Student Loan Debt Continues To Make News Over Summer

Sallie mae student loan forgiveness after 20 years

When the bell rings to start a new school year, college students, especially the 70 percent using loans to pay for expenses, need to catch up on a few news items that surfaced during the summer break.

Here is the quick summary of what happened while you were away:

  • You will pay a higher interest rate for student loans this year, albeit only slightly. Rates are rising from 3.9 percent to 4.66 percent for undergraduates and 5.4 percent to 6.21 for graduate students.
  • Private loans could be cheaper than federal loans for the first time in a decade, though only if you have a high credit score.
  • If you took out a loan after July 1, you are eligible for the Income-Based Repayment program that caps repayment at no more than 10 percent of your income and you could have the balance forgiven after 20 years.
  • College graduates from households with no student loan debt are decidedly better off than those who graduated with student loan debt.
  • Households headed by a college graduate earn significantly more than those without a college degree.

The first two bullet items are related in that the choice between federal and private loans overwhelmingly has favored federal for most of the last decade. That could be changing as banks quickly recover from the Great Recession and more money is available for lending.

The latter three bullet items are not surprising, but the disparity between graduates with loan debt and those without is shockingly high and so is the pay difference in pay between college graduates and those without a degree.

Congress spent most of the summer ignoring several proposals to ease the strain on people with student loans, then settled on a middle-of-the-road answer by tying interest rates for student loans to the 10-year Treasury index rate. Loans for undergraduates will be the Treasury index rate, plus 2.05 percent. Graduate students and parents PLUS loans add 3.6 percent to the Treasury Index Rate.

The good news with this system is that Treasury index rates are at historical lows and the rate you receive this year is fixed for the life of the loan. The bad news is that, if you need another loan for next year, the interest rate likely will change, and even more likely, go up.

The new legislation mercifully caps interest rates at 8.25 for undergraduates, 9.5 percent for graduate students and 10.5 for parents who take out PLUS loans.

Students with credit scores over 800, and parents who will to co-sign for the loan, might have alternatives to consider at private lending institutions.

Some private lenders have lowered rates for their most creditworthy customers because borrowers have been very good about paying the money back. MeasureOne, a California company focused exclusively on student loan data, says that serious delinquent loan repayments (90-plus days past due) have declined to just 2.55 percent from their peak of 7.33 percent in 2009.

That has encouraged the top six private lending institutions – Sallie Mae, Discover, PNC, Navient, Citizens and Wells Fargo – to drop rates to between four and six percent for their best customers. Sun Trust is offering the 4.0 interest rate, while Sallie Mae’s best customers get a rate of 5.74.

The major drawback to private loans is that there is little flexibility if you fall behind on repayment. Federal loans offer things like loan consolidation, income-based repayment, deferment and other avenues to assist borrowers who lose their job or suffer an unforeseen financial hardship.

Students who do have borrow for college, owe an average of $30,000 when they graduate. According to Pew Center Research, a non-partisan think tank in Washington, D.C., that creates a notable financial gap between them and their peers.

Though the median income for college educated households is $57,941, the median net worth of households with no student loan debt is $64,700, or more than seven times higher than households with student loan debt, whose net worth is a paltry $8,700.

The Pew Center report did reinforce the fact that earning a college degree pays off over the long haul. The median salary for workers with a college degree is $57,941 compared to a median salary of $31,512 for those without a degree. That is a difference of 83.9 percent.

One more positive fact worth noting before you start school: The increased interest rate is only going to add about $4 a month to your payment. Skip lunch once a month and you should be able to handle it.


Paying Off Your Student Loans: Forgiveness Programs & Beyond

Sallie mae student loan forgiveness after 20 years

More than 44.2 million people in the U.S. have student loan debt, according to 2016 data from the Federal Reserve Bank of New York, and they all have one thing in common: They have to figure out a way to pay those loans back. Paying student loans is important not only because you agreed to do so when you borrowed them, but also because failing to repay your loans can seriously damage your credit, and once you fall behind, it can be pretty difficult to get back on track. This is especially important because student loans are difficult to get rid of, even if you’ve had financial hardship or filed for bankruptcy. (You can see how your student loans affect your credit standing — and, as a result, your ability to qualify for credit cards, auto loans, etc. — by getting two of your free credit scores on Credit.com.) Still, there are some programs available to you, including student loan consolidation, income-based repayment programs and even public service student loan forgiveness, that can help you along the way.

Whether you’re considering taking out a student loan, just about to start repaying them or wondering how you can make your loan payments more affordable, here are some things you need to know about paying student loans.

Sallie mae student loan forgiveness after 20 years

Federal student loans are the most common kind of education debt. (As of the third quarter of 2016, outstanding student loan debt stood at nearly $1.4 trillion, and federal loans accounted for $1.26 trillion of it.) The first step to getting a federal student loan is to fill out the Free Application for Federal Student Aid (FAFSA), and then your school will decide how much aid, including student loans, you qualify for. Federal student loans for undergraduate borrowers do not require a credit check (most applicants don’t have credit at that point in their lives), but PLUS loan and Parent PLUS loan applicants must not have an adverse credit history.

Federal student loans have limits that vary by what kind of federal loan you’re borrowing, your year in school and whether you’re a dependent or independent student. For Direct loans, the most common kind of federal student loan, the government limits dependent student loan borrowers to no more than $31,000 for their undergraduate degrees. It’s important to remember that you do not have to borrow the full amount you qualify for, and you should only borrow what you need.

Yes, student loans carry interest, but how interest works varies widely by loan type. Some borrowers may qualify for subsidized student loans, which means the government pays the interest on them while the borrower is in school. Most loans are unsubsidized, meaning the loans accrue interest as soon as they’re disbursed. So, by the time you enter repayment, which may be several years from when you borrowed the loan, the balance may be much higher.

Your federal student loan servicer (or lender, if you have private student loans ) should be in contact with you about how to set up your online account to review your loan details and manage payment. If you don’t know who your federal student loan servicer is, you can log into the studentaid.ed.gov, using your FSA ID, to get the details.

Federal student loans have a variety of repayment options, including the ones we mentioned earlier: consolidation, income-based repayment programs and, yes, public service student loan forgiveness. You also have the option of deferring your loans or entering a forbearance period, if you qualify. Private student loan companies may also have options like forbearance or refinancing, but they vary by lender and your financial situation.

If you think your standard repayment plan isn’t going to work for you, ask your student loan servicer about your repayment options. For people with a high level of debt relative to their income, programs like Income Based Repayment (IBR), Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE) can help you lower your monthly payments to an affordable level, and after 20 to 25 years of on-time payments, your remaining loan balance may be forgiven (though you may have to pay taxes on that forgiven balance).

In addition to the forgiveness options through IBR, PAYE and REPAYE, you can also consider working in a field that qualifies you for Public Service Loan Forgiveness (PSLF) or an industry-specific loan forgiveness program.

Loan forgiveness programs are available to everyone from Peace Corps and AmeriCorps volunteers to teachers, nurses, doctors and other young professionals serving communities in need. Professionals choosing to work jobs in communities in need may take home lower-paying salaries, but they’ll also get some serious help paying their student loans.

Here’s a roundup of the loan forgiveness programs and volunteer programs available to recent grads and young professionals.

This program repays up to 60% of student loans for registered nurses who agree to work full-time (32 hours or more each week) for two years in a non-profit facility in need of nurses. Nurses that choose to work a third year have the opportunity to repay an additional 25% of their student loans.

Repaying as much as 85% of student loan debt after 3 years is some deal. For more information, visit the website of the Health Resources and Services Administration .

Doctors, nurse practitioners, physician assistants, dentists, dental hygienists and mental health professionals including psychologists, social workers and marriage and family therapists can wipe out a big chunk of their education debt by choosing to work for two years in an underserved community with the National Health Service Corps.

In exchange for two years of full-time employment at a qualified facility, up to $25,000 in student loans will be repaid each year. Further loan repayment is available if you choose to serve beyond the two-year contract.

Teachers who are willing to make a five-year commitment to a school in need can get some much-needed help with their student loans. The richest rewards are reserved for science, math and special education teachers.

Science and math teachers who work in low-income high schools may be able to cancel as much as $17,500 of their federal Stafford loans . This money gets eliminated from a teacher’s loan balance after he or she completes five years of teaching at a designated low-income school.

Special education teachers who work in designated low-income schools for five years may be eligible for as much as $17,500 in loan forgiveness for their federal Stafford loans.

Other full-time teachers working in a designated low-income elementary or high school for five years may be able to cancel as much as $5,000 of their qualified federal loans.

The College Cost Reduction and Access Act of 2007 created a new loan forgiveness program for public service employees. This program requires quite a commitment — 10 years working as a public service professional. But the payoff — the cancellation of all remaining Direct federal loans after 10 years of service and 120 qualifying student loan payments — may be just the incentive a heavily indebted college grad needs to choose a lower-paying, service-oriented career path.

Eligible public service jobs include everything from emergency management, public health and safety and law enforcement to social work, child care, library sciences, public interest law services and jobs serving people with disabilities and the elderly.

To be eligible for this program, you must make 10 years of consecutive, on-time repayments of your federal Direct loans, including Direct consolidation loans. Keep in mind that the standard repayment period for federal student loans is 10 years. If you choose standard repayment for your student loans and keep up with your payments, your student loans will be paid in full in 10 years. You won’t qualify for loan forgiveness because you’ll have no remaining debt left to forgive. Only grads that are eligible for reduced student loan payments, because of very high debt levels or consistently low salaries, would be eligible for this loan forgiveness program. To qualify, they would still need to make 10 years of on-time payments through an income-based or income-contingent repayment plan and work full-time for 10 years in a public-service job.

Public service can also help you with Perkins loan cancellation. Qualified jobs include things like like firefighting, law enforcement, federal public or community defenders, and many others. You can read more about loan cancellation on the Department of Education’s website .

Borrowers who serve full-time in AmeriCorps or Peace Corps positions can also qualify for PSLF. Additionally, Peace Corps volunteers with Perkins loans can cancel as much as 70% of their debt after four years of service. Peace Corps volunteers who complete a two-year term can wipe out 30% of their Perkins loans’ balance. Another 20% can be canceled upon completion of a third and fourth years of service. Federal student loan payments may also be deferred while serving in the Peace Corps.

Other Student Loan Forgiveness

Federal student loans can be canceled in the event of a borrower’s total disability or death and, in rare cases, bankruptcy. Borrowers may also apply for loan cancellation if they were defrauded or if their school closed, preventing them from completing their degree.

In the case of all loan repayment programs, forgiveness and cancellation, nothing is automatic. All programs involve an application process, so if you have questions or need help, reach out to your student loan servicer (helping you is their job), contact the department of education or, if you need additional guidance, consider working with a nonprofit credit counselor or attorney who specializes in student loans.

Lucy Lazarony contributed reporting to this article.

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How can a nurse work fulltime sufficiently take care of their family and do 32 additional 32 hours a week?

It’s not 32 hours on top of a regular work week. It’s simply that you don’t qualify if you only work in nursing part-time.

Gerri Detweiler is correct. 32 hours is the minimum hours you can work and still apply. If you work less than 32 hours…you are part time.

I have a question, I am enrolled at school to obtain a BA in Social Work, I then want to go for my Master’s. Problem is school is becoming way too expensive. I heard about this program and wanted to know if I would be eligible.

We can’t tell you for certain if you are eligible, but the National Association of Social Workers has information about the loan forgiveness programs on its webpage: http://www.socialworkers.org/loanforgiveness/default.asp

Do you have federal student loans? If so I suggest you check out this student loan forgiveness chart which summarizes options. If you can’t get loan forgiveness working specifically as a nurse it sounds like you could be eligible for income-based repayment (if you qualify).

The sad part of this is the income based doesn’t always work. I have more loans than I should, House, truck, car, etc… My loan holder wants more than 180 a month and I don’t have that to give with having insurance (medical/dental/vison). What else can be done. They just keep taxing and adding on penalties. I was jobless for 2 yrs and they just put more debt on me. I didn’t have money to give yet they charged late fee’s. Now I finally have a job and am so far in the hole there is no way out. They just keep burying me in penalties that I cant afford.

I would recommend you get a second opinion from someone other than your servicer. You can get a free consult with Joshua Cohen, the Student Loan Lawyer, or you can visit IBRInfo.com for more information. It has been well documented that servicers don’t always give borrowers complete and accurate advice about their options. That’s not to say there is a program that will definitely work for you, but you do want to make sure you explore all possibilities.

I am 59 and cannot find any full time work that pays more than $11.00 an hour. I am in debt for 70 grand for an MBA from University of Phoenix that doesn’t hold water.

I’m 64 and owe $130K plus. Am on disability and can’t even find a job for more than $8 per hour.

Hey Obama forgave illegals for committing the crime of sneaking into this country the least he could do is forgive the student debt when is less than these blood suckers who are undocumented. Perhaps we can find employment with their criminal selves headed back where they belong.

He doesn’t want to break up families what a crock! He’ll ruin us though.

Are you in Income Based Repayment? If so please check it out. If you are not eligible for it because your student loans are older, you may become eligible within the year because President Obama signed an executive order expanding that program. Under IBR your payments may be as low as $0 and balances will eventually be forgiven.

Would I be able to change a student loan to an IBR loan? What if I have a co-signer?

Income-based Repayment is a payment plan, not a loan. But since you have a cosigner it’s likely you have a private loan not a federal loan. Private loans are not eligible for IBR. If you are not positive though you can visit the National Student Loan Data system which should list any federal loans you have.

I am part native American. I didnt know it made a difference when filing the FASFA. I also thought i had to have proof? Is there anyway to fix this

I’m on a income based repayment plan. I was told 0 payments monthly as long as my income doesn’t change. I meet a particular criteria, which meant I am not required to make monthly payments. I was told from ed financial where all of my loans are consolidated that as long as I am on this ibr and my income doesn’t change for the next 25 years, my loans will be forgiven. I owe roughly 63 grand… The disability parts, well, I can’t say I think it sucks, because I have a job, plus is blindness considered disabled? I’m a single parent raising 3 kids, and the one area I question is public service professional jobs. Would working at a title 1 school count? I was told from ed financial that since I work for a title 1 school, but I’m not a “certified” teacher, nothing can be done, as it relates to forgiveness. 2017 will be my 10th year. I’m looking for options to help me clear my debt of loans just like some of you here, so I welcome any suggestions/thoughts.

yes blindness is a disability, and make sure you check that on your taxes also if it’s yourself.

Hello….There is no forgiveness or even bankruptcy remedies for TAXES! Beware of so-called $0.00 payment plans, You will be liable at the end of the ICRP or IBR (or whatrever they call these jokes of plans) for the TAXES on the loan amount and beware that the interest does not stop. At the end of the 10 or 25 years the loan could be 4 or 5 times the original amount and you WILL OWE THE TAXES on THAT AMOUNT! PERIOD! They do not tell you that! Sallie mae student loan forgiveness after 20 years

Gerri Detweiler is right. Income Based Repayment is the way to go. My $12,000 loans were in some sort of forbearance or deferment for 13 years and grew to almost $20K before I found out about it. But now, based on my income, I owe a payment of $0 per month. You MUST reapply every year however and usually about 3 months before your current time period is up because of the length of time it takes to process the paperwork.

Thanks so much for sharing your story and I am glad it helped.

I’ve been in the IBR for a while now, I guess with me my thought is, eventually it’ll need to be paid, but what if I never make enough money and my required payment stays at $0??

If you continue in the program then eventually the remaining balance will be forgiven.

and the TAXES on a forgiven debt? What about those?

I am in the IBR program and the payment is over $500 because I live alone and the income is too high, so they said. But then, I applied for the loan forgiveness in 10 years because I am Federal Employee and the payment is going up to over $600 a month. That is not helping me at all and I don’t consider that forgiveness because with that payment of over $600 a month in 10 years, all they are forgiving me is the interests, not the loan. Very frustrating.

How much is your income every month? My husband owes about 36K and has been in forbearance and deferment also, but we can never get the payment to $0 per month. HOW do we do it?

Josie – I imagine this commenter is in Income Based Repayment. You must apply and the payment amount will be based on income. You can learn more at IBRinfo.org.

I know student loans can be overwhelming but relying on deferment or forbearance is not a great long-term strategy. I’d encourage you to look into IBR. You may also want to contact a reputable non-profit credit counseling agency that does student loan counseling to explore all your options. Cambridge Credit Counseling, Money Management International and a few others are doing this kind of counseling.

I know why don’t you take a job in the fields like the migrant workers your so worried about, and maybe you can work off your debt that way. Oh by the way I’m sure you wouldn’t last not one day doing such hard labor. You ought to do one thing before you dole out your racism. Look at the face

of all the pan handlers in your community and I bet you won’t see not one brown skinned person in the lot. Why because the would rather work the fields before stooping to beg for money.

Mac – I am editing your comment as we are trying to help people by answering their questions on this blog and not to get into political discussions. The problem of student loan debt dates back a while, and is not at this point a partisan issue.

if they say forgiveness why don’t they just get rid of all the student loans like it says to forgive it i think it is all a lie there is no forgiving at all they make u just consolidate it first for like 50 years!! to a lesser payment thats all there is no forgiveness.

With some of the programs there is actual forgiveness (I have a relative who got all debt forgiven due to work in the medical field in a rural area) but it’s certainly not for all loans.

I applied and was accepted for a rural area program. I have lived and worked in the area for almost a year. Problem is that the state of Kansas accepted me, but the county I live in has no money to help pay their 1/2 share, so the state won’t pay any either. Not fair at all.

That’s really a shame. Have you looked into IBR as an alternative for the time being?

Can you give me some guidance into student loan debt forgiveness for working within a rural area? Where do I start to inquire about the possibilities or how to apply?

What field do you work in? If it’s medical then you want to look into the National Health Services Corp as mentioned in the article.

Does Paramedic qualify?

It’s not listed under the NHSC eligibility guidelines. You may want to check their website for more information.

I had $50+K forgiven last year. I have been totally disabled for 22 yrs. Things started looking good, so went to school, thinking I could go back to work, then everything went to h*** in a handbasket and now am worse off than before, so no work for me. I wrote to Dept. Ed and asked for a disability forgiveness and got it within months. Now, if for some miracle I can work within 3 yrs. my loans come back, but if no work for 3 yrs. then they are totally forgiven.

What was the outcome? Did the relative have to come up with the taxes on the amount forgiven?

In his case the employer also gave additional funds to cover taxes, But you’re right–that can be an issue if someone does not qualify for the insolvency exclusion, usually due to home equity or retirement funds.

You should contact the Department of Education and request information on discharging your debt because you are disabled. I did.

If you have certain types of loans, such as Direct Student Loans, and are totally disabled for a year or more you can apply for forgiveness.

I have been disable for over 2 years. I can’t even pay my rent because of the Social Security Benefit I receives. It is a small amount and sure will seek a loan forgiveness. Thanks for the information.

If your on disability, student loan debt is forgiven.

no it isn’t..the only way it is forgiven on disability is if you are going to DIE from your disability and you have a Dr willing to sign you off as such..

that’s not true. If you are considered permanently and totally disabled, unemployable, then you can have your student loans forgiven, BUT you will also receive a 1099-c and that loan amount is considered income for the year you had it forgiven and you will be taxed on that amount. being on disability can help with the amount you have to pay on an IBR plan but it’s not officially for that reason

Not true… You need to prove it and it is not easy… I was on SSDI and they denied me! I’m looking at doing an Adversary Proceeding as part of a Chapter 7. Beware forgiven debts will result in a TAX obligation, whereas bankrupting for discharge of the loan debt is not taxable.

i thought if u were on disability for 5 yrs then it may be forgiven.

If you have federal student loans and are disabled you can apply for a Total And Permanent Disability (TPD) Discharge. It’s not automatic yet.

same here. I’ve only had just above minimum wage jobs and now I’m unemployed at 57 and my credit is ruined.

Here’s one resource, Pssst…Want to Know The Best Kept Secret In Student Loans? and you can find others by using the search bar at the upper right of any Credit.com page. The loans that are eligible for these programs are federal loans (Stafford, PLUS and others). More information is here: The Ultimate Guide to Student Loans

We’ve emailed you, totherightofleft, and are gathering information about your options.

You may have gotten wrong advice from your servicer about having to make payments while you’re being garnished. It is not uncommon for them to incorrectly advise borrowers. Joshua Cohen, “The Student Loan Lawyer” who we frequently quote in our articles offers a free 15 minute consultation. You may want to take advantage of that to see how you can get back on track. Let us know what happens.

The bigger problem I’m seeing is not so much the Student Loans, but the inability to get a job after college, ESPECIALLY if you are an older adult, that pays enough money to cover the cost of normal living expenses, insurance, servicing the loans, AND having margin for savings. My husband completed his Bachelor’s Degree three years ago and it seems to have only qualified him for the most basic of entry level positions paying about $12 per hour and it is SEASONAL at that. By the time the employer takes out taxes, insurance, and TSP, over 60% of his check is gone. His take home is similar to the kids working for minimum wage with no benefits!

It used to be that a Bachelor’s Degree was your key out of poverty and into the Middle Class. In my opinion, a Bachelor’s Degree is not worth anything more than a high school diploma was worth 30 years ago when I graduated high school. And yet, the cost of that degree has skyrocketed. It just no longer seems like it provides a good return on the investment unless you are going into a specialized field like engineering, medicine, etc.

This has caused us to completely change our approach to our children’s higher education – to the point that we are seeking alternative avenues. We know HVAC guys, plumbers, and welders with just six months of technical education that make over twice what we make, and my husband and I have three jobs each just to cover everything.

Yes, these are exactly the kinds of issues Credit.com contributor Bob Sullivan has been writing about in his series The Restless Project. Here’s one of his articles: U.S. Ranks Only 12th in Well-Being Survey

I agree with you. I have a Bachelors in healthcare administrative and I have not been able to find a job due to the lack of experience I have. I did not push my son to go to college after he finished high school nor will I push my younger son. I have a job but being a single parent can not afford the cost for schooling. OBAMA pushed for people to go back to school to better their education but we are suffering because of it. I spent 4 years in school for nothing except to be in debt and owe the state more money.

Yes the issues are that colleges have increased the costs and there are no jobs for graduates that will provide the salaries required to pay off the HUGE amount of borrowed money to get that degree!

Yep, my husband and I are in the exact same boat. I have had three long-term bouts of unemployment since I graduated college 10 years ago, making paying off my loans very difficult. I’ve worked every job under the sun just to pay my bills. My husband also has loans. We’ve pretty much come to the conclusion that our loan burden is so high that we’ll never be able to afford to have kids and the chance of buying a house is slim. So we’ll be living like broke 20-year-olds until retirement. Pretty awesome.

There is much truth in what you say, but the major does matter. You must focus on the needs of the economy and realize you may still miss. That there is no money after taxes and medical is because like college costs have been driven way beyond reason or need by ” free college loans”, so health care rules now make that much more expensive and required ( young people pay it to cover old people). the government usually makes thing worse, healthcare, college costs, and student loans are a great example.

I, too, am nearly 60 years of age and cannot seem to get above the $27K per year. my debt for student loans is over $50K. I stupidly thought if I got my master’s degree I could get a good paying job. ain’t gonna happen, captain. I cannot afford to make any payments towards student loans, make a car note (that I have to have for the $27K job) and pay insurance for the car. now the government wants to tax me more because I cannot afford health insurance with a $6K deductible per year. after paying bills just to survive, I barely have enough for groceries. where does it all end?

So sorry to hear what you are struggling with. Have you looked into income-based repayment for your student loans?

Janice – if your income dropped you should be able to apply to have your payments readjusted. I know it’s a lot of work to keep up with this but it’s really important you try to use the programs available to you, or you may find yourself in an even more stressful situation. You’ll find more information here. IBRinfo,org.

I am 47 years old. I attended the Art Institute of Fort Lauderdale 2 year program when it was still a trade school. My original loans were less than 18K. I was a young, single mother and had problems making payments. I ask for forbearance often. By 1995 the loans were 26K. I consulted a bankruptcy attorney who told me to consolidate the loans. I did with Sallie Mae. By 2001 the loans were up to 42K. I got married and we made regular payments for nearly 6 years. The loan amount never went down. We were both out of work in 2007 and moved out of state for a job for my husband. We have small children so I got a part time job on the weekends. Even so, we could not make the payments. I made income based repayments for a few years and watched the loan get bigger and bigger. It was up in the 50s when I read about an income based payment where your interest was paid for you for 3 years. I read this on Sallie Mae’s website. I guess I read wrong, because after signing up for the program and paying for a year, the loan was up to 62K.

It broke my heart. I cannot tell you the huge burden I feel with these loans. I have paid over 30K on loans that were originally less than 18K and that were consolidated at 26K. I have worked in my field, but not using the very expensive education I received at AIFL. The year after I left, everything shifted to computers. I had one computer class the whole time I was at AIFL. Everything that I learned there was done by hand. I learned everything on a computer at the first job I got in my field, 4 years after I left AIFL. I had taken a job on the midnight shift to get my foot in the door. I waited and when a job opened up in the Graphics department there, I applied and I got it “because of my personality”. They trained me on how to do computer design.

Anyway, you can get released from every kind of debt that I am aware of, but student loan debt. I would be very, very happy if a judge would simply stop this monster of a loan in it’s tracks – stop the interest – and just let me pay it off. Paying on a loan for years and years and never once making a dent in it, but watching it grow and grow, is horrible. When I saw that the loan had gone up to 62K, I just shut down. I stopped paying. The loan is in collections now and is over 90K. They want me to sign up for the rehab program, but doesn’t that ERASE all my payment history and start me at day one/payment one? When my loan is sold, I am at the mercy of whomever buys it – as far as my payment goes. Is there any hope of loan forgiveness? There is new legislation out or coming out that protects people against schools such as the one that I attended (Art Institutes programs have changed) where they charge you high prices for an education that is not adequate for you to work in the field earning enough to pay back the loans. It does not help me. I need a miracle.

So sorry to hear you’re going through this. We have emailed you.

My daughter is a single Mom w/ 3 children under 10 years of age. She graduated from a private liberal arts college, but owes over $130K in student loans. The problem is that she was ill-advised by her school advisor convincing her that she should take out more loans to live off of rather than just applying for $ for her classes. During her undergraduate years became ill w/ a chronic illness that has passed on to all 3 of her children. Chase has been fined before for predatory lending and she was one of those unfortunately who have loans through Chase. The school will not officially give her the paper degree because she was unable to pay off her loans. She has PHD student loans, but only an undergraduate degree due to poor advice. Chase forgave about 30K of her loan without her requesting it. They just told her they were and sent her a 1099 stating that some of her loan was forgiven and she has to now pay taxes on this forgiven amount. She pays over $300 a week in daycare and works really crazy hours for very little pay. Her babies are in and out of the hospital and most recent one has to get monitored and tested for her heart and Chronic Asthma. Simply put, she is working against herself and I believed she’ s a victim of predatory lending by the school and Chase Bank. What can she do about this. This has totally ruined her credit.

i’d like to see the answer to this specific situation. i am in just the same one.

In a nutshell, it was that stopping payments was a huge mistake. It was possible “karebear” did not understand or had not been told that the remainder of the loan would be forgiven after 25 years of payments on the income-based repayment plan. However, because she gave up and stopped paying, the clock will now re-set when she begins again.

It seems to me that a debtor should be able to get a judge to declare a debt satisfied after the lender has collected an amount far in excess of what was originally borrowed.

So the person or company should not get paid interest on the money you borrowed from them? What if you boorwed the money from som epoor retired person who just trying to get a fair return on the money he saved his entire life. You not paying interest is no fair, you agreed to it when you borrowed it. Choices have consequences.

While that may be true, what I have discovered is that when you have your loans consolidated, you end up actually being charged twice for the loan! I have 2 consolidated loans. When I looks on the US Dept. of Education’s website to look at my loan balance; I see the consolidated loans and what their monthly payment amount is and I see my current loans through the Dept. of Education and those consolidated loans are in there as well! Hence I am being charged twice for one loan.

I am in a similar situation, I had a child that was born with a birth defect. Then my husband was diagnosed with a terminal illness and later died. My $40,000 loan is now over $200,000 after deferment and forbearances. I have worked for 2 state governments for 12 years total but have never been able to pay consistently for 10 years straight. I see no hope in sight!

So very sorry to hear it. We wrote more about this issue in this article:

It varies by the loan. Factors that affect it include whether it’s a federal loan or a private one, and if there was a co-signer. We wrote about it here: What Happens to Student Loans When You Die?

There certainly are downsides but the jury is out yet on the tax issue. I suspect Congress is going to do something about that but you’re right, it’s not guaranteed. And I agree it’s not perfect – there can be downsides for some borrowers, but right now there aren’t many other options for those who truly can’t afford their payments.

You may currently be eligible for the Income Based Repayment program which offers public service loan forgiveness. Visit IBRinfo.org for more information.

Currently this forgiven debt is likely taxable but Congress has not yet indicated whether it will change that.

Have you disputed it with the credit reporting agencies? I’d suggest you do that and supply a copy of the letter with your dispute. A Step-By-Step Guide to Disputing Credit Report Mistakes

Cathy – I am not aware of a director that lists student loan forgiveness opportunities in every community. I believe you’ll have to do some digging for that. And I don’t understand the second part of your question. Can you try restating it?

The original loan was from a technical school and due to interest has gone way up taking his entire IRS refund at the end of each year. He has no information on this loan. How does one get information on something that was 15 years ago and is there a forgiveness program for technical schools.

OK one more question. Is it a federal or private student loan. Tell him to get into the National Student Loan Data System to see what he can find out about the loan.

Start at the National Student Loan Data System. You should find information there about your options for your loans. Let us know what happens!

Thank you so much for the information.

Please contact an attorney with experience in student loan issues asap. You can find one via The Student Loan Lawyer website.

Where do I apply?

There are links in the stories to the various programs. You’ll have to go directly to the program you believe you qualify for. Otherwise you can go to IBRinfo.org to learn how to apply for income-based repayment.

The income based payment program is a finger in the leaking dike stop gap measure because when your loan IS forgiven After 25 yrs of payments, you Must pay Income Tax on the forgiven amount, which will be 3 times your balance of today. Say you have 100k in debt. Your balance Increases each yr because you are not even paying the interest due. In 25 yrs, the debt will increase to over 300k, and you will owe TAX on 300k , all in one yr. ! That will be at least 100k itself.

I have been paying on my student loan going on 9 yrs. because the interest rate is so high. I feel like I haven’t touched it. I have asked them to reduce the interest but they won’t! Its ridiculous that there are people out there that care more about money than helping their fellow human being.

Is it a federal student loan? If so I’d recommend you at least look into Income-based Repayment. Please read: Pssst…Want to Know The Best Kept Secret In Student Loans?

Don’t believe the hype on the Americorp Service “Award.” Know that you are heavily taxed once you use the “award” that you gain for doing your service for poverty wages.

i am 32 and will be graduating in May 2015 with a doctorate in physical therapy. my student loan/s over the last 10 years (involving deferments and unsubsidized interest) are now at about $180,000. i read about some loan forgiveness programs for serving in rural and impoverished areas but none of them mentioned physical therapists, only doctors, dentists, phys. assists., etc. is there a loan reduction program inclusive of physical therapists?

Unfortunately we do not catalog all student loan forgiveness programs. One site that does collect details on various programs is Student Loan Hero. http://studentloanhero.com

Good luck in finding forgiveness or repayment programs that will work for you.

What do you mean when you say you are in payment forgiveness? Which program are you in? Income-based repayment? If so in IBR the balance is forgiven after 10, 20 or 25 years.

I applied for income based due to low income, they said I do not have to pay for a year. I need to reapply every year. I am on Social Security so my income will never go up. The question is how long will this continue until they write it off or tell me to apply for forgiveness?

It will take 10 years of paying $0.00 a month.

Richard – Have you asked the servicer? Generally under IBR loan forgiveness occurs after 25 years of payments, unless you qualify for public service loan forgiveness (10 years) but that requires that you work in a qualifying public service job and it sounds like you are not working. If you are disabled you could consider applying for a disability discharge but keep in mind there could be tax consequences if your debt is discharged due to total and permanent disability.

“applying for a disability discharge but keep in mind there could be tax consequences if your debt is discharged due to total and permanent disability.”

Note: IF it is Due to Total and Permanent Disability filing and after (3) Three year monitoring period you have met the requirements set forth in their agreement , You will Not have Taxes to pay on the forgiven Student Loans (SL) as there is an IRS form to fill out Due to Below Poverty / Total and Permanent Disability that you could Not pay the SL Nor the Taxes that would be assessed with them . I just went through this this Year .

What form did you fill out that excused taxes on the forgiveness of debt?

No there is no way to avoid the taxes. It is a Non-forgivableNon-forgivable tax.

If the taxpayer qualified, he or she can claim the insolvency exclusion. We explain that here: Just Received a 1099-C? Don’t Freak Out!

Talk to a tax expert about rules for exempting 1099-C taxability. You MAY be ab le to avoid taxes on amount forgiven.

Absolutely. We’ve written extensively about that topic here on the Credit.com blog:

I owe over $50k and have usually gotten forebearance, although I should have applied for IBR (on my to-do list, I’m super busy because in 1 mo. we will have zero $ to our name).

QUESTION: my husband applied for disability and will most likely get it (hopefully in a couple months, fingers crossed). Will that make ME eligible for disability discharge even if I’m not the one with the disability.

I know that sounds like a ridiculous ? but hey, if I die, he acquired my debt, right? And since we’re a household UNIT (and live where there are no jobs)…

Btw, I do help care for him, but not in an official status, and he is able to do a lot more around the house than he could a couple months ago, yet he’s still disabled.

No. Go get a job if you aren’t disabled…

How incredibly narrow-minded and shallow of you. And you came here to tell people how to run their lives because…yours is so wonderful? You obviously didn’t see how I “live where there are no jobs”. That means I would have to travel a long ways to get one or commute. Hello. Unless you did see it and like to feel important by judging others with little knowledge of their situation. I actually slave all day on the computer attempting to get income online (proofreading, ecommerce, IM, etc.).

Thats what i had to do to pay back the money i borrowed. That is life. I didn’t think the student loan program was offered by Santa Claus.

Your ignorance astounds me. Do you not see statistics of the unemployment rate and how so many people are looking for work and can’t find work? Some people live in remote areas, where jobs are a long ways away, and pay very little. One is lucky to get a minimum wage job where I live, and that would only pay for rent, gas to drive an hour one way to work, and day care. I’d have nothing left over. I’m earning some money online, though (ecommerce, internet marketing, small jobs on fiverr and odesk, etc.) without having to pay childcare, gas, etc…so at least I have a little left over.

How do you get a 10 year ibr?

10 year forgiveness applies to Public Service Loan Forgiveness. Please read: Public Service Loan Forgiveness FAQs

I graduate since December 2014, want a job but don’t get it and I have over 60k. What can I do?

Marg – If these are federal loans, you may want to look into Income-based Repayment. It could lower your payment to zero while you look for work.

I am a sahm and my $10,000 of loans have pretty much been in forbearance the entire time. I graduated in 2010, worked for about a year then had to leave my job due to complications in my pregnancy. I have not worked since 2011. My forbearance just ended should I apply for another deference or try for the income based repayment? I personally have no income however my husband is working. I can’t afford to pay for any of it at the moment.

I am a Social Security disability lawyer and I also represent student loan borrowers so I have seen this issue before.

One argument that the Turners can use to avoid income tax liability is the insolvency exception. Basically this IRS provision says that a discharge of indebtedness is not taxable if the forgiveness occurred when the taxpayer was insolvent. If this is applicable the Turners would need to fill out IRS form 982.

On the instructions to Form 982 the IRS describes “insolvent” as follows: “you were insolvent to the extent that your liabilities exceeded the fair market value of your assets immediately before the discharge” and it refers to IRS publication 4681 for more about the insolvency calculation.

If the insolvency exception does not apply I wonder if the Turners could reduce or eliminate tax liability because their gross income includes SSDI money. SSDI income may or may not be taxable depending on the total household income. This is a situation where the Turners should consult a tax advisor to determine the starting point for the debt forgiveness tax calculation.

I am afraid I don’t really understand what you are asking about paying it all back in one shot. It sounds like you have federal student loans and Navient is the servicer for those loans (collecting payments on behalf of the federal government). Have you visited the website of the National Student Loan Data System to get information about your loans? It should list all your federal student loans and the repayment terms.

I would suggest you start there. After you have done that if you can be more specific about your questions perhaps we can help provide some direction.

I want to do Income Based Repayment. Do I have to go through a “broker.” Why do I have pay $1000 for a company to do IBR? My loan is with the Dept of Ed, so I don’t have a bank to call.

You absolutely don’t have to pay anyone for this. As it’s explained at IBRInfo.org: “To apply for IBR, borrowers can log in at Studentloans.gov, enter their personal information into the Electronic IBR Application, authorize a transfer of their tax information using the IRS Data Retrieval Tool, and review, electronically sign and submit the completed form online.”

Hope that helps Dee! Let us know.

Where do you apply for these benefits?

It depends on which one(s) you think you qualify for. There are links in the story. If you don’t qualify for any of those you can check into Income-based Repayment at IBRinfo.org.

The only program I think I would qualify for is the Volunteer one. However I did not find a link for that particular one.

Rhonda – what about IBR? That’s much more accommodating and your payment can be as little as zero depending on your income.

Have you checked into IBR? Your payments may be as low as $0 under that program.

Bethany – we have deleted the company name per our community guidelines. But we encourage you to consider doing this yourself. You can do it for free and it sounds like that’s money you could really use for other purposes. It’s not that hard to apply for Income-based repayment! You’ll find instructions and lots of good info at IBRinfo.org. This is really important for your financial future; I’d encourage you to take the time to take advantage of it.

RE: Loan Forgiveness for Teachers… Only $17,500 for 5 years?! Really?? That’s less than $4,000 per year! They make it sound like a bargain. But you can just get a job that pays far more than that and pay off your debt sooner.

In 1972 I received a Student loan for $2,700.00. I am now 70 and am a left below knee amputee. I am on social security and am medically permanently disabled. Do I still need to pay the loan ?

Is this a private or federal student loan? If you aren’t sure see if you can find it in the National Student Loan Data System. If it’s a private student loan it may be out of the statute of limitations. They can try to collect but there may not be a whole lot they can do if you don’t pay. Federal student loans don’t have a statute of limitations but you may be able to get a disability discharge. The first step is to find out what kind of loans you have.

Thank you so much Gerri. It is in the NSLD System because I tried to apply for a Pell Grant in 2013 but I was denied because of the unpaid loan from 1972.

Then it sounds like you may need to apply for a disability discharge.

Thank you so much again Gerri.

Sure. Let us know how it turns out for you.

Is there not much hope for $100k in private loans then? I heard you can discharge private loan amounts over and above the actual tuition paid.

We are not lawyers, and in this case, because you have already tried to handle this yourselves and it hasn’t been effective, it sounds like it’s time to consult a consumer law attorney to get this resolved. You can find names at NACBA,

the National Association of Consumer Advocates website.

Here is information from the IBRinfo.org website:

“I am making PSLF-eligible payments on my undergraduate loans. If I take out more loans to go back to school, will those loans also qualify for PSLF?

… be aware that if you choose to consolidate your old loans with your new loans, you would then have one big “new” loan, causing the PSLF clock to start over and any PSLF-eligible payments you made on your undergraduate loans before consolidating would no longer count toward the 120 required PSLF payments.”

The only time you can claim student loans in bankruptcy is if they are garnishing wages and you can claim they are causing a fiscal hardship. This is always an option if you are in this position. The problem is bankruptcy itself is an expensive process as well. I can easily cost you thousands of dollars for a bankruptcy lawyer and they do not really do payment plans. Intensely the reason they garnish your pay checks 15% is because that is what the government considers your expendable income. Most student loan providers will try and get you on some sort of payment program before it goes to garnishment because of this fact. Don’t get me wrong even after a bankruptcy you still technically owe them that money they just can’t legally make you pay it anymore. This is a pretty extreme measure though. Really the best bet for most people is IBR (income base repayment). The great thing about this is depending on when you got the loan it will be forgiven after 10, 20, or 25 years. You do have to report your income to them once a year. One complaint that people on here make is that they see their loan grow year after year on this plan. The truth is most providers show this growth. In my opinion this is on purpose so that you will laps in renewing the repayment plan and make payments on it or give up because you don’t think it is doing anything. DON’T LAPS. If you do the time frame starts over. They want this to happen because they have a better chance of getting more money from you. The other thing is the loans cannot be in default in order to qualify.

if they in default they don’t qualify but if you do default and complete a federal Student Loan rehabilitation program after 9 months then they will become Eligible for the IBR again…

Much as we’d like to help, it sounds like what you really need is a good lawyer. You could also consider filing a complaint with the Consumer Financial Protection Bureau.

For IBR, will this always be based off all wages? I was thinking of getting a part time job to catch up on bills this year, but am afraid that will make next years payments more per month.

After reading much of this blog all I can say is you better obtain a degree in a field that has excellent job prospects before you obligate yourself to high dollar student loans. Good Luck.

I have roughly 60,000 in student debt from attending school for my bachelor’s. My husband is military and we are stationed overseas where work is almost non existent. I have loans through SallieMae (now Navient), Wellsfargo, and SallieMae federal financial aid.

When I tried to combine all of the loans my monthly payment actually ended up being more for the 15 years.

We are paying roughly $600 a month and I cannot work here. I don’t want to my loans in a deferment because of the interest stacking up.

What’s my best option at this point?

this article sounds good on paper, but when applied to reality, it doesn’t hold an ounce of water….kind of like a politician, tell them what they want to hear, even though it doesn’t make any sense.

most of the common folks that are indebted to Uncle Sam for student loans, can not find a job that pays enough to survive on, let alone live on…and that is without the debt of a student loan.

Those of us(such as myself) who are disabled, do not have a prayer in Heaven or hell of ever paying back what we owe….

Yet, our fine & wonderful gov’t.,(cough, hack, cough), is always pushing to take away from us what we do not have, & will make our lives harder than they are already.

I am 39 yrs old with three kids and one on the way. After all these years I recently had my student loan go into Default. I was on a payment arrangement to get out of default in 2013 , i became unemployed beginning of 2014. I m in a pickle and not quite sure on how to get out of it?!

Check into income-based repayment.

Hello, I have a Federal Student Loan of $24,000 and then 2 private student loans: one of $24,000 and the other $13,000. Currently, I make $23,000 a year and have never missed a payment on my student loans because they are my first priority. However, my federal student loan is starting to become a problem. I’m on the plan where the payment increases every 2 years with the loan pay off being two years. Next year my ONE federal loan payment will go up to $345 then in two years $450 and the last year $550. I can’t afford to pay that much on one student loan when I have 2 more that are consistent. I have been thinking about the Income Based Program but I’m scared of the negative effects. Will applying for this program effect my credit? I’m nervous about the taxes I will have to pay if it does get forgiven in 25 years if my situation does not improve. Plus, when I talk to my Federal Student Loan Company they always seem negative about the plan and advise me to make that my last resort, stating that I will NEVER be able to pay off the loan if I switch to the Income Based Program. What is you advise?

This is indentured servitude. I feel sorry for anyone that has such debt at a young age.. We as a country will pay for this misguided program and comfy relationship between our government and colleges.

I have been on $0 payment for 2 years now on IBR. If I continue at $0 for years, does this count towards the years of eventually getting my debt forgiven? Does that mean that if one cannot ever afford to pay, all these loans will eventually be all forgive even if the person never paid a dime? Does this apply Department of Education Loans and Federal Loans? I pay an arm and a leg right now to my private loans and there’s no flexibility with them.

If you continue to qualify for a $0 payment on your federal loans and continue in the program you may have them all forgiven. If you work in public service you must make 120 qualifying payments. If not, balances are forgiven after 20 or 25 years, depending on which program you are in. You’ll find more details at IBRInfo.org.

My loans go back to 1996. I can only make one or two payments per year of $264. How can I pay down these loans?

It’s hard to know. You could investigate income-based repayment, possibly, if these are federal loans.

What if you were on disability when you went to college. How do get debt forgiveness with a family of three and only making 24 000 a year.

Do you have federal student loans? If so have you applied for a disability discharge? If you don’t qualify for one you can look into Income Based Repayment (IBR).

I’m 58 yrs old, started with $43,000 student loan debt. I deferred for probably 12 years as a single parent… my loan debt grew to $58,000– I started repaying with monthly payments of $451… but because interest accrues daily even in repayment, even with a steady on-time payment the balance keeps growing– it’s Very Discouraging. and may I say Disgusting….. I am a teacher, and I work in a district that is 75% or more free & reduced — but my loans were taken out before a certain year and I cannot qualify the the current loan forgiveness program the President put into place(which would be $17,000 I believe). My balance is now at $65,000 and I don’t know how to get this off my back. I’m starting to feel desperate….. and am considering selling my house to get out of this debt. I am working full time, but I’m not getting any younger, and I need a new car but with the monthly payment for student loans, I’m worried about a car payment also. Any suggestions would be welcomed!

I graduated from a “Top 100 Best-Value” school in the country with “only” 55.000$ in debt (a lot less than most people I know.) In 2005. In the past ten years, I have held 3 different jobs related to my field of study. All three were either part time, seasonal AND/OR 1$ over minimum wage. BUT, all 3 STILL REQUIRED A COLLEGE DEGREE! The reality is, I am 32 years old, I have 2 kids, a husband who also has student loans, 1 junker car, and living in a 500$/month rental, pay-check to pay-check, because THIS is all we can afford. We both had no choice to default on our loans and now are making the minimum payments. Bottom line: The cost of higher education in America is OUT OF CONTROL. What needs to happen is an overhaul of the cost/vaule of college or this will keep getting worse and worse, as evidenced below. Especially if they keep doing things like garnishing wages (which are so low, they are literally taking food out of my children’s mouths when they do that,) suspending drivers licenses, AND even suspending professional licenses (from truck drivers to doctors to cosmetologists.) It is not that we don’t WANT to pay them back as fast as possible, BUT, the economy is awful, and right now, my husband and I are choosing to pay back our loans rather than save for our kids college, go on vacation, buy a house, etc. Thanks, American education system!