Debunking the myths about Federal Student Loans
So many of my clients will say something to me along the lines of... "I know that there is nothing we can do about my student loans, ....right?" Actually, there IS something we can do! (Most of the time). Below, I will talk about the options available.
Getting out of default on your federal student loans is easy, if you know what you are doing!Did you know that you have an absolute right to rehabilitate a.k.a. get out of default on your federal student loans? That's right. Its called rehabilitation, and most times, your payment will be VERY low. You can even enter into a rehab plan paying $5 per month, for 9 months. Then the "default" status comes off your credit report. That in and of itself is worth at least ten points on your credit report!
Consolidation is another way to get out of default. This can be done by your attorney or even by yourself.
You may be eligible for public service loan forgiveness or another kind of forgiveness of your loansIf you are enrolled in an income driven repayment plan, and you work in the public sector, you will likely be eligible for public service loan forgiveness after a certain number of payments. This type of loan forgiveness applies to a great number of people who are unaware that they are eligible to wipe out the balance of their federal student loans after having made a certain number of payments. These options are delineated in the Higher Education Act, (HEA) and there are a number of conditions that must be met to qualify. You may qualify if you are a teacher, fireman, in the military, a police officer, a nurse, a doctor, a janitor in a school or a hospital, or if you work for a not for profit organization. Additionally, if you are disabled, you may be eligible for the total and permanent disability discharge, and should apply to have your student loans forgiven.