At the time of writing the national student debt is approximately 1.4 trillion dollars. There are 22 million American people with federal student loans. 9.6 million or about 43% of borrowers are either behind or have permission to postpone payments due to economic hardship. Thousands of these loans go into default everyday.
It’s no wonder why there is such a huge outcry from past present and future students about the current state of education and financial aid. When one defaults on their loans the creditor or loan servicer backed by the government has the right to garnish up to 15% of your wages. This also prevents you from getting any more financial aid and relinquishes your right to forbearance or forgiveness. To remedy that situation one has to go through a loan rehabilitation program that will reverse those effects. It’s nice to be able to get back on the straight and narrow but it’s unfortunate that many people don’t know that there are programs out there that can stop default from ever happening.
There are 4 plans that can lower one’s monthly payment and depending on one’s personal situation, even forgive them. There are also special forgiveness programs for people who work in the public sector, like teachers or doctors.
The 4 main programs are
- Income Based
Income based requires you pay 10% of your discretionary income if you are a new borrower on or after July 1st 2014 but will never be more than the monthly cost of the standard 10 year plan. If you aren’t a new borrower the payment is 15% of discretionary income
- Income Contingent
Income Contingent requires you to either pay 20% of discretionary income or what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income. You’ll pay the lesser of the two.
- PAYE (Pay As You Earn)
You’ll pay generally 10% of your discretionary income but never more than the standard 10 year repayment plan amount
- REPAYE (Revised Pay As You Earn)
Generally 10% of your discretionary income.
We can provide more information on how these programs could benefit your specific situation and help guide you through the process by calling (941)957-9182!