Student loans

Published on: February 5, 2024

Taxable Forgiveness of Student Loans?

Remember, any private or federal student loan debt that is forgiven before December 31, 2025 is not subject to federal tax.

Due to the American Rescue Plan Act of 2021 loans that are forgiven are not considered taxable income for federal income tax purposes. Since state and local tax implications will vary, we recommend you contact a tax advisor for more information.

I’m working on a new blog about 1098s that we are hearing going out to borrowers for interest that is rolled into a consolidation or forgiveness under the Borrower Defense program. That should be out in a couple days.

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Published on: January 23, 2024

Some Highlights of the Joint Spousal Separation Process and Application (available soon)

By Christie D. Arkovich, P.A.

Finally! Relief for Joint Spousal Consolidation Federal Student Loans

Did you know that married couples were allowed to consolidate their debt under a program that existed from 1993 to 2006 which allowed a single monthly payment and often a lower interest rate. But it meant that each spouse was 100% liable for the other spouse’s debt. Moreover, borrowers who had these Joint Spousal Consolidation loans were often left out of most programs. We’ve long known of the problems plaguing borrowers in this “One Way In, No Way Out” program.

Borrowers were unable to sever the loans despite divorce, an uncommunicative partner, domestic violence or financial abuse. Borrowers also were not eligible for most of the best programs which required a Direct Loan because they were trapped in the FFEL Consolidation Loan.

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Published on: January 22, 2024

What if You Borrowed a Little More than 12k? Will You Receive Forgiveness of Student Loans?

By Christie D. Arkovich, P.A.

Good news: the Administration announced last week that in February, it will begin early implementing the SAVE provisions that provide cancellation of borrowers’ remaining balance in as few as 10 years of qualifying payments depending on the total amount originally borrowed.

Borrowers enrolled in SAVE will have their remaining balance forgiven after 10 years of qualifying payments if they originally took out $12k or less in federal student loans, with one additional year of payments required for every additional $1,000 borrowed, up to a max of 20 years for those with only undergraduate loans, and 25 years for those with any federal student loans for grad school.

So if you are a little over $12k initially borrowed, no worries, they are allowing for one additional year of IDR (SAVE) for each $1,000 over.

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Published on: January 19, 2024

Three Year Monitoring for Disability Discharge of Federal Student Loans?

By Christie D. Arkovich, P.A.

Lots of confusion out there regarding the three year monitoring. The wage monitoring part of the three year monitoring went away, but NOT the three year monitoring as a whole. What does that mean?

Well, if the borrower returns to school and takes out federal loans, that could reinstate the forgiven loans if done within the post discharge three year period. The 1099 (which may or may not actually be sent) is supposed to be sent out AFTER the three years are over. This could render the forgiveness taxable under federal guidelines if done after December 31, 2025. Congress will have to allocated additional funding to the TPD program to allow for the non-taxability to continue after that date.

Also, if the borrower was approved based upon their SSA status, and that status changes, the loans may be reinstated. Our clients are approved on a physician’s certification so that shouldn’t matter for us.

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Published on: January 2, 2024

Vocational Student Loan Debt Can Be Discharged in a Bankruptcy

By Christie D. Arkovich, P.A.

Despite lots of changes in the landscape allowing the discharge of both federal and private student loan debt under the right circumstances, many people still believe that student debt survives a bankruptcy.

Private loans follow very different rules then federal as you probably know.

One thing I haven’t written much about are private loans for these vocational schools such as those for coding, helicopter, cosmetology etc. If the school is NOT on the federal Title IV list for the years of attendance, those are dischargeable in a bankruptcy.

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Published on: December 21, 2023

We Regularly Obtain Full Forgiveness of Federal Student Loans Through the TPD program

By Christie D. Arkovich, P.A.

Most people I speak with about the disability discharge of federal student loans are concerned that the test is similar to the Social Security Disability analysis. It’s not. You don’t have to deal with a scale of whether you can feed or dress yourself. You don’t have to be approved for SSD.

It’s a vocational test. Something we’ve dealt with often with our ADA or FMLA work for our former plaintiffs’ employment law practice.

The TPD standard doesn’t mean the borrower can’t work at all, it just means that due to their medical condition(s), they can’t reasonably work enough to be able to sustain themselves.

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Published on: December 21, 2023

Self Certify Income

By Christie D. Arkovich, P.A.

Are you having trouble with your federal student loan servicer who is asking for income documentation? You can avoid all that for now, by simply self-certifying your income. You can self certify through February 29, 2024 and here is how:

https://studentaid.gov/help-center/answers/article/report-income-in-the-income-driven-repayment-application

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Published on: November 22, 2023

Deadline of 12/31/23 for Federal Student Loans

By Christie D. Arkovich, P.A.

To help get the word out on how to obtain significant savings on federal student loans, we are speaking at a roundtable for the Florida Defense Lawyers Association on December 14.

Sponsored by: The FDLA Women in the Law Committee. Maximize your opportunities for student loan forgiveness by taking advantage of the new IDR Audit, SAVE, and On Ramp programs. While the IDR Audit is automatic, there are ways you should prepare for it to obtain the most forgiveness particularly if you have older FFEL loans, gaps between education, or even Parent Plus loans. Don’t try and figure it out all alone! (This is roundtable discussion with no CLE or CE offered.)

I don’t think you have to be a current FDLA member, but you may want to consider joining, and you do need a Fl Bar number.

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Published on: November 22, 2023

ICR – What is This?

By Christie D. Arkovich, P.A.

If you have federal student loans, the Income Contingent Repayment (“ICR”) is the most expensive Income Driven Repayment Plan or IDR:

20% of your discretionary income, or
the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income.

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Published on: November 9, 2023

Can you Discharge Student Loans in Bankruptcy? Why Yes, You Can!!

By Christie D. Arkovich, P.A.

I just wrapped up an interview for badcredit.org for a story that they will run sometime in Nov or early December about the new rules allowing someone to discharge student loans in bankruptcy. I’ll post links here when that story is ready.

Bottom line is that there is a growing awareness that private student loans can often be discharged in a bankruptcy as a non-education loan. You’d be surprised at the results that we see! Often a full discharge, or getting the balances dropped by 50-70% and interest reduced from 10-15% to 1-2%. Very small payments spread over 20 or even more years. And the kicker is that any discharge in bankruptcy is tax free forgiveness. Who wouldn’t want to kick their private student loan to the curb…

But what about federal student loans? In the past, we simply did not file these cases – it was nearly impossible to win a discharge of federal student loans. I used to work for the other side running around the State of Florida trying these cases. I think I lost one down in Miami. One. All the rest resulted in a win for the creditor (my client at that time before I moved to the consumer side of things). But now since the new DOJ process is available, it is finally possible, if not probable. Here’s the new results – see for yourself:

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