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Fazzio Law Offices

Student Loan Law

You do not have to live in debt slavery anymore.  We have been there and we know the road and the journey to get free of student debt.  It is not an easy journey, but as the saying goes, “a journey of a thousand miles begins with a single step.”  And that first step is reading this short overview and signing up for our e-mail list below. 

The Student Loan Borrower Dilemma

Is this you?

  • Are you receiving calls from debt collectors?
  • Being threatened with wage garnishment, social security offset, or tax refund offset?
  • Being sued for a student loan?
  • In default but not sure how to get out?
  • Unable to afford your current minimum payment?
  • Wondering if you qualify for a discharge?
  • Thinking about bankruptcy?

The Personal Toll of Student Debt

We know how you feel.  Student loans can be overwhelming and make you feel hopeless. Rather than planning for your future, you feel that you have to put off marriage, put out of mind your dream of having children, and forego home ownership until your loans are paid off. Savings. Retirement. Investments. A college fund. When you hear people talking about these things at a cocktail party, you cringe. These are not realities for you.

Unless you win the lottery, it seems that default and collections is inevitable. You feel stressed to the brink. You never get a day off from being a student loan borrower. Going on vacation or paying a visit to friends and family is something that leaves you feeling guilty and fatigued rather than recharged. Your life is on hold.

Student loan payments are a very personal thing. There is no pat on the back for paying and this is after-tax money – you could own a home for the amount of money that is flying out the door. If you are making your payments, they are barely putting a dent in your loan balance. If you have missed your payments, you receive continuous calls and harassment from your servicer.  Co-signors, friends and family may be getting these calls as well. But, this is no oversight – you didn’t forget to send the payment – you are well aware of the problem. It keeps you up every night.

The Question of What to Do About Your Payments

Are you in default or facing default? Have your wages been garnished? Have your federal or state tax refunds been seized? Has your debt been reported to a professional licensing organization? Do you have a student loan lawsuit pending in state court?

Perhaps, you are an attorney with average student loan debt of $125,000 or a dentist with average student loan debt of $241,097. Maybe you are a pharmacist with average student loan debt of $160,000 or a veterinarian with average student loan debt of $140,000. The situation seems helpless.

But, you do not have to live in debt slavery. Trust me. I have been through this journey myself, and I can tell you that there is a path to financial freedom.

The Options Available to You?

Federal and private student loans. Repayment options. Extended, Graduated, Income-driven. IDR. Default. Forbearance. Rehabilitation. Deferral.  Consolidation. Income-based vs. Income-contingent. Re-financing with Sofi, SplashFinancial, Credible or LendKey.

Student loans have a lot of “terminology” and come with many “options.”

But, as with any problem, you need to analyze those options and come up with a plan to achieve the outcome you want. 

There are Seven (7) Basic Repayment Options for dealing with federal student debt:

  1. Standard Repayment Plan (high monthly payment / lower terms)
  2. Graduated Repayment Plan
  3. Extended Standard Repayment Plan
  4. Extended Graduated Repayment Plan
  5. Income-based Repayment Plan (IBR)
    1. 10% of discretionary income plan (loans post-2014)
    2. 15% of discretionary income plan (loans pre-2014)
  6. Pay as You Earn (PAYE) – post-2017 grads
    1. Have to qualify by income
    2. Lower of 10% of discretionary income or amount under standard plan
  7. Revised Pay as You Earn (REPAYE)
    1. 10% of discretionary income (no income qualification) – loan forgiveness after 20 years for undergrads or after 25 years for grads
    2. Uses spouse’s income in calculation of payment

See https://studentloans.gov/myDirectLoan/repaymentEstimator.action

Private student loan debt is a different animal.  There is no income-based repayment and no loan forgiveness.  For a great summary of how private student loan workouts operate click here!  Private student loan repayment terms generally range from 7-15 years but can be extended to 30 years.  Interest can be fixed or variable rate.  Some lenders offer interest-only repayment options.

  1. Option 1 – Workout: The best option is to get an interest-only or extended repayment plan or a period of forbearance, in order to avoid a default of the loan or negative repayment history.  Why?  It is in your best interests to protect your credit score and avoid credit reporting of missed payments and default, which will negatively impact your credit score going forward.  Many student loan lenders will not work out such options and will instead take aggressive collection action right from the outset.  Since private student loan lenders are at the bottom of the barrel with regard to their collection tactics and practices.
  2. Option 2 – Re-finance: Increasingly, there are new market participants who will give you the money to pay off your federal/private student loan payments in full and to get into a new lending relationship.  The new vanguard of student loan companies are hungry for your business, offer much lower interest rates, and are looking to guide you into their other products and services.  Their business model is completely different and they are not aiming at bullying you into doing something you cannot do, but rather to working with you and helping you to solve your problem.

Credit Score Repair – to dig out from under student loan debt by re-financing, you will have to improve your credit profile and  demonstrate financial responsibility. Even with negative remarks and problematic credit issues, you can repair your credit score. You can use services like Lexington Law to get negative items off your credit. You can also establish credit by getting additional credit and beginning to pay down your cards, keeping a high available balance.  The more credit you get and use responsibly, the higher your credit score.

Hitting a Moving Target – Do you need a guide?

Unfortunately, life never proceeds in a straight-line from Point A to Point B.

Solving a student loan problem is like trying to hit a moving target. Your income doesn’t stay static. At one point you are single and working for a low starting salary, with one source of income. At another point you may have a family and fixed commitments, but a higher salary or multiple streams of income, including variable or commission-based periodic compensation.  Even if you have budget carefully, things come up and life happens. Your best friend gets married – and it is a destination wedding.  Your parent or sibling loses their job and needs financial support. Or worse yet, you or your spouse get sick and are saddled with medical bills.

Perhaps, you lose your job, get a divorce, go bankrupt or go through a foreclosure.

In all of these scenarios, your “plan” will need to be modified to reflect these realities of life. None of these life events has to be a wall that stops you in your tracks.

Student loan companies, like mortgage companies, expect regular monthly payments. They do not set up their programs so that you pay “what you can” or “pay adjustably.”

Why You Need an Expert Guide

One night I went on a trail run in January on a 19 degree night out on the Watchung Reservation and got lost in the woods. It was freezing. My phone died from the extreme cold. My battery-powered head lamp ran out of juice.  I couldn’t read the trail markings or navigate in any reasonable way. I literally had no idea which direction I was going on the path. I was lost!

If you have ever been lost in the woods, you know this feeling. A pit forms in the bottom of your stomach. Terror sets in. On a frigid night in pitch dark blackness, the feeling is even more palpable. 

Terrible thoughts took hold. Was I going to die? Freeze to death? Walk all night to stay warm only to collapse from exhaustion?

It turns out I was only a few hundred yards – maybe a football stadium distance – away from the road where my car was parked. Life is ironic that way.

But, it took two hours to find my way out.

Many times, what separates us from our destination is not the epic journey we make it out to be in our minds. Rather, what we seek is often just around the bend but out of sight.

That is where a guide comes in.  A guide can get you from where you are to where you want to be without experiencing the stress of wrong turns, dead-end roads, and fear of the unknown.

What I experienced that night was anxiety, racing thoughts, pain, panic and terror. Hopelessness briefly set in. And as much as the jubilation of finding my car gave me a thrill and reshaped my perspective – still; it is definitely not an experience I’d like to relive and I wish I had simply had arrows pointing me home and avoided the ordeal. I wish I'd had a guide.

The Job of the Student Loan Lawyer

Why do people that go on safari, travel the Amazon, or hike in alpine regions (like Mt. Everest) hire a guide? These people know the terrain. They know where they are and where the destination is. They can point you in the right direction and encourage you as you go along.  These people have dealt with all of the problems and inconveniences that arise along the way.  Torrential weather?  They know how to set up camp or seek shelter.  Injury? They know how to treat and manage. Detour? They know the best route to get back on the trail.

Dealing with crushing student loan debt is no different than embarking on a dangerous expedition. You need to plot a course to your destination and adjust as situations develop along the way. We can be your guide and assist you with the process.

Blog for Student Loan Law