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Category Archives: Student Loans
Americans are facing the most dire financial situation since the opening days of the Great Recession in 2008. In fact, Goldman Sachs suggested that unemployment claims hit more than 2 million in a short period of time. Treasury Secretary Steven Mnuchin ominously warned that the U.S. could experience a 20 percent unemployment rate. Mnuchin clarified that this scenario could occur without intervention, but later walked back his statements. Widespread layoffs have many people with student loans worried about making payments. Fortunately, President Trump suspended payments for federal student loans on Friday. The freeze is in place for 60 days, but could be extended. You can reach out to your loan servicer to take advantage of this change of events. The economic impact of the coronavirus pandemic could last for many months. Some people affected by the crisis may be unable to find work for a long time. If you recently…
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The Trump administration recently introduced budget proposals that could spell the end for Public Service Loan Forgiveness (PSLF). In 2007, the Bush administration signed PSLF into law. PSLF allows eligible federal loan borrowers to receive tax-free loan forgiveness for working in many public sector jobs. The program allows for loan forgiveness after making 120 eligible payments. You have to meet certain requirements to be eligible for PSLF. Prior blog posts published by our law firm go into more detail on this program and its requirements. You must work within a public sector or nonprofit job that is eligible for PSLF forgiveness. Additionally, you must enroll in an eligible repayment plan. Borrowers from all walks all life are enrolled in PSLF. If you are a teacher, doctor, lawyer, government official, police officer or nonprofit worker, then you can enroll if you are eligible. Certain professions generally incur large student loan balances….
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Many federal student loan borrowers can take advantage of Department of Education programs that limit monthly payments. In fact, there are four repayment programs that limit monthly payments based on discretionary income. These options also allow borrowers to receive loan forgiveness after completing the specified number of timely payments required by their chosen Repayment Plan. For instance, Income-Based Repayment (IBR) provides loan forgiveness after making 20 to 25 years of qualifying payments. However, many borrowers do not realize that at the conclusion of the Plan when the balance remaining is forgiven, as the law stands now you will receive a notice (or 1099 Statement) indicating you will have to claim the forgiven amount as income. You could find this to be a very unwelcome surprise after thinking you had made your final payment. It is difficult to determine how much you would have to pay after completing your student loan…
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