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Christie_1How is it possible to wait too long to address student loan debt?

Right now, with the IDR recount working to forgive six figure debt for clients (yes, we are now seeing this occur – check your studentaid.gov site for your loan balance b/c servicers are running behind in getting the emails out), we strongly recommend that everyone with a FFEL or Perkins loan consider consolidating to a Direct loan.  Do that now.  If a lawsuit is filed that gains transaction to put a hold on the IDR recount, this relief may no longer be available.  It really is a race against time for the IDR recount I fear.

But what should you do if you have a private student loan?

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Christie_1The new IDR account adjustment going on right now may require that you consolidate your FFEL loans to Direct.  You may also want to consolidate differently dated Direct loans to one consolidation that will re-date all the loans to the earliest repayment date so you get as much credit toward your income driven plan forgiveness as possible.  This is particularly important for anyone who bifurcated their education and had a gap – no matter how small – between degrees.

There is much more information online and at your fingertips than you may believe.

You need to login to studentaid.gov & download your TXT file covering all of your federal loans.  Each loan is listed and for FFEL loans, the Servicer, Lender & Guarantor are listed so you can tell if FFEL is owned by ED or not.  FFEL loans owed by ED are covered by the IDR waiver/account adjustment.  Generally though, if you have a FFEL loan with anyone, including the Department of Education, it usually is best to change it to Direct for multiple reasons such as PSLF, SAVE etc.  There can be reasons not to though – and we’d recommend a strategy session with us where we can go over whether you should consolidate, how to do it, and often be by your side talking you through it.

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Christie_1There are a few of us student loan attorneys around the nation that have dedicated a good portion of their lives and practice areas to understanding the student debt landscape and how to use it to our advantage to solve problems.  It shouldn’t be that complicated to repay a debt; but, alas it is.  The Department of Education has done more things over the past year than it has in the past 20 years to address student loan debt.  Because things have moved both rapidly and glacierly (if that isn’t a word, it should be), and various court filings have been all over the place, it’s hard to keep up with recent events.  And it takes time.

  • We get basic questions such as how do I know what loan types I have?
  • We also get questions on more complicated issues such as how can I best lower my payment while on an income driven plan – or what does double consolidation mean and how can it help lower payments on a Parent Plus loan?
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Christie_1Pish posh on the 10k forgiveness the Supreme Court recently denied.  This is SO MUCH MORE IMPORTANT!  And a lawsuit was filed yesterday by the New Civil Liberties Alliance on behalf of the Mackinac Center for Public Policy and the Cato Institute in an effort to block it.  So take action now!!!  We are designating extra time over the next few weeks to make sure we are available to walk you through a consolidation and answer any questions you have.   This is expected to result in $39 billion in federal student loan forgiveness to more than 800,000 borrowers.  Don’t delay.  The litigants have already requested a temporary restraining order to put a hold on things.  I suspect that if someone gets a consolidation application in (online can take five minutes) before a TRO order is entered, they would still be counted for forgiveness (but that’s above my paygrade so we don’t really know).  Forgiveness that occurs under the recount will also be tax free as it will occur before the end of 2025.

IDR one time account adjustment:

For many years, student loan servicers steered struggling borrowers into forbearance instead of guiding them toward income driven repayment.  Income driven payment generally caps payments at no more than 10 percent of income, and ultimately leads to loan forgiveness after 20 or 25 years of repayment.  Many of these loan servicers also failed to accurately track borrowers’ progress toward forgiveness.  Some of these companies had no system for tracking payments and identifying when borrowers would qualify for forgiveness.

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arkovich_law-narrowThe Navient settlement today reflects a broad shift in the understanding of higher education debts that can be summarily discharged in bankruptcy.

The case is Homaidan v. Sallie Mae Inc., Bankr. E.D.N.Y., No. 17-01085, motion filed 7/21/23.

If you are considering bankruptcy to fix your finances, make sure to get your student loans taken care of also.  We do both, and if you’d like to set up a strategy session to discuss your specific situation (credit card debt, house, student loans, income and assets) and understand your options (and you’re in the Tampa area or its surrounding counties), please see the link below.  We freely discuss any options you can take advantage of if bankruptcy is not a good option as well.

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arkovich_law-narrowParent Plus loan borrowers and grad loan borrowers have received the short stick for all the recent announcements post the Supreme Court decision on student loan forgiveness.  The new bankruptcy rule will allow debtors to create a Chapter 13 Plan to easily provide IDR credit:

Changes:  We have revised §685.209(k)(4)(iv)(K) to provide that the Department will award credit toward IDR forgiveness for months where the Secretary determines that the borrower made payments under an approved bankruptcy plan.

While there is a process for this to occur now it is not widely understood and rarely used.  In most cases, borrowers owe more in federal student loans when they exit bankruptcy than what they owed before filing.  There is no reason why borrowers should not receive IDR credit towards their student loans during a Chapter 13 bankruptcy which often is five years.  This has been a big bone of contention of ours for several years.  Depending upon how the new change will be applied (the regs aren’t out yet), debtors should be able to obtain IDR credit while making a court approved payment plan which could be substantially lower than the normal IDR payment amount outside of bankruptcy.  This may be the only recourse available to those with Parent Plus loans who don’t or can’t double consolidate their loans in time to avoid ICR.  It may also be the only way to address a high payment for those with grad loans who have high medical, housing or family expenses and are stuck with an unaffordable IDR payment even under SAVE.  It will be particularly good for those in the next 12 months who won’t see the SAVE payment reductions until July 2024.

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Need new hurricane windows, roof, exterior door or garage door upgrades, roof decks, reinforcement of roof to wall connections? – check out this 10k grant below, opened up with new funding on July 1 for Florida homeowners.  It’ll match $2 for every $1 you spend.  No state tax on several items for 12 months.  Don’t wait to apply, more applications being filed every day.

Requirements:

    •  Single family residence or townhome
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arkovich_law-narrowI was reading about Solomon’s Paradox today:  We’re better at solving other people’s problems than our own, because detachment yields objectivity.”  So true.  I enjoy solving a client’s problem, will do multiple rounds of negotiation, think outside the box for unusual solutions etc.  But when faced with buying a new truck, I recently told my husband that I’d rather get a root canal.  These things are fun when done for others, but simply work when done for yourself.

Then I saw Kross’s update in 2014 who stated “viewing oneself in the 3rd person yields the same detachment, so when trying to help yourself, imagine you’re helping a friend.”

I often will say in consults that if someone were a member of my family, I’d recommend….  Good approach for our law firm to take, as well as for personal matters.

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We’re presenting at a Webinar on Tues (on demand later) for student loan update post Supreme Court decision. Cost is only $25 through PLI.
Or you could read the 427 pages of new IDR regs if you prefer 🙂
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arkovich_law-narrowCan I do All This Myself or Do I Need an Attorney?

Yes, dealing with your debt is something you can do yourself. But like anything, sometimes it is better to hire someone who does this day in and day out. Particularly if you have a lot of debt or assets to protect.  Many of the borrowers we speak with are unaware of key governmental programs and how to jump through the various hoops to qualify. The student loan system itself is the least transparent of any system that I have ever seen in my 30 years of practicing law. For private loans, negotiation or litigation can be involved; both of which a borrower is not well suited for in most cases. We know deadlines that may apply for tax free relief.

If it’s a bankruptcy, we know all the trustees, the rules, the loopholes, basically how to not only get things done, but also to obtain the best result.

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