Get Relief from Student Loans
Illinois Lawyer for Student Loan Work Outs
Most people believe there is nothing that can be done to get relief from
student loan debt. This is simply not true. There are a number of options
available to assist student loan borrowers. Unfortunately, much of this
has not been highly publicized so most borrowers are left in the dark.
Also, schools tend to do a poor job of counseling and preparing students
to meet demanding repayment obligations.
Learn about your options - call (312) 544-0365 now!
When a borrower calls her student loan lender for help, there is often
more confusion and all repayment options are not explored. The borrower
is then left frustrated and either seeks a deferment or forbearance (if
available), struggles to make the high monthly payments, or simply doesn't
pay and slides into default.
Federal Student Loans
Defaulting on student loans is bad, especially if they are federal loans.
Federal loans are one of three types of student loans (Federal, Private, and State).
What make a loan a federal loan is that the United States Department of
Education guarantees (insures) the loan. A federal loan is deemed in default
if it is 270 days late. Once in default, the entire balance of loan is
due and debt collectors become involved. The greatest concern for most
borrowers with a defaulted loan is the large jump in the balance. The
balance increases because of collection fees, which can be as high as
25% of the loan's balance. Federal loans also give the lender the
ability to use an administrative wage garnishment (AWG) to collect on
a defaulted loan. Up to 15% of a person's disposable income may be
The nasty thing about AWGs is that the lender
does not have to file a law suit and get a judgment first. This is an administrative
remedy – no legal action needs to be initiated. Borrowers in default
on federal loans may also have their tax refunds intercepted, social security
payments offset, and find themselves in litigation with the Department
of Justice. Federal employees in default can have as much as 15% of their
pay offset. Borrowers with Federal or State licenses (doctors, lawyers,
real estate professionals) may find their licenses in jeopardy.
The good news about federal loans is that they have the most options and
borrower rights. In addition to a deferment and forbearance, there are
options that allow borrowers to consolidate, repay based on income, rehabilitate
a defaulted loan, have the loan forgiven, and have the loan administratively
discharged. Again, most of these options are never explained to borrowers.
Student Loans from Private Lenders
Private student loans originate from
private lenders and are not guaranteed (insured) by the government. So, none of the remedies
discussed above are available for private loans. State law governs the
enforcement of these loans. So, a statute of limitations will likely come
into play as will any available state law remedies or defenses. Generally,
enforcing a private loan is no different than enforcing credit card debt.
One big difference between credit card debt and private student loans is
that private loans are generally not dischargeable in bankruptcy. A chapter
13 bankruptcy (essentially a consolidation of your debts) may be used
to make affordable payments on private loans for up to five years. Any
remaining private loan balance will not be discharged and will survive
the chapter 13 bankruptcy. Chapter 13 for private loans is not a solution;
it's more about financial management and staying out of litigation.
State Student Loans
State loans originate from agencies created by the State. These agencies
are quasi-governmental. Not every State offers these loans and States
that offer them often administer them differently. So, it isn't easy
to say what remedies, defenses, or repayment options are available for
these loans. Some States can intercept State tax refunds. Some States
offer no ability to cure a defaulted loan. Also, interest rates for these
loans tend to be higher than Federal loans and are comparable to rates
for private loans. Quite frankly, the only substantive difference between
State and private loans is the disbursement process.
If you are having trouble paying your student loans or are just looking
for clarity, please feel free to
give me a call at 312-544-0365 or fill out an online case evaluation form.