Getting Ride of Your Student Loan

With college fees rising up & Business schools becoming expensive, professional education is becoming more and dearer with each passing day. Hence students opt to take education loans either for a complete degree or on a semester basis. It has been noticed that managing the repayment of education loan is difficult at times for the passed out students. A survey shows that there are many cases when the education loan payment exceeds their original cost. One can opt for forbearance or deferment but anyway the loan has to be repaid since these options are only temporary solutions. They do not close down the loan.

Unlike other debts, student loan is not discharged if one declares bankruptcy, so the individual still holds the liability to pay off the student loan. Disposing of the education loan is necessary to fetch other loans in future. Because default of a loan is a bad option one can opt for as it will tarnish the financial records of the individual that will absolutely bar that person to get any loans for future usage. But there are certain methods by which one can legally dispose off the debts or take them off from your financial records.

The details of the method are briefed below:

• When the debtor is dead or 100% disabled then the debtors or their heirs are not liable to pay off the student loan. It is necessary that the debtor’s family has the information about the fact that the student loan gets waived off in case the debtors dies suddenly. Otherwise if the debtor has faced an accident or facing a long term illness which does not allow him or her to work then also the loan gets discharged as per certain guidelines.
• In case the education institution closes before the debtor’s course or degree is complete, then the debtor does not stand responsible to pay off the loan. The loan stands cancelled fully and his or her credit report becomes clean
• The debtors can enroll in Peace Corps VISTA or can teach in a low income school for five years who are paid in nuts for teaching. Above this, these schools or Peace Corps provides you with a pay of 15% of the loaned amount each year as part of the program. This 15% directly goes to the loan agency hence there is part pay off of the loan. So the debtor can have some peace of mind.
• Though student loan is not dischargeable if one declares bankruptcy but one can request for a special “hardship hearing” where one can explain to the judge that repaying the debt would become an undue hardship on you. Only a small percentage of debtors get waiver through this mode.
• If one can prove that the school or college they have passed out have done a “False Certification” by saying that the course or the degree will benefit the individual but the promises are being fraudulent then one can get their loan discharged under certain guidelines.

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Who Qualifies For Student Loan Forgiveness?

The flip-side of student loan

Everybody needs a good and effective education to lead a happy and wealthy life. Education is an aspect of a person’s life that one cannot ignore or be careless about it. The higher a person grows in his education ladder, the more he has to pay to afford it. More and more students are turning to financial institutions that provide educational loans at lower interest rates. Easy availability of student loans has paved the way for University aspirants to pursue their dreams and achieve their goal. There are numerous organizations that provide student loans to candidates who are willing to borrow money from them in order to pay the university charges and related expenditures. Professional courses are extremely expensive and arranging funds for such courses requires meritorious students enroll for scholarship programs. Despite this a student is often burdened by increasing debt amount which can put a student at the risk of becoming a defaulter. Today, American economy is facing too many crisis and bad debts are adding to this already bad situation. The federal government has come up with plans to control the increasing student loan debt by offering concessions to those who qualifies for student loan forgiveness.

Exemption from repayment

Those who have taken direct loans from the federal government are exempted from paying their interest amount while they are still enrolled to a university. Upon completion of study the student can avail additional grace period of six months before he starts repayment. With the current amendment if a student is working for public or nonprofit employer he or she can get the benefit of Public Service Loan Forgiveness (PSLF). Only direct loans are considered for this program and all the loans taken under Federal Family Education Loan (FFEL) schemes have to be converted into direct loan. Since FFEL has been abolished and the estimated outstanding loan amount is close to $400 billion, government has been trying to provide waiver to the borrowers in order to recover some portion of the bad debt. Newly amended plan targets borrowers who are at greater risks of becoming a defaulter due to multiple loans which require separate monthly payment of interest amount. Incase FFEL is converted into direct loan; the borrower has to make a single monthly payment reducing the chances of nonpayment. When a student has only one loan to pay he enjoys additional benefit of interest rate reduction, which is up to 0.25%. In case the payment is made through Department’s automatic debit system a student can benefit from further reduction of rate of interest.

Income Based Payment

Keeping in mind the economic down slide, the federal government has brought about several amendments in its current policies. A fact that, a student may fail to find a well paid job even after completing professional training is extremely disheartening. In the wake of sluggish market trend many loan borrower fail to repay their debt amount. This new policy allows a professional to pay a maximum of 15% of his/her discretionary income and provide forgiveness after 20 years. All these steps are directed towards helping the students and troubled economic situation..