Articles Posted in Student loans

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I’ve been invited by the Tampa Bay Bankruptcy Bar Association to speak about student loan debt and what can be done – both inside and outside of bankruptcy.  This is for the Consumer luncheon on the fifth floor of the federal courthouse if any local attorneys are interested in attending.  You don’t have to pre-register, it’s free and there’s pizza!  I’ve got lots to cover, some new things going on and the results are fantastic!  Just check out our reviews and what our clients are saying!

This graph above should show why we have a problem with student loan debt – its tremendous growth even since the recession in ’08 is crazy.

Also, notice in the graph below, while our mortgage delinquencies are back to the lowest they’ve ever been, student loan delinquencies are the highest they’ve ever been — and more than credit cards, auto and mortgage debt.

Published on: you contact your private student loan company, you likely will be told the only options are: 1) a payment amount that is much higher than you can afford, or 2) to make an interest only payment which makes no dent whatsoever on the loan balance.  Stop that.  Read below.  Then call us.

Our latest Google review from Matthew:

My daughter and I contacted Christie last December regarding loans that I had cosigned for.  Navient was unwilling to offer an affordable payment.  They offered an interest only payment, and late payments were killing our credit. With Christies guidance we did exactly what she suggested and we were able to reach a settlement for around 30% with an affordable monthly payment.

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Part II:  What can people do when they have private student loan debt?

Private loans don’t have any government programs like federal loans do – payments are not based upon income, there is no debt forgiveness and no protections for someone who becomes disabled and cannot work.  However, they will settle.  They key is to put them in the position of wanting or having to settle.  How we do this is we help our client track consumer collection law violations.

How many times do they call you a day?  Do they call your cell phone after you’ve told them not to?  Do they call you at work after you’ve told them not to?  Do they call before 8:00 a.m. or after 9:00 p.m.?  Do they discuss your debt with third parties?  All of that is potentially illegal under the FDCPA, FCCPA and the TCPA and provides us with leverage to settle a debt and ways to escalate the conversation to a decision maker with higher authority to negotiate a settlement.

Published on: tax landscape for student loan forgiveness is constantly shifting.  Earlier this year we blogged about disability discharges of federal student loan debt no longer considered taxable.  Discharges in bankruptcy for either federal loans under a Brunner challenge or non-qualified private student loans that don’t meet the definitions for discharge protection are both non-taxable events.

The Public Service Loan Forgiveness program for federal loans also provides a tax free total forgiveness after ten years of qualifying payments.  Talk to us if you have questions about whether your loans qualify, your employment qualifies, or your payments qualify.  There are sticky questions that may prevent relief after years of payments if done wrong.

The IRS also allows for tax relief for taxpayers who took out federal student loans for attendance at Corinthian Colleges and other schools owned by American Career Institutes (ACI) and were granted a discharge under the Defense to Repayment program.

Published on: now, I got off the phone with a very sophisticated potential client who is facing a garnishment for his federal loans.  This was a very intelligent person and well respected in his field, but he didn’t really know much about how the student loan system worked.  His closing comment to me before we ended the call was “What a productive phone call!”  I often hear “I wish I had called you years ago, I’d be that much further ahead”.

I mention this because due to high demand, we now have to charge for our student loan consultations – $175.

But we offer a Guarantee:

Published on: Taibbi with Rolling Stone, wrote a recent piece called “The Great College Loan Swindle” that outlines how we got here.  It started with sales pitches that colleges make to kids – comparisons of salaries of those with high school diplomas to those with 4 yr degrees.  The value of that degree over a lifetime of earnings.  Investing in yourself was a common phrase used by for-profit colleges.  It creates a vicious cycle, everyone feels obligated to go to college, most everyone who can go does, and then you have a glut of graduates which is where we are now.  And this isn’t limited to just the student.  Parents wanting to help their kids every way they can, co-sign on loans they cannot possibly repay, or sign their own loans called Parent Plus loans.  Parent Plus loans do not take into consideration the income and employability of the parent or grandparent who applies for the loan.  Not surprisingly, Parent Plus loans have been cited by the CFPB as having extremely high default rates.

So Step 1, convince everyone a college degree is necessary in life.

Step 2: make it easy to borrow the money.

Published on: is a state that allows professional licenses to be suspended for non-payment of federal student loans.  We had a client who came to us last month after having her LPN license suspended.  This is even worse than a garnishment.  Rather than 15% of her wages being garnished, which is difficult enough for most clients, she’s receiving NO pay.  And her job could be at risk if she is replaced.

It took 2-3 weeks, but we fixed her federal student loan default, got her onto an affordable income based plan and lifted the suspension order.  Fortunately, our client was able to retain her job.

Don’t wait to cure federal student loan defaults!

Published on:, a client elected to have us settle her defaulted federal student loans in full by payment from her 401k.  While we normally don’t recommend using protected 401k monies to settle debt, this particular client makes too much for debt forgiveness.  A settlement now will likely result in 10% reduction in principal and waiver of the 25% collection fees since she is in default.

While you normally cannot settle federal student loans, there is an opportunity to do so when the loans are in default and a hardship exists.  So by paying them now from her 401k, she’ll likely see a 1/3 reduction in her loan balance.  Put another way, that’s a 35% return!

The average interest rate on federal student loans is also 6.8%.  Most people are not getting those rates with CDs, money markets, stocks and bonds.  So paying off the federal loans often makes sense from this perspective as well.

Published on: Iowa appellate court ruled recently that a Income Driven Plan with a zero payment “does not ameliorate the undue hardship”.

In In re Martin, out of the Northern District in Iowa (8th Circuit) the lender argued that the debtor was not entitled to discharge the loans because she would qualify for an income-based repayment program, or IBRP, where she would qualify for a zero payment.  In 20 or 25 years, whatever is left on the loans would be forgiven, but the forgiveness could be considered taxable income.

In 20 or 25 years, the debtor would be 70 or 75 years old, and whatever savings she amassed would be consumed by the maturing tax liability.  In other words, Judge Collins said, the “tax liability could wipe out all of debtor’s assets not as she is approaching retirement, but as she is in the midst of it.”

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Initially, twenty some years ago, I worked on the side of the student loan companies.  Whenever someone in the State of Florida sought to discharge federal student loan debt in bankruptcy, I was often trial counsel for the student loan company.  Our clients ranged from Sallie Mae, ECMC, TERI and USA Funds.  Our track record was excellent – I recall losing only one trial down in Miami.  It wasn’t really due to any great lawyering skills, it simply  was very difficult to discharge student loans in bankruptcy.  I traveled around the state handling trials and appeals in Tampa, Orlando, Jacksonville, Fort Myers and even Miami area – it may have been Fort Lauderdale – all I remember is it was a long way down there!

Why did I do that type of work?  Well, I felt grateful for my own loans and believed in the system and wanted to help to make sure it was around for future borrowers.  I would not be a lawyer today if it weren’t for the student loan system.

But you could say I’ve seen the light since then.  Today, I work for borrowers.  Nowadays, it’s nearly impossible for the vast majority of student borrowers to actually pay off their debt.  When I graduated back in 1992, I owed 45k and my first job right out of law school paid 40k – roughly a 1 to 1 ratio.  Fortunately, it was never hard for me to pay off that debt.  But nowadays, I’ll see 3 to 1 ratios all the time, i.e. someone owing 90k in loans, but only making 30k.

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