Disabled Veterans Can Have their Student Loans Forgiven

Written by adminSeptember 28, 2018
Student Loan Consolidation

As student loan debt soars past the $1.5 trillion mark, it’s leaving a lot of misery in its wake. People from all walks of life struggle to be able to afford everyday living costs and pay their student loans. For-profit colleges are under intense scrutiny for their predatory tactics in getting people signed up for their programs.

They promise to have extremely high job placement rates, but in actuality, do nothing to help their students. It’s false advertisement that allows them to make their schools extremely expensive and prey on students looking to improve their lives. The number of people suffering under the burden of their student loans is increasing dramatically.

In an effort to pay for their school, in an economy where jobs were hard to come by, many joined the military. It’s a good option for millions of young people who joined up to pay for school. The U.S. military pays out scholarships and grants for education as an incentive to get young people to sign up.

Veterans and Student Loans

President Trump has made several blunders in this arena. He and Education Secretary Betsy DeVos continue to find ways to cut government spending. This involves dismantling protective measures put forth by the Obama Administration. This time, it appears he got one right in a way that helps struggling borrowers.

President Trump has come out swinging for veterans, which is part of his platform. If you’re 100% disabled from your time in the service, you can have your student loans wiped away. To their credit, the Obama Administration did their due diligence in working to forgive the debt of many disabled Americans.

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About 350,000 of them had their slate wiped clean through the Social Security Administration, which is the agency that handles disability. The problem is, the SSA doesn’t count disabled vets. That’s the job of the VA, meaning veterans often got the shaft when it came to these debt-killing programs. Now, their prayers have been answered.

Student loan forgiveness is available to millions of graduates who qualify! To learn more about your options and how we can help you pay off your student loans, give us a call at:

Call Now 844-332-2079

In April, the Trump Administration announced their plan to forgive all student loan debt for those disabled vets who will most likely never be able to work again, many of whom have suffered under this crushing burden for so long. He hopes that this deal will become an automatic process.

Qualifications for Vets

If you’re a veteran who is 100% disabled, and you have student loans, they can be forgiven. There are tens of thousands of disabled vets who may not know about this option. Here are several of the qualifications you must meet:

• You must have a determination from the VA stating your unemployable due to disability.
• Receiving SSD, SSDI, or SSI benefits
• Determined completely disabled by a doctor
• Have federal student loans.

While this law doesn’t cover private student loans, you can call your lender and see what options they may be able to provide. Many will offer the same type of discharge due to disability. There are as many as 800,000 disabled veterans who qualify for this program.

It’s also important to note that there are no tax consequences to receiving forgiveness. The average student loan forgiveness program will be taxed as profit, so veterans do not have to worry. So, if you’re a disabled veteran, the federal government has your back. There is no need to worry about your student loans.

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Racial Wealth Inequality Made Worse by Student Loans

Written by adminSeptember 27, 2018
Student Loan Consolidation

It’s easy to talk about how student loans are impacting the quality of life for millennials. They’re delaying life decisions until later in life because this repayment of loans is taking priority. Yet, there’s an even larger wealth discrepancy no one is talking about. This problem is hurting young black Americans more than it is whites.

A new study has come to light, published by Sociology of Race and Ethnicity. The study is called, “Racial Disparities in Student Debt and the Reproduction of the Fragile Black Middle Class.” The details in this report are truly shocking. While most college students in the modern era struggle with paying back their student loans, blacks have it much worse.

According to the study, whites pay their debt down at a rate of 10% per year. It’s 4% for blacks. After fifteen years, blacks still hold 185% more of their debt than their white counterparts. Blacks also take on 85% more debt to go to college than white students. All of these this is only widening the wealth inequality gap between whites and blacks.

Student loan forgiveness is available to millions of graduates who qualify! To learn more about your options and how we can help you pay off your student loans, give us a call at:

Call Now 844-332-2079 

Student Loans and Unique Challenges

This new study is revealing the unique challenges black Americans still face. They don’t have as much familial wealth to draw from to go to school. As a result, they take on more debt. After they graduate, finding comparable work is more difficult. These unique challenges only add to the racial wealth inequality in this country.

“The racial wealth gap is both the biggest and has grown the fastest among those with a college education,” said Jason Houle, assistant professor of sociology at Dartmouth College and co-author of the study. “We point to student loan debt as potentially one thing that explains why that’s happened.”

http://financialhelpers.com/the-cons-of-strategic-student-loan-default/

This study has highlighted that as much as 25% of the wealth gap between whites and blacks is caused by student loans. The information was gathered from a previous study, conducted in 1998. It was called the National Longitudinal Study of Youth 1997 Cohort. Over 8,900 students have responded each year since that study.

Upward Mobility at Risk

One of the other challenges to black students are the types of loans they’re taking out and the schools they attend. Black students frequent for-profit schools and take out private loans. For-profit schools have recently come under fire for their predatory advertising. Those often-expensive schools make false promises of helping students find work after graduating.

Taking out private loans is dangerous in itself. They have fewer protections for consumers that federal loans have. These two problems combined make black students more at risk. It is true that blacks have gained greater access to college degrees over the years, but that access is under “exploitive terms,” according to the research.

“Black Americans now have more access to homeownership than they did, but it’s largely on predatory terms,” Houle said. “This similar thing goes on in the student loan market. In a world where we have rising college costs and rising student debt. It raises questions about whether or not that engine may be sputtering out.”

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4 Reasons Why Student Loan Forgiveness Applications Are Rejected

Written by adminSeptember 26, 2018
Student Loan Consolidation

The media is at it again. Maybe you’ve seen the headlines. 99% of all student loan forgiveness applications are rejected.

As student debt is reaching all-time highs, and people want relief. When the story broke that most weren’t getting that relief, there was an uproar. The reason has more to do with the Public Service Loan Forgiveness program.

Of course, there are going to be fewer applications approved in the first year. This isn’t the first year of the program, but rather the first-year eligible debts could be forgiven after the law was signed ten years ago. In order to qualify for student loan forgiveness, the borrow has to make 10-years of qualifying payments.

Qualifying payments had to begin around October in 2007. Some of those qualifications include working in a service or government related job during that time.

Here are 4 reasons why:

1) Their Loans Were Ineligible

To qualify for student loan forgiveness, you had to have a certain type of loan. Only federal direct student loans could qualify. Going back to 2007 when the program was created, only 21% of the student loans out there were direct loans. The rest of the loans at that time were undertaken by a guaranteed program that has gone under.

Today, you’ll find that most loans fall under the federal direct category. The rejected a lot of loans for this reason. Most of the loans taken in 2007 didn’t qualify. Those former students will have to pay their loans back in full. Now that the majority of student loans are federal direct loans, they’ll qualify in the future.

2) An Insufficient Record of Qualifying Payments

Another big reason why student loan forgiveness applications were rejected was fewer borrowers made the payment deadline. You must make 120 qualifying payments, which equates to 10 years. They also have to be working a service or government job during that time. Not reaching these requirements will disqualify you.

http://financialhelpers.com/4-facts-you-should-know-about-student-loan-forgiveness/

It’s been 10 years since they signed the law. That means to qualify for student loan forgiveness, the borrower couldn’t have missed any payments. If they took some time off of work and/or stopped paying for a time, they would still have a few payments left to qualify.

3) They’re on the Wrong Repayment Plan

This is a confusing part of the process. There are several repayment plan options out there, but there’s only one that qualifies for student loan forgiveness. If the borrower selected the wrong repayment plan, their application was denied. There is good news though. Congress has stepped in to allow eligible repayment plans to qualify.

So, while many borrowers had their forgiveness applications denied, Congress approved them. These approvals aren’t in the initial statistics by the media. If you were denied due to being on the wrong repayment plan, go ahead and resubmit as soon as possible.

4) Errors in the Paperwork

28% of all the applications denied for student loan forgiveness was done so due to “missing or incomplete information.” We can’t say how many of those 8,000 applications would’ve received forgiveness if all the information was complete. Yet, the Department of Education has stated that borrowers denied for this reason can resubmit with their complete information.

So, if you see the news headline decrying that 99% of student loan forgiveness applications are denied, there are good, reasonable reasons why. Follow the guidelines and you’ll be fine. It is easier to obtain student loan forgiveness. They are constantly working to create better laws.

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The Cons of Strategic Student Loan Default

Written by adminSeptember 25, 2018
Student Loan Consolidation

As student loan debt soars past $1.5 trillion, the struggle of paying them back is real. A lot of former students are having to delay making major life decisions to pay back their loans. But others are taking a different approach. A new wave of young adults are becoming activists against what they call ‘student loan debt servitude’.

To protest the massively expensive cost of a college education, and their student loan bill, they’re simply deciding not to pay it. They are intentionally diving head first into default with no regrets. They use terms like “a student loan is economic terrorism” and crying out that these debts must be canceled immediately.

Their goal is political activism, and their outcry is understandable. The cost of a college education IS way too high. The problem is, this type of activism is doing nothing for their cause. In fact, it hurts them much more than it hurts the lenders. Banks and the federal government have plenty of money. They also have all the resources they need to make you suffer.

What Happens When Your Student Loan Goes into Default

Once you start missing student loan payments, your account is declared delinquent. After about 270 days of non-payment, you’re considered in default of your loan. That’s about 9 months late with your payments. The consequences of that are often quite severe. Going into default can stall your life financially and professionally. Here’s a list of situations that can happen:

• Delinquency reported to credit bureaus
• Your credit score will tank
• Send the loan to a collection agency
• Will garnish your pay
• You will no longer be entitled to deferments or file for forbearance
• Withhold your taxes
• You will not be eligible to receive more financial aid
• The lender can take you to court
• Revoke your professional license
• Interest will continue to pile on
• Add late fees

“Defaulting on any student loan can have very serious – and very guaranteed – negative consequences, including late fees, collections costs, credit damage, and collections efforts,” says student loan expert Adam Minsky.

Strategic Default Won’t Work on Federal Loans

To get their money back, private lenders have fewer options. They will have to take you to court to fight for their payments. Federal student loans, on the other hand, don’t need to follow that rule. The borrower has absolutely zero leverage against the government. That means they have more power to compel you to pay.

“Defaulting on a federal loan can be particularly dangerous because the government and Federal guarantors have a lot of power to pursue borrowers and take their money without needing to go through the court system,” said Minsky.

http://financialhelpers.com/4-facts-you-should-know-about-student-loan-forgiveness/

“Defaulting on Federal loans generally does not give borrowers leverage – their options are constrained by Federal law. And while it is possible to get out of default on Federal loans, going into default generally does not give people an advantage.”

It really makes no sense in the long run to torpedo your student loan and refuse to pay it. You’re only harming yourself, especially when there are programs available. There refinancing, income-driven payment plans, and student loan forgiveness.

If you have any questions about your loans and want to know more about these programs, give Financial Helpers a call. We’d love to help you sort out your loan situation. It’s better to pay them off the right way. Give us a call at:

Call Now 844-332-2079 

At the end of the day, you borrowed the money. It’s your responsibility to pay it back. If you’re struggling, there are a variety of programs that can help you. Give us a call today.

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AARP Study Finds that Student Loans Are Crippling Young People

Written by adminSeptember 24, 2018
Student Loan Consolidation

When a person graduates college, it’s the beginning of a new life for them. A college degree is meant to allow young adults the opportunity to start off life in the right direction. That’s why we spend a lot of time studying, testing, and working hard to get to that level. The problem is, student loans are setting them back rather than propelling them forward.

For a lot of graduates, a college degree isn’t what it used to be. In fact, a new study conducted by the American Youth Association and AARP found that student loans are crippling young people in the crux of their life. Millennials are being hit the hardest with debt that prevents them from saving money for huge milestones.

Imagine having to pay anywhere from $400 to $1,000 each month to keep compliant with loan repayment. It can be nearly as high as a mortgage, not including other expenses, like the electric bill, phone bill, and rent. Even if millennials do find meaningful work right after graduation, it’s rarely enough to overcome the payments and afford everyday life.

AARP Study on Student Loans

According to the AARP study, this problem is hitting millennials more than any other age group. Nearly half of all millennials (48%), are struggling under the burden of student loan debt. Only 34% of Gen Xers and 12% of Baby Boomers have this problem. A lot of it has to do with millennials living through the Great Recession and the cost of college rising dramatically.

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Because the cost of going to college has risen so significantly over the last decade, more people are forced to take out student loans to pay for it. The worst part is, they’re saddled with this debt for the next decade or two. Some repayment plans take 25 years to complete. How can they save for retirement or buy a house?

The Burden Isn’t Just on Students

If you have a full generation of adults coming up now where half of them can’t afford to move out of their parent’s home, that impacts the economy greatly. Research already is showing that this generation is delaying marriage, having kids later in life, and are waiting longer to buy a home. They simply can’t afford to survive by themselves in today’s economic climate.

“The student loan problem is rippling across the broader economy,” says Ben Brown, founder of the Association of Young Americans. “As people both young and old continue to graduate with more debt, that ripple effect will become wider and more significant. This highlights the importance of solving both the extreme cost of higher education as well as the $1.5 trillion student debt crisis.”

LendEDU conducted a survey and found that 75% of Millennials feel daily stress about their student loans. It’s going to set a precedent for future generations who may decide that college is not for them. We’re already seeing fewer people are applying to college, but the cost is still going up.

Making Better Decisions

If you don’t want to take on extreme debt at an early age, there are options. Future generations are going to have to make a better decision when it comes to where they go to school. Don’t fall for the schools that promise job placement right after you graduate. Most of those claims are controversial and are even found to be fraudulent.

Also, rather than going to an Ivy League school, opt for a getting your undergraduate degree closer to home. Go to a community college for the first few years. Save up for the rest. Choose a school that’s a better financial fit for you, not the big school with the huge cost. In the end, you’ll find it’s not worth paying off a loan for the next two decades after graduation.

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Misconceptions About Letting Student Loans Go into Default

Written by adminSeptember 21, 2018
Student Loan Consolidation

Every year, millions of Americans rush to college. It’s part of the American dream. We’ve been told since we were little. If you want to make good money, you need a degree. So, that’s what we do. If someone can’t pay for their schooling, they take out student loans. It’s not a big deal at the time. They sign the dotted line and figure they’ll deal with it later.

Then, later comes. The student graduates, and before they even get a chance to breathe, the bills start coming in. It’s time to pay back your lenders. But, what happens when the economy isn’t doing too well and jobs aren’t aplenty? Is the lender going to wait for you to find gainful employment?

Maybe. There are forbearances that allow you to take some time, but while you’re doing that, interest still accumulates. But many student loan borrowers shrug their shoulders. They think they will be able to tackle the problem later on. That’s when the nightmare turns into a catastrophe.

When Student Loans Become a Burden

Student loans aren’t something that should be taken lightly. There’s a reason why the debt has reached an epidemic level of $1.5 trillion. Actually, there are numerous reasons. Predatory lending, fake claims by colleges, economic hardships, and years of taking out increasing amounts of loans pile on to the problem.

For many who have no options, they have nowhere to turn. They decide that the default is okay for a few years until their situation turns around. If that sounds like you, there are things you should be aware of. You have other options. Here are several misconceptions and consequences of allowing your student loans to default:

Misconception #1: Your Loan Will Just Go Away

There are a lot of people out there who believe if they just stop paying their student loans, they’ll magically go away. The lenders will stop hunting them down, the interest will stop flowing, and life will get back to normal. This is not true!

According to Teri Williams, who is the President of OneUnited Bank, student loans “cannot be discharged or ‘erased’ without payment in full.” There is no bankruptcy option that will wipe it out. With the exception of a fraudulent case or other parameters under the law, your loan will follow you everywhere you go.

Some of those parameters include student loan forgiveness, but that requires qualifying conditions that must be strictly met. There were plenty of students who felt they would qualify, but they didn’t have the right type of loan. And sometimes, the government changes the rules, depending on who is in power.

Misconception #2: Lenders Won’t Work with You

Say what you want about lenders and debt collectors. Many can be downright mean and will use every tactic in the book to get their money. But as long as you’re open, honest, and communicate with them, they will often work with you. They want their money and if you reach out to them, the more options they have for helping you.

Rachel Rabinovich, a financial planner with Society of Grownups, believes debtors want to help. “They are there to help you and the earlier you reach out, the more options they’ll have,” she says. “They don’t want to deal with the paperwork and mess any more than you do.”

http://financialhelpers.com/what-does-it-mean-to-have-excessive-student-loan-debt/

At the end of the day, you borrowed the money, and no matter what situation you’re in, you have to pay it back. Contacting your lender and working out a deal will bode much better for you than ignoring the problem and letting it go into default. They will help you go over repayment plans and more.

“Most lenders prefer to modify terms to make it possible for you to make regular monthly payments rather than taking you to court to obtain a judgment,” said Rabinovich.

Misconception #3: You Can Just Declare Bankruptcy

This topic was briefly covered earlier, but there are no bankruptcy protections against student loans. This is considered the nuclear route for so many people. They turn the key and have all their debts obliterated. With student loans, that’s not the case. The odds of a judge forgiving those is nearly zero.

So, even if you’re declaring bankruptcy, you will still have your loans haunting you.

The big question now is: what happens if you default? Well, the consequences vary. It can extremely complicate your life. Kevin O’Leary of Shark Tank said its best for young people to make paying off their student loans a priority before anything else.

The reason is, if you have a high amount of debt, it can impact your credit score negatively. That makes it that much harder to secure a loan for necessities, like a new car, to get a new credit card, and to even secure a mortgage. Life only gets more expensive once a person starts to settle down, get married, and have children.

“Defaulting on federal loans could make it impossible for you to participate in other federal loan programs,” Rabinovich adds. “For example, defaulting on a federal loan would likely disqualify you from receiving an FHA Loan (Federal Housing Administration). FHA Loans are popular with first-time homebuyers due to their minimal down payment requirements.”

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Kevin O’Leary’s Advice for Paying Off Student Loans

Written by adminSeptember 20, 2018
Student Loan Consolidation

Mr. Wonderful himself, Kevin O’Leary, has made a career out of giving financial advice to struggling entrepreneurs. As one of the mega-stars of ABC’s Shark Tank, O’Leary also frequents CNBC and Fox Business networks. Now, he has a word to share with millions of Americans suffering under the burden of student loans.

Recently, the amount of student loan debt has topped $1.5 trillion and growing with each passing year. It has become an epidemic of biblical proportions, higher than a credit card and auto loan debt. Only mortgage debt is higher. By 2023, it’s estimated that 40% of all student loans will default as it becomes unmanageable to borrowers.

So, what is O’Leary’s sage advice? Pay off your loans immediately.

“Get rid of that student debt right up front while you’re young and frisky, that’s the time to do it,” O’Leary told CNBC’s Make It. “You should pay that loan off in 36 months if you can do it.”

Paying Off Student Loans Should Be Your Priority

When students graduate college, their focus might be getting settled into a career and starting a family. They want to buy that house or a new car, but O’Leary thinks that’s a bad idea. Piling debt on top of debt is setting yourself up for a financial disaster later. Plus, having a large amount of student loans will make it more difficult to get other loans.

Instead, you should make paying off your student loan your main priority.

“It means you’re cutting back your lifestyle significantly. You’re spending up to 40 percent of your paycheck just to get rid of it. Why? Because it’s a very nasty thing to have hanging over your head for a very long period of time,” said O’Leary.

He makes a really good point. According to Experian in a 2017 study, even the generation known as Baby Boomers are still paying off their student loan debt. This generation is between 50-70 years old! The next generation down, 40-49-year old’s, still hold $229 billion in student debt. These loans do not just go away and can take decades to pay off.

Don’t Wait Because You Think It Will Be Easier

One strategy a lot of college students use is putting off their payments. They use forbearance and deferments, thinking it will be easier to pay off once they’re making more money. According to O’Leary, that’s not a good plan at all. In fact, it makes the problem larger and harder to deal with.

“The minute you establish a lifestyle and you start going out for dinner, and you start dating or you get married, all of a sudden, you have all kinds of other expenses, not necessarily just paying off your loan,” O’Leary says.

http://financialhelpers.com/why-you-should-skip-student-loan-forbearance/

“That’s why you want to pay your loan off as fast as you can before your lifestyle starts to really creep in on you and make you spend more on things like vacations, and dating, and dinners, and when a child comes along, all of those expenses.”

Interest rates also play a huge part in this. When you start out, you might think the interest rates are great, but over the life of the student loans, paying decades later, the interest has really piled on thousands of extra dollars. Student loans are “generous at the beginning, but over the long term that interest really adds up,” O’Leary says.

If you have a $50,000 student loan with a 5% interest rate (which is the current rate), you’d add $14,473 in interest. This is only paying the minimum balance over a decade. On the other hand, if you pay $1,500 per month, you can get out from under your loan in three years, reducing the interest to $4,616.

“I know it sounds like a lot, but really smart people figure this out pretty quickly and they focus on getting rid of that debt,” O’Leary says.

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What Does It Mean to Have Excessive Student Loan Debt?

Written by adminSeptember 19, 2018
Student Loan Consolidation

As millions of people across the country go back to their college dorms, many aren’t thinking about the future ramifications. They know they’ll have student loan debt (unless they got a free ride), but they underestimate how it will play out. No one goes to college and believes they’ll have a difficult time finding work once they graduate.

Except, that’s what happens. In the crux of the Great Recession, there were as many people with bachelor’s degrees working fast food as there were unemployed. Jobs are still coming back, but studies show they aren’t the high-paying jobs our parents and grandparents had. Everyone is still reeling, even if consumer confidence is growing at record rates.

Despite the horror story playing out in the news every night, more and more kids gear up for college. They take out student loans with no fear of not being able to pay it back. Yet, the debt continues to climb. Recently, student loan debt reached a peak of $1.5 trillion. In the next few years, 40% of that will go into default. Many will suffer from excessive student loan debt.

What is Excessive Student Loan Debt?

Some debt is reasonable after leaving college. A few grand here or there for books and tuition is reasonable. Some people leave college $50,00-$150,000 in debt. In a lot of cases, this can take the next 25 years of your life to pay off. Again, these students borrow that amount with the full expectation that they can graduate and get an adequate job to pay for it.

The problem is, it can become a vicious cycle. Having a lot of student debt can seriously interfere with a person’s life. Monthly repayment can cost more than a mortgage. Your credit score can be affected and it can cause other lenders not to loan you more for things like a house or a car.

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In specific terms, excessive student loan debt is when a person has too much debt that they can’t pay it back in a reasonable amount of time. It will seriously impact the financial stability of the individual. Interest is also a major factor most don’t consider. It can add thousands to your total debt, putting students in a vicious cycle they will never dig out of.

There is Help Available

If you find yourself stuck with excessive amounts of student loan debt, there is help available. The worst thing you can possibly do is not pay your bill. Interest will still add up and going into loan default will only make the problem worse. There are government programs that will assist borrowers based upon their income and ability to pay.

Financial Helpers is here to help as well. We’ve helped thousands of people struggling under the burden of student loans. We listen to their stories and work with their budget to find a plan that works for them. We even find if they qualify for student loan forgiveness, deal with the paperwork, and make the process easy.

If you’d like to know more about your options, you can call Financial Helpers at:

Call Now 844-332-2079

Excessive student debt will cripple your life. You shouldn’t have to put off financial freedom until 20 years down the road. There are options, you only need to know where to look. Financial Helpers will get you there.

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Why You Should Skip Student Loan Forbearance

Written by adminSeptember 18, 2018
Student Loan Consolidation

With the student loan crisis in full swing, millions of students graduate college with no idea what to do next. They may have a brief reprieve, but for the most part, repayment of loans begins immediately. With their shiny degree in hand, did the student find a great job right away? Odds are, the answer is no, but the lenders don’t care either way.

There’s a reason why the elite mock millennials for being the generation that still lives at home with their parents. It doesn’t mean they’re lazy and refuse to work. Student loan debt has become a crippling problem for this generation. For the last decade, the economic crisis made finding meaningful work nearly impossible.

The economic climate doesn’t matter to lenders. They want their money back, job or not. The monthly payments can be as high as $800-$1,000, depending on how much you borrowed. That’s the cost of rent. With so many students graduating and facing immediate hardship, many turn towards forbearance to give them some time.

What is Forbearance?

After a student leaves college, their student loan is due immediately. The amount of the payment depends on a variety of factors. In the event of an economic or financial hardship on the student, they can decide to apply for forbearance.

Forbearance is a process that allows students to put their student loan payments on hold for a temporary period, usually up to 12 months. This is a good thing for people suffering with financial difficulty to get a little extra time, but it should only be used for emergencies. Yet, its usage is becoming a trend among people with debt.

http://financialhelpers.com/how-the-great-recession-caused-the-current-student-loan-crisis/

Because you can get an unlimited number of forbearance deferments, a lot of students are putting their payments off for years, at a great cost to themselves. In the second quarter of 2018, 2.8 million student loan borrowers are considered in forbearance. A number of these cases remained in forbearance for 18 months or longer.

Why You Shouldn’t Put Off Your Student Loan

Forbearance isn’t a long-term strategy to avoid paying your loans. It should only be used in cases of a financial emergency. For example, if you injure yourself and cannot work, or the loss of a loved one. Students all over the country keep making the same mistakes. They jumped at a chance for an education, but weren’t prepared for what came next.

So, they avoid paying their loans as long as possible. They push it out further and further, but don’t realize they’re only making the situation worse for themselves. Even during forbearance does interest accrue on a student loan. That means the amount you owe will continue getting bigger during that time.

Over the period of a year, depending on the amount of interest, your loan could grow by $1,000-$2,000. That’s only the first year. Over the life of your loan, the interest continues to grow. Some students can never get out from underneath the revolving cycle of interest and actually pay down their loan.

Better Options

To recap, forbearance should only be used in a time of crisis. If you absolutely cannot pay your monthly bill, you can get it push off by a month or two. Your student loan will not go anywhere or magically disappear just because you push it off. In fact, the interest rate will only further grow your ending balance.

If you’re struggling to pay off your student loan, there are other options available to you. The PAYE and REPAYE are income-based programs that allow students to remain up-to-date on their payments. If you have a limited budget, you can pay what you can afford. As time goes on, as you make more money and your credit score improves, you can refinance your loan.

The worst thing you can do is get frustrated and give up. It will only add to your problems. Pay your balance down and keep to a schedule.

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4 Facts You Should Know About Student Loan Forgiveness

Written by adminSeptember 17, 2018
Student Loan Consolidation

Sure, everyone who takes out student loans would love to be awarded complete student loan forgiveness. Just one wave of the magic wand by someone sitting in a federal office, and POOF! The loan is gone. But sadly, most people misunderstand what it takes to get there. Not everyone can apply and the rules are strict.

So, the first thing about getting a student loan is you need to be prepared to spend at least the next decade of your life paying it back. Depending on the amount you owe, monthly payments are about as expensive as a cheap apartment rental. For this reason, a large percentage of people default on their student loans.

In fact, but 2023, it’s estimated that 40% of borrowers will default on their loans. As the amount of debt surpasses $1.5 trillion and climbing, student loan forgiveness is the only hope a lot of Americans have. If that sounds like you, here are four facts you could consider:

1) Student Loan Forgiveness Takes A LOT of Time

Barring a fraudulent case, you’re not going to apply for forgiveness and get it granted within a few months’ time. There are even a lot of stipulations and conditions to receive it. Currently, there are three programs that offer it: PAYE, REPAYE, and Public Service Loan Forgiveness.

With the Public Service Loan Forgiveness plan, it’s a 10-year process. Therefore, you have to be a federal, state, or local service worker who makes regular (around 120) payments over a ten-year period to qualify.

PAYE (or Pay As You Earn) is a 20-year program for student loan forgiveness. This is more income-driven. There’s a revised (REPAYE) program that can take up to 25 years. These programs help former students pay less each month based upon their income. At the end of the day, they might not be worth the trouble.

2) Good Chance Your Balance Will Increase

Getting on a student loan forgiveness program might be helpful for a lot of students. They can pay lower monthly payments, but there’s a reason why it can take as long as 25 years. Accruing interest is the major killer here. The interest doesn’t stop accumulating and will likely grow your balance.

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Every year, you have to re-certify your income. If you get a new job, a raise, or if your income changes under any circumstances, it can boot you out of the repayment program. You can even eventually take longer to repay than you would’ve done if you hadn’t joined the program. There are a lot of different scenarios to consider.

3) Student Loan Forgiveness Dollars Become Tax Debt

At the end of the day, you will have to pay off your debt. Any student loan forgiveness you receive only changes from loan debt to tax debt. That’s because the IRS still counts the amount forgiven as income you’ll have to pay taxes on. If you’re disabled or under the Public Service Loan Forgiveness program, this doesn’t apply to you.

4) The Future is Wide Open

Here at Financial Helpers, we’ve been regularly offering updates to the student loan forgiveness program. Each administration seems to have a different idea on the best way to offer help to students. The Obama administration created a lot of these programs at the height of the debt crisis, but the Trump administration seems to be more interested in protecting banks.

We recently reported that Betsy DeVos, the education secretary, was in favor of a tiered forgiveness program based on income. A federal judge ruled against her just last week. With this being said, there are a variety of different ways to pay off student loans quicker. There’s refinancing, repayment, and consolidation.

To learn more about your options and what plan works the best for you, call Financial Helpers today. We’ve love to hear from you. Our team of student loan debt experts is ready to assist in creating a plan around your budget and needs. You can call us at:

Call Now 844-332-2079

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