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Drowning in Student Loans? You May Have Options

Do you have a Federal Student Loan balance?  You could benefit by restructuring the terms of your loan!  Now is the time to review and change your loan agreement by taking advantage of the interest free and payment deferral period.

The Cares Act

With the signing of President Trump’s memorandum last week allowing for the deferred repayment of Federal Student Loans until at least January of 2021, it may be time to review and alter your loan terms.

Everyone’s situation is unique but if you fit into one of these categories it may be worth a look:

  1. Financial Hardship– Many people with Federal Student Loans have had their income decrease drastically or even disappear since the start of the pandemic.

  2. Income has not changed– You may be fortunate enough to not have lost your job or even see your income suffer.

  3. Doing well financially– Healthcare workers and some other job categories have actually seen the opportunity to increase their earnings.

Repayment options

If you have struggled to keep up with the bills you may qualify for IDR or Income Driven Repayment of your student loans.  Your payments would be capped at a percentage of your income and the repayment terms extended.  Just contact your loan service provider to find out if you may be eligible.

You may have seen your income stay about the same.  If so, you could still take advantage of the portion of the memorandum that allows for interest free payments through the end of 2020.  Your entire payment would be going toward the principal amount thereby paying off the loan sooner.

Maybe you have actually seen your earnings increase.  If so, you could make larger principal only payments to satisfy the loan more quickly.  This would also be an idea time to pay down credit card debt or bolster your emergency fund.

Qualifications

To take advantage of the new favorable Federal Student Loan rules your loan must be owned by the Education Department.  Private loans such as Perkins Loans and FFELP (Federal Family Education Loan) do not qualify.  To obtain forbearance you would need to combine your loans into a Federal Direct Consolidation Loan by contacting your loan servicer and determining how the consolidation would affect the interest rate, loan balance and total amount of repayment.

If you happen to have a Federal Student Loan in default, collection attempts have been suspended through September 30th.  The new memorandum does not address whether or not this period will be extended. 

Forgiveness

If you meet certain requirements you could be eligible for Student Loan Forgiveness. 

1:  You must be employed full time by a U.S. Federal, State, Local or Tribal government organization or by a not-for-profit organization.

2:  You must have made 120 consecutive qualifying monthly payments toward your Federal Student Loan while employed by a qualifying employer.

3:  Your loans must be either a Direct Loan or have consolidated your Federal Student Loans into a Direct Loan.

4:  You must be making your Federal Student Loan payments through an Income Driven Repayment plan.

Student loan debt is a problem for millions of Americans.  If you are one of them, you have options.  The attorneys at Dsouza and Strachan Law Group have the knowledge and experience to help you restructure your student loan agreement.  Contact Dsouza and Strachan today for a free consultation.

 

 

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