Morton McGoldrick, PLLC handles student loan legal matters. We can assist with helping a recent college graduate or retiree deal with their student loan issues. We provide student loan consultations with the goal of identifying a strategy to manage and eliminate student loan debt. We can help with both federal and private student loan debt.
TYPES OF STUDENT LOANS
Federal Student Loans: These are loans that are guaranteed by the U.S. Department of Education.
State Student Loans: These are loans that are offered by a state agency.
Private Student Loans: These are loans given by private banks and are not guaranteed by the U.S.
Department of Education.
STUDENT LOAN DELINQUENCY AND DEFAULT
If you have a federal student loan, you will be delinquent on your student loan payments if you are less than 270 days behind on payments. Your student loans will go into default when you are 270 days behind on payments. Upon default, the Department of Education can send you to collections, start an administrative wage garnishment (meaning that they can garnish your wages without even filing a lawsuit against you), offset your social security benefits, intercept your federal and state tax refunds, and can file a lawsuit against you. You may also be subject to a 25 – 40 percent collection fee. Private loans are subject to default if a single payment is missed at the discretion of the lender. Private student loan holders can send you to collections and file a lawsuit against you to obtain a judgment. Upon receipt of a judgment, they can garnish your wages and bank accounts.
CURING STUDENT LOAN DEFAULTS AND DELINQUENCIES
A student loan attorney at Morton McGoldrick, PLLC can help you cure your student loans that are either delinquent or in default. Federal student loans can be cured through Consolidation or Rehabilitation. Private student loans can be cured through settlement.
ADMINISTRATIVE DISCHARGE OF STUDENT LOANS
Federal student loans can sometimes be discharged administratively depending on the circumstances. For example, Parent Plus loans can be administratively discharged upon the death of the student who received the benefit of the loan. Other federal student loans can be discharged if the borrower has suffered a total and permanent disability. Morton McGoldrick, PLLC can help you determine whether or not you might qualify for administrative discharge of student loans.
REPAYMENT PLANS FOR FEDERAL STUDENT LOANS
Most federal student loan servicers will tell the borrower that they have the option of paying their student loans back with a balanced-based repayment plan that will last either 10 or 25 years. These balanced-based repayment plans require that you pay off the entire balance of your student loans, plus interest. However, there are numerous other repayment plans based on the borrower’s income, which may allow you to repay only a fraction of your student loan debt before having the remaining balance forgiven. The following Income Driven Repayment Plans (IDR) are available for many federal student loans:
Income Contingent Repayment (ICR)
Income Based Repayment (IBR)
Pay As You Earn (PAYE)
New Income Based Repayment (New IBR)
Revised Pay as you Earn (REPAYE)
In addition, a new federal program that will further reduce monthly payments was introduced by the Biden Administration in August, 2022. This new program, which does not yet have a name, will likely be available in mid to late 2023.
Morton McGoldrick, PLLC can analyze your situation and tell you which repayment plan you qualify for and which would be the most advantageous for your situation. Choosing the right repayment plan can save you money.
ONE TIME IDR RECOUNT
The Department of Education will conduct a one-time revision of IDR-qualifying payments for all Direct Loan and federally managed FFEL loans. This means that the Department of Education will credit borrowers with any payments made while in repayment status, regardless of the payments made, loan type, or repayment plan. In addition, any time spent in forbearance or deferment (with minimal exceptions) will be credited towards the IDR payment plan. This means that borrowers with loans that have accumulated repayment time of 20 to 25 years may result in automatic loan forgiveness. Schedule a review with a student loan attorney at Morton McGoldrick, PLLC to find out how this might apply to your situation.
FRESH START PROGRAM
Effective January 1, 2023, anyone with a defaulted federal student loan can enter a Fresh Start Program with the Department of Education. This will get borrowers out of default without needing to go through a formal rehabilitation program. In addition, credit reporting regarding student loan defaults will be removed from credit reports. Schedule a review with a student loan attorney at Morton McGoldrick, PLLC to find out how the Fresh Start Program might help get you out of default, improve your credit score, and get you on an affordable payment plan to help eliminate your student loans.
STUDENT LOAN FORGIVENESS
If you work for a qualifying employer (government organization or non-profit), you may qualify for Public Service Loan Forgiveness. If you qualify, you may be eligible to eliminate your federal student loans by making payments over a ten-year period of time. This can include time in balanced-based or income driven repayment plans. This means that you might be able to eliminate your student loans with minimal or zero payments each month under an IDR plan if you qualify. Student loan forgiveness of $5,000 to $17,500 may also be available for teachers.
Schedule a consultation with a student loan attorney at Morton McGoldrick, PLLC to analyze whether or not you might qualify for a student loan forgiveness program.
STUDENT LOAN DISCHARGE IN BANKRUPTCY
It may be possible to discharge both private and federal student loans in bankruptcy. This may be an option for borrowers who do not qualify for affordable Income Driven Repayment plans. In order to discharge student loans in bankruptcy, the borrower must be able to pass an undue hardship test. Effective November 17, 2022, it will be easier than ever to discharge federal student loans in bankruptcy cases due to updated guidelines from the Department of Education and Department of Justice. A student loan attorney at Morton McGoldrick, PLLC can help analyze your situation to determine whether or not your student loans might be able to be discharged through bankruptcy.