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I Make Hardly Any Money. How Can I Get My Sallie Mae, Direct Loan and Pell Grants Forgiven. – Elle

“Dear Steve,

1. I’ve been homeless and rented “rooms” for the last 3 years. Moved somewhere between seven and nine times.
2. I’ve been mostly unemployed, have had a great difficulty finding jobs because I was a stay at home parent most my adult life, and when I did find work the pay was 8.50 and hour on the average.
3. Was collecting foodstamps at one point and received Medicaid which expired and I never pursued
4. Lost all my possessions because I could not pay the storage bill.
5. Went into a chapter 7 bankruptcy a year ago in January. So that would be 2011
6. Had two short term jobs that I was fired on bogus terms from over the last six months. Currently unemployed and seeking work.
7. Have not earned enough to be required to file taxes in at least three years.
8.I have a 22 year old in college and a 17 year old and they both could use my financial assistance.

I graduated college with my BA with a concentration in Psychology and Communications. last week. I’m worried that because of the economy I won’t find work. I owe money to Sallie Mae and to Direct Loans and for Pell Grants. Do I qualify for loan forgiveness? What can I do, if I don’t?

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Dear Elle,

I think a number of the links in the resource section below will help to answer your Direct Loan and forgiveness questions.

Please post your responses and follow-up messages to me on this in the comments section below.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


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  • Dear Elle,

    Pell grants are “gifts” and do not require repayment. This makes me think you may need to better understand what you are dealing with… Do you know if your loans with Sallie Mae are private, federal or a combination of the two?  
    To see/understand your current status on Federal loans go to this site and create an account (this is the national database for federal student loans):

    Once you have a clear understanding of what your loans are you will better be able to review your options.  Unfortunately none of the current forgiveness or consolidation plans are available for loans that are in default.

    Bankruptcy is “technically” an option but no so much in reality as the requirements for discharge are incredibly difficult to meet.  I’ve read articles about borrowers who have been completely paralyzed/unable to work and still were unable to get SL’s discharged.  I’ve also read about a few who were successful.  It is something you could talk with an attorney about just in case.

    A new bill, H.R.4170, was introduced on March 8, 2012 by Rep. Hansen Clarke.  It is a 10-year repayment plan based on 10% of discretionary income (discretionary income is defined as 150% over poverty level).  At the end of the repayment period any remaining balance would be forgiven, and the forgiven balance would not be treated as taxable income (a huge plus for those on SS at the time of forgiveness as the IRS would not come after you for taxes on forgiven debt).  

    This plan would apply to federal loans as well as many private loans and would help those currently in default.  

    You can read more about H.R.4170 here on my website:

    To show your support for H.R.4170, please sign these 2 petitions:  and

    If you are on facebook, feel free to join my group, AgingWithStudentDebt at:  We are a group of SL borrowers working toward solutions to the problems of aging with this debt.  We support one another, help each other navigate the maze of SLD, share news/information and rally around legislation that will bring reform.

    Best of luck to you Elle!

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