Student Loan Deal Passes Senate

Durbin, earlier this year floated legislation to allow private student-loan debt to be discharged in bankruptcy. However, the proposal doesn’t address federal loans, the bulk of outstanding student debt, and doesn’t clarify Chapter 13’s repayment rules. Falling behind on student loans can have other consequences. In 2009, a Florida optometrist told Bankruptcy Judge John K. Olson that she could lose her professional license if state regulators found out she defaulted on her student loans. Judge Olson allowed the woman to keep making full payments, but lawyers say fighting for such exceptions can be an expensive battle with a high risk of failure.

My Daughter’s Life is Over With These Private Student Loans

Settlement certainly isn’t an easy way out. Borrowers often face a tax bill for any portion of a loan that’s forgiven, since tax authorities consider forgiven debt to be income. Settlements also have severe negative repercussions for borrowers’ credit scores. That’s why Minsky counsels his clients to consider all other options first, including loan forgiveness, income-sensitive repayment plans and loan rehabilitation, a federal student loan program that expunges defaults from borrowers’ credit reports after they make nine on-time monthly payments. Some clients decide to take those other paths, while others see a settlement as a way to close out a difficult chapter of their lives.

Choosing to pay for college through a private student loan is no better than paying for it on a credit card. Private student loans are generally more expensive and risky for consumers than more-common federal student loans, and dealing with private student lenders can be a tremendous hassle, states the PIRG analysis. PIRG also found that high debt borrowers are also disproportionately PSL borrowers, often with $40,000 or more in total debt. Even worse, PSL repayment was the subject of nearly 65 percent of the more than 4,300 complaints received by CFPB from October 1, 2012 through September 30, 2013. Repayment concerns included fees, billing, deferment, forbearance, fraud and credit reporting.

I am very sure there are thousands and thousands of others struggling too. She does NOT want to file bankruptcy – she want to pay what she owes…she is a good kid… My daughter borrowed $35,000 in PRIVATE school loans..She has paid at least $15,000 back-yet her total debt is now >$45,000!!!! How can this happen??? She has to pay $150.00 to even ask for when in hospital for surgery and unable to work ( as a waitress) because her BFA has not provided any increased opportunity for work in her field …she has struggled for 7 years- living in abject poverty under the weight of this loan system.
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It only affects Stafford loans, which are made by the U.S. government to help finance a college education. Students can apply through their university financial aid office. The loans are limited to no more than $5,500, for a mix of subsidized and unsubsidized loans for the freshmen year and $7,500 for juniors and above. On July 1, the interest rate on subsidized Stafford loans doubled from 3.4% to 6.8%.

I dont see any end, said Laurie Banks, who graduated from BYU in June 2012. I make minimum payments every month and just keep trudging along. Banks has a couple of state loans and some federal loans to pay off, too. She said it was worth it to get her education, which helped her get her job as a technical writer. But the debt constantly weighs on her. My tactic is to tread water, Banks said.


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