Tag Archives: StudentDebt

Student Loan Relief

The sad reality for most of my student loan clients is they have large federal and private student loan balances.  In many cases they also have co-signors, usually a parent or relative, who will be on the hook if the main borrower defaults.  Federal loans can be consolidated and placed in affordable repayment plans, but private loans are usually another story.  That said, there are options for dealing with private loans, even if you are in default. (1) Check your Statute of Limitations period (“SOL”).  All states have SOL deadlines for creditors to file collection lawsuits.  If the SOL has expired on a private student loan, the creditor is out of time to sue and obtain a judgment unless you make a voluntary payment to extend the SOL period (federal student loans do not have an SOL).  If sued after the SOL has passed, you still need to raise the…
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How to Cover Student Loan Payments After Losing Your Job

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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Do You Have to Pay Taxes on Forgiven Student Loans?

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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