Private Student Loans Relief

6 min read

In March, Congress passed the Paycheck Fairness Act of 2010 (PFA) to strengthen equal pay laws by preventing employers from retaliating against employees who discuss their wages or request information about pay practices. This law was signed into law by President Obama on July 9th, 2010.

The PFA requires employers to provide accurate salary data to employees and prohibits retaliation against workers for discussing their salaries or seeking wage-related information. However, under current federal regulations, student loans cannot be discharged in bankruptcy. If this rule changes, these private student loans may be dischargeable in bankruptcy.

There are two types of loan forgiveness programs: borrower relief and employer relief. Borrower relief means that if the borrower is unable to make payments while actively working towards a degree program, he/she may opt out of those payments and have his/her remaining balance forgiven. Employer relief means that if an employee takes time off work to pursue education or training, the company may forgive any remaining balance once they return to active employment. The new rules would allow borrowers to qualify for both forms of loan forgiveness.

Private student loans constitute less than 1% of outstanding consumer debt. These loans are often not eligible for traditional bank refinancing, making access to relief extremely difficult. Currently, private student lending companies offer borrowers repayment plans, but only for a very small percentage of the total number of private student loans in existence. These companies do not provide borrower relief unless all balances are paid in full.

It is likely that the new rules will increase demand for private student loans, leading lenders to charge higher interest rates on the loans. This could mean that private students will need to borrow more money, reducing the amount of loan forgiveness offered and increasing risk of default.

Private Student Loans Relief

Private student loans relief

Private student loan debt is one of the most challenging aspects of college. Many students find themselves buried under thousands of dollars of private student debt. If you’re struggling with student loans, we want to help! We have created a loan forgiveness program where you can apply and qualify.

3. How much does Private student loan debt cost?

For College Students – $23 billionMissing out on tens of Thousands of Dollars.

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Private Student Loans Relief

Private student loans relief is available for both federal and private student loan programs. In general, private student loans are not federally regulated and have no co-signer requirements. They often carry higher rates than federal student loans. However, they do offer some benefits over federal loans. Most notably, if you default on a private student loan and fail to make payments for 180 days, you won’t accrue interest on the unpaid balance. To qualify for this benefit, however, you must meet certain criteria. You need to be at least 24 years old and enrolled in a qualifying program for at least six months. You also need to have borrowed $10,000 or less and have been repaying this amount for two consecutive semesters. Finally, you can’t have already received bankruptcy protection or had a garnishment order placed on your wages.

Federal student loan forgiveness may occur due to financial hardship, military service, or enrollment in a public school. If you meet these three conditions, the government will deduct the outstanding balance of your loans from your taxes. Qualifying programs include active duty in the military, a full-time job working in a federal service industry, or attending a public school. Students who complete their education and are unemployed cannot receive any type of student loan relief.

For students who don’t qualify for federal loan forgiveness, private student loan relief may be possible. Private lenders operate independently from the federal government and therefore aren’t subject to any regulations governing federal loans, making them more flexible than federal options. However, many private student loans are still governed by the same terms and conditions as federal loans. According to the Consumer Financial Protection Bureau, private student loans often carry higher interest rates than federal loans. Additionally, private debt forgiveness laws are much more restrictive than those applicable to federal loans. While borrowers can qualify for private loan relief under almost identical circumstances as for federal loans, many lenders won’t consider requests for relief unless the borrower also has a current federal loan.

Borrowers should always check the fine print of their private student loan agreements before signing. Many private loans require borrowers to repay the entire remaining principal balance even if they stop paying. Furthermore, lenders don’t have to provide borrowers with a discharge notice until after five years. If you fail to pay, the lender can file a lawsuit against you for the full amount of the loan. So, if your repayment plan ends prematurely or you decide to leave school early, a private student loan agreement could become quite costly to you.

If you’re struggling to afford college, ask yourself whether you really want to go to school. A four-year degree isn’t cheap, but borrowing money doesn’t solve the problem. Instead, try looking into cheaper community colleges where you can earn two-to-four years of college credits while saving money.

Private Student Loans Relief

Private Student Loan Relief (PSLR) was established under  IV Part D of the Higher Education Act of 1965, as amended, and provides eligible borrowers with relief from certain private student loan payments. Eligible borrowers who have made at least three payments on their loans after July 1, 2007, may benefit from PSLR.

Borrowers whose loans were not insured or guaranteed by the federal government may apply for relief from these payments if they meet the following requirements:

Have made all 12 monthly payments due on their loans;

Be enrolled as full-time students on at least half time basis;

Have graduated or received a certificate of completion; and

Not have been in default before applying for relief.

You must submit a completed application and supporting documentation (such as tax returns, W-2 statements, pay stubs, etc.) with your application to qualify for PSLR.

If you qualify for PSLR, you will no longer be responsible for making any payment toward your student loans. Your total loan balance will be reduced by the amount of your monthly payments before taxes. You may continue to make additional payments while receiving PSLR. Once you stop making your loan payments, however, you will need to refinance your loans or take an income contingent repayment plan to help lower your monthly payments. You should consult your loan servicer about how to do either of these things.

After you have applied for PSLR, your loan servicer will send you instructions on how to make your remaining loan payments. You also will receive a letter informing you whether your request for relief was approved.

If your loan servicer determines that you did not meet the eligibility requirements outlined above, they will inform you of this fact. In addition, you may ask them to reconsider your case and consider granting your request for relief. However, you cannot appeal that decision.

A borrower’s federal income tax return filed for the six months preceding the date he or she makes his or her first and second loans payments will determine the size of the discount on the loan principal. However, borrowers are still liable for interest charges accruing on the unpaid portion of the loans.

If you wish to avoid paying interest on the unpaid portion of your loans while you receive PSLR, you will need to enter into an Income Contingent Repayment Plan. There are several options available in order to pay down the outstanding balance of your loans while maintaining a low monthly payment. To learn more, contact your loan servicer directly.

Interest rates on private student loans vary widely. Typically, they range between 6% and 24%, depending on your credit history and loan type. Before borrowing money for school, visit our Federal Direct Loan Debt Calculator to find out what your payment could potentially be.

When you decide to refinance or change your current lender to repay your student loans, keep in mind that lenders charge different fees and costs associated with refinancing. Make sure you shop around for the best deal.

Private Student Loans Relief

If you have had trouble securing private student loans, you may qualify for relief under the recently passed Bipartisan Budget Act of 2018 (BBA). Under the terms of the new law, the government provides federal loan subsidies to students who receive direct payments on their student debt if they meet certain income requirements.

Private student loans are not covered in bankruptcy proceedings. Because the student loans are not dischargeable in bankruptcy, borrowers need to pay them back even if they file for Chapter 13 bankruptcy. In addition, borrowers do not get any benefit from using Chapter 13.

To apply for relief, you need to show proof of financial hardship and demonstrate that paying off your student loan would cause an undue burden for you and your family. You also need to provide two years of tax returns showing gross income below $50,000 ($100,000 if married filing jointly) and total taxes paid last year equal to 0% of adjusted gross income.

Your request for relief under the new law should be submitted directly to the Department of Education. You will need to give your social security number and contact information before applying.

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