Quick Answer: When an ex-spouse can’t help repay a Stafford loan due to circumstances like homelessness or mental illness, the borrower should apply for Income Based Repayment (IBR) to get payments as low as $0 per month. This prevents default consequences like wage garnishment while the borrower rebuilds their financial situation.
“Dear Steve,
I divorced my ex in June of 2007. At the time of our divorce there was a Stafford student loan owing from when I attended college in 2001. Since my divorce, I have adopted my youngest granddaughter and am raising her on my own.
In addition, my ex has been homeless and diagnosed bi-polar and requires medication. I have found myself in a situation dealing with him where I have been forced into a confidential relocation. Therefore, I cannot receive any assistance from my ex in repaying this loan.
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I am currently attending college again and will graduate in June with a degree in Paralegal Studies. My current total income is $735 per month. I have not made any payments on this loan in several years due to my income status.
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Through my research I have not been able to find a loan forgiveness program which I might be able to apply for to even get part of this loan reduced. Can you give me any suggestions?
Deb”
Dear Deb,
I’m so sorry to hear about the situation you’ve been dealing with. It certainly sounds entirely stressful and frightening.
To get a grip on the old federal loan the most logical approach would be to attempt to get that old loan into an Income Based Repayment plan (IBR) and get the monthly payment adjusted based on your income. The payment can be as low as $0 per month. The goal here would be to get the loan out of default so you can avoid any Administrative Wage Garnishment or tax refund intercept.
More details on the IBR can be found here.
If the loan servicer says you are not eligible for the IBR program at this time because you are in default, then you will need to rehabilitate the loan. Typically loans that are in default are not IBR eligible but I have seen servicers do it.
Loan rehabilitation is not a horrible strategy to get your old loan back into good shape. In this program the rehabilitation payment can be as low as $5 but it will be an affordable amount you and the loan servicer agree on. After nine payments your loan will be out of default and eligible for the IBR payment.
While the program will not forgive your loans unless you make 25 years worth of payments under the program, it will lower your payment to a manageable level and get it back in good shape so it is one less thing you need to worry about.
Please post your responses and follow-up messages to me on this in the comments section below.
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