Student load debt is becoming an increasingly big problem for consumers across the country. With the high price of tuition, it is quite common, almost necessary, for the majority of students seeking higher education to incur some student loans. If you are lucky enough to land a good job post-graduation, you may not have a problem with repaying your student loans per the terms of your original agreement with the lender. However, as discussed in previous blog posts here on the Bond and Botes website, student loan repayment is becoming an increasing problem for many Americans and can be quite burdensome. There are, however, a number of options available to help you with repayment of your Federal student loans if you are in bind with student loan repayment.
Repayment Options for Student Loans
The Consumer Protection Financial Bureau has recently launched the “Payback Playbook” that outlines some affordable repayment options for student loans. These options include payment plans that can span up to nearly 20 years and some plans up to 30 years. Some of the repayment options include,
Income Based Repayment Plan (IBR)
I have noticed this plan seems to be very popular. On this plan your payment may be 10-15% of discretionary income with payments to be recalculated every year based on updated budget and household information. If you have not paid your debt in full after 25 years, the remaining balance will be forgiven
Income Contingent Repayment Plan (ICR)
Under this option your payments will the lesser of 20% of your discretionary income or the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income. Any unpaid balance that reaches 25 years, is forgiven.
Income Sensitive Repayment Plan
Your payment is based on annual income.
Pay As You Earn Repayment Plan (PAYE)
Here, your maximum monthly payment will be 10% of discretionary income with any unpaid balance to be forgiven after 20 years.
Revised Pay as You Earn Repayment Plan (REPAYE)
Your payment will be 10% of discretionary income with balances forgiven at the expiration of either 20 or 25 years.
These plans are in addition to the standard, graduated and extended repayment plan also available. You may even be in a position, due to your health or your employment, to receive student loan forgiveness, cancellation or hardship discharge. You can learn more about these repayment option at the Federal Student Aid website.
One other piece of advice from our lawyers: NEVER EVER get a private student loan from a private lender. If you need a student loan, make sure you ONLY get a student loan from the U.S. Department of Education. There is no reason to involve a “middleman” who will make money off of you. If you have difficulty making your student loan payments, it is MUCH EASIER to work with the U.S. Department of Education on a repayment plan than it is with a private student loan. Again, just to be clear, our advice is to NEVER get a student loan from a private student loan lender and to ONLY get a student loan from the U.S. Department of Education. This bit of free advice will potentially save you thousands and thousands of dollars and bad credit down the road.
If you are struggling with student loan debt, I encourage you to check out these options and try to get your payments on track before you receive a wage levy or tax refund offset in order to pay student loans. Although, most student loan debt is non-dischargeable in Bankruptcy, our attorneys may still have options for you, especially if you are facing a wage levy or tax refund offset. Please call our office nearest you today for a free consultation with one of our attorneys.
Amy K Tanner is a shareholder in several of the Bond & Botes Law Offices. She holds a Bachelor of Science from Auburn University at Montgomery, and a Juris Doctorate from Thomas Goode Jones School of Law. She focuses primarily on consumer bankruptcy law in the Huntsville and Decatur offices.Read her full bio here.