Bankruptcy Judge Says REPAYE is a Hopeless Strategy

A recent opinion written by United States Chief Bankruptcy Judge Somers is a fascinating read. The bankruptcy judge excoriates the student loan position the government has held that student loans should not be discharged in bankruptcy. Of course, even that position goes against previous Department of Education advice that some federal student loans should be … Read more

Almost Nobody Has Has Their Student Loans Forgiven Under an Income-Driven Repayment Plan

A couple of weeks ago Rodger asked me how many people have actually completed an Income-Based Repayment plan. I didn’t know the answer so I went and asked the Department of Education and surprisingly they got back to me relatively quickly. Don’t Be Shocked As of January 27, 2020, there have been 19 people that … Read more

Federal Student Loan Program – “An Outrage”

Last month, Adam Looney of the Brookings Institution released a paper that is chock full of ideas for fixing the federal student-loan program. Looney began his paper with a withering condemnation of the program in its present form, which he accurately described as an outrage. I am quoting his critique verbatim, just putting his words … Read more

How Can I Avoid a Big Tax Bill in 25 Years on Forgiven Federal Student Loans?

Question: Dear Steve, I am paying the minimal payment for the REPAYE payment plan to the federal government. My yearly pay is merely 12 K per year. My debt is 100 K with all of the interest added. If my student debt should be erased in 27 years, how will that impact my taxes when … Read more

Alternative Repayment Plan – The Little Known Federal Student Loan Plan When All Else Fails

For individuals struggling to repay their federal student loans and think the only repayment options are a Graduated Repayment Plan, Extended Repayment Plan, Revised Pay As You Earn, REPAYE, Pay As You Earn, PAYE, Income Based Repayment Plan, IBR, Income Contingent Repayment Plan, ICR, or Income Sensitive Repayment Plan. For Direct Loans there is also … Read more

Income-Driven Repayment Plans for Managing Crushing Levels of Student-Loan Debt: Financial Suicide

By the end of his first term in office, President Obama knew the federal student loan program was out of control. Default rates were up and millions of student borrowers had put their loans into forbearance or deferment because they were unable to make their monthly payments. Then in 2013, early in Obama’s second term, … Read more

Income-Driven Repayment Plans for Distressed Student-Loan Debtors: Not a Silver Bullet for Easing the Student Loan Crisis

by Richard Fossey & Robert C. Cloud. The federal student loan program is in crisis. More than 40 million Americans now have outstanding student loans totaling almost $1.3 trillion and 8 million borrowers are in default (Cao, 2016). As reported recently by the Brookings Institution, in the for-profit college sector, default rates are especially high. … Read more

Income-Driven Repayment Plans for Distressed Student-Loan Debtors are Insane

In a recent post, I wrote about Alan and Catherine Murray, who won a partial discharge of their student-loan debt in a bankruptcy case decided in December 2016. Educational Credit Management (ECMC), the creditor in their case, is appealing the decision. We should all hope ECMC loses the appeal, because the Murrays are the poster … Read more

Can I Switch Out of REPAYE to IBR? – Peggy Sue

Question: Dear Steve, I recently consolidated $78,000 of Federal Student Loans and entered into the RePAYE Plan. In the past year I got married, and understand that in RePAYE my spouse’s income must be included in the repayment calculations when I re-certify. FedLoan is currently serving my loans. When I re-certify can I switch to … Read more

Do Any of My FFEL Consolidation Loan Payments Count Towards Public Service Loan Forgiveness? – Amelie

Question: Dear Steve, I have a Student Loan with Navient. I’m paying it (on time) since 2000. They were FFEL Stafford Subsidized Loans that were converted in a FFEL Consolidated Loan on 1999 with Sallie Mae. I am an employee of a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service … Read more

Am I Doing the Right Thing By Consolidating This Student Loan for Forgiveness?

Interest rate negotiation can result in a lower interest rate than you are paying now.

Question: Dear Steve, I consolidated my undergraduate loans into an FFEL Consolidation loan, disbursed in October 2007, owned by Nelnet. After that, I graduated, worked three years at a nonprofit, only to discover the payments I made during those years weren’t eligible for PSLF because I was paying on an FFEL loan, not a direct … Read more

Navient Feels Like a Modern Day Mafia to Us

Question: Dear Steve, Took out Federally backed Student loans with Sallie Mae 20 years ago after a divorce. Had to use deferments due to job losses and health issues. Borrowed around $75,000 for three degrees. Due to the delayed interest from the deferments I now owe $126,000. I am now in retirement at 69 years … Read more

I’m Graduating With a PhD and Student Loans I Can’t Afford

Question: Dear Steve, I’m currently a full-time PhD student at a very reputable university who is entering what is hopefully the final year of graduate school. While I’ve been fully funded all of my years here, the stipend has never been enough to help me pay down any of my loans from previous undergraduate and … Read more

Should I Go With Student Loan Assistance Center for Help?

Question: Dear Steve, Student Loan Assistance Center SLAC said that they would help me with my student loans. I currently have $307,500 worth of them right at 50 when I checked myself. I currently don’t have a source of income, and I still have two children in the home. They wanted me to come up … Read more