Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog

President Trump’s proposal to eliminate public service is not nearly as bad as the headlines make it appear.  Basically, 99.5% of folks are being denied for PSLF right now because they do not know how to qualify.  Their federal student loan servicers are doing a poor job of communicating to the borrowers what is necessary for forgiveness.  It’s not hard, we do this type of work for our clients all the time, but then again, we know what to do.

President Trump proposes to simplify the process and have one income driven plan for all.  Won’t matter where you work etc.  The payment would consist of 12.5% of discretionary income for 15 years.  Right now those seeking public service forgiveness pay between 10-20% discretionary income over 10 years.  So it adds five years for those in public service.  But it drops ten years for those employed in the private market who are often on a 25 year IBR plan.  That’s huge — who wouldn’t want ten years shaved off!  And if you were to ask someone in public service if they would rather pay for 15 yrs and have the certainty of forgiveness tax free, as opposed to 10 years, with only ½ of one percent getting approved, I’d say the vast majority would select the new plan.  The current program is a nightmare.

Current borrowers could stay in the 10 year plan if they wished as well.  I know, I know, that’s what they said when President Obama was pushing Obamacare, but that’s what the proposal states.

See below for tips to end roadblocks faced by our older population when dealing with student loans!

In a Yahoo Finance article this week, several problems were outlined and addressed during Secretary DeVos’ testimony on Capitol Hill.  First, lengthy delays in the Borrower Defense to Repayment program for those who were fraudulently misled by their schools.  Second, public service forgiveness denials for those who believed their student loan payments have been counting for years.  And third, confusion and difficulties for those trying to obtain student loan relief due to their disabilities.  I’d like to focus on this problem because while public service and fraudulent schools have had tons of press over the past couple years, the roadblocks faced by disabled borrowers have not been discussed much at all.

Under federal law, a disabled person can apply for total and permanent disability discharge to relieve their federal student loan debt.  However, on December 4, 2019, NPR released the data and results of an investigation that showed that only 28% of eligible borrowers identified between March 2016 and September 2019 have either had their loans wiped clean or are on track for that to happen.

Some of our student loan clients have asked what they can make in terms of income and still be approved for a social security disability discharge.  Normally we tell them income from employment counts, income from investments do not.  For those that fear that they have to do a little part-time work in order to meet their bills, the guidelines allow someone to earn up to the poverty guidelines for their family size (and a family of one can use a family of two).

 
What forms of income are used to determine if I am exceeding the Poverty Guidelines or not?
The only income used to determine if you are exceeding the Poverty Guideline amount is income from employment.

Many federal student loans placed in in-school deferment will accrue interest during school and capitalize upon graduation:

Loan types that do not require payment of interest when deferring student loans include:

• Subsidized Federal Stafford Loans