  You will lose the protections afforded to you under the federal programs.

2. If a person is totally disabled and unable to work, their loans can be forgiven.

3. If a person is employed by a government or nonprofit entity, and has been making payments on their student loans, they may qualify for public service loan forgiveness for some of the loans (but only if you’re on a qualified income-based repayment plan).

4. If a person is employed as a certain type of teacher for a specific period of time, they may have $5,000 to $17,500 of their student loans may be forgiven.

5. Some loans can be administratively discharged if you can prove certain things related to death, school closure, false certification, identity theft or unpaid refunds.
6. There are deferment and forbearance options available to delay collections while you figure out a game plan.

Keep in mind, these programs only apply to federal student loans.  If you have private student loans, there are no requirements that they offer you income-driven repayment plans or forgiveness options so you must look at other ways to try to resolve them.

If you are having issues with student loans, the first step is to determine what types of loans you have. Our office will do an initial analysis of your student loan situation and help you determine your options.  Contact the Law Office of Kathryn L. Johnson PLLC at (520) 743-2257 or email