Question:
Dear Steve,
I have a federal student loan @ $110,000 from 2003 – 2011. I was laid off from the Federal Bankruptcy Court in 2014 thats to Mr Obama with only 19 months left till early retirement. I took a job that pays 65% less (income dropped from 62,000 to 24,000) and the same year my husband was laid off and has not found full time work since.
He has a private student loan of @ $12,000 from ITT Tech which he can now never use or transfer those credits. Our total income went from 96,000 in 2013 to @ $50,000 this year. With a large mortgage and monthly expenses there is no room to pay on these student loans.
And now that Steve is 60 years old we are just trying to make it till he can start drawing SS benefits in 2 years. This month we are behind on our mortgage and out truck payment. HOW CAN WE OBTAIN STUDENT LOAN FORGIVENESS DUE TO FINANCIAL HARDSHIP???
HOW CAN WE OBTAIN STUDENT LOAN FORGIVENESS DUE TO FINANCIAL HARDSHIP???
Jacque
Answer:
Dear Jacque,
First I have to address your impression that President Obama laid you off. You may want to direct your anger towards him but these issues are controlled by Congress and the desire to cut the budget and make government smaller. Your anger probably needs to be directed towards the Budget Control Act of 2011 which had a significant impact on federal court budgets as the years progressed.
As the Federal Bar Association said back then, “The outcome of the budget talks in Washington could have big consequences for the federal courts. Congress approves the federal courts’ budget and appropriates money for the judiciary to operate. Steep across-the-board funding cuts in the federal budget could dramatically affect how much money is made available for the operation of our federal courts.”
And these mandatory cuts specified by Congress did have an impact. Supreme Court Chief Justice Roberts expressed his concern over the damage these cuts have had on the federal courts. As Justice Roberts said in his 2013 review, “The impact of the sequester was more significant on the courts than elsewhere in the government, because virtually all of their core functions are constitutionally and statutorily required.” He went on to say, “Sequestration cuts have affected court operations across the spectrum. There are fewer court clerks to process new civil and bankruptcy cases, slowing the intake procedure and propagating delays throughout the litigation process.”
Hopefully you had your federal student loans in one of the Public Service Loan Forgiveness program from 2007, when it started. You would have had seven years of qualifying employment under your belt. If you do not have your federal student loans in an income driven repayment plan, you should. This will give you the lowest monthly payment available based on your income. See this page and you will want to look for the information on how to get those loans into a Direct Consolidation Loan and then opt for an income driven repayment. That payment program would have counted towards the Public Service Loan Forgiveness. If you go to work for a state, federal, or nonprofit entity, those will help you to qualify for loan forgiveness.
Steve’s ITT Tech loans would not be eligible for any of the government forgiveness programs. Private loans are not included. If they were federal loans then they could be eligible for forgiveness under the Borrower Defense program.
Ultimately, you will have to strongly consider downsizing to get your current life to fit within nearly half of your previous income. It’s not a great solution but considering that the private loans offer no financial hardship solution, except default, and the federal loan income driven program is the lowest payment available, then you will have to look at other cost cuts.
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