In 2008, the average graduate from a four-year college marched down the aisle with more than ,000 in student loan debt on their shoulders. That's a lot of debt to start out with. And the need for student loans is rising as tuition costs rise. Unfortunately, also rising is the default rate on these student loans. With this newly graduated life comes new responsibilities - car, family, home. Student debt often gets pushed to the bottom of the list of bills. In the past, student debt was discharged in bankruptcy cases, but not so much anymore with the reforms to the US Bankruptcy Code from 2005. Federally funded loans - the most common, even when supplied through third party lenders - are now aggressively pursued for recovery and student loan is much harder to discharge. A deferment, or an official delaying of the repayment of the debt, is available to some who meet specific criteria, such as military service, a return to school or other extenuating circumstance.
For everybody else, there are two options other that Detroit bankruptcy lawyers can recommend:Forbearance
Forbearance is when your lender gives you permission to stop making payments on your loan for a specific period of time, usually to a maximum of one year. Unlike deferments, interest does continue to accumulate, increasing your debt. However, forbearances are easier to obtain than deferments because they are not subject to so many conditions and are not tied to the type of loan and when they were obtained. Forbearances may be granted on federal loans for reasons such as illness, financial difficulties, inability to pay within the maximum time allotted for the loan and if the collective payments total more than 20% of the borrower's income.
Unlike deferments, forbearances may be granted even if you are in default of the loan. Forms to request a forbearance are available by contacting your lender or from Detroit bankruptcy lawyers.Cancellation
Cancellation of a student loan is dependent on specific conditions, much like a deferment. Just like it sounds, cancellation of the loan means you no longer have to pay all or part of the balance. Detroit bankruptcy lawyers offer these conditions under which all or part of the loan may be cancelled:
Death - if you die, your executor or estate will not have to pay off the balance of your federal loan.
Permanent, total disability - if you become permanently disabled and cannot work or are disabled to the point that the disability will result in your death, you can cancel your student loan. You must have become disabled prior to receiving the loan, though. You will need a form from your lender filled out by your attending physician to qualify for this cancellation.
Member of a uniformed service - certain members of a uniformed service, such as the Army or National Atmospheric and Oceanic Corps, are eligible for the cancellation of their student loans. More information on this option is available from your commanding officer.
Teaching in needy areas - Former students who go on to teach in disadvantaged areas are eligible to cancel their student loans.
Providing other assistance in needy areas - providing services other than teaching to disadvantaged groups or populations also qualifies former students to cancel their student loans.
Health care professionals - Some students of the health care industry are eligible to cancel their student loans.
Law Enforcement - Some full time law enforcement professionals can cancel all or part of their remaining older Perkins Loans.
Defunct trade schools - Some students who enrolled in trade schools and obtained financial assistance to do so may cancel these student loans if the school closed before the curriculum was finished. In the past, some students were also falsely certified for these loans. If you are one of these unfortunate people, you can cancel 100% of your student loan.
Identity theft - If someone forged your name and signature to obtain a student loan, you are not responsible for that loan and you may cancel 100% of it.
Withdrawal from school - If you withdrew from school or enrolled and never attended and did not receive a refund for your tuition paid, you may cancel that student loan if you failed to complete 60% of the curriculum.
The Department of Education retains an Ombudsman that may be able to provide you with further assistance. You may contact this person by visiting their website.