The rising cost of post-secondary education means student loan debt can climb into the six-figure range. Fortunately, relief is available. The federal College Cost Reduction and Access Act offers options for reducing loan balances through career choices and extended payment plans. Under rare circumstances, individuals who file for bankruptcy can discharge their student loan debt. Below, a bankruptcy lawyer explains each of these options so you can decide which one is right for you.
Income-Based & Income-Contingent Repayment Plans
Provisions of the College Cost Reduction and Access Act allow lower payments to relieve student loan debt burdens. Based on the graduate’s career choices under the income-based repayment plan, loans are forgiven after 10 or 25 years. Debts are extinguished if borrowers pass away before the loans are repaid or forgiven.
Grad PLUS and Federal Direct loan borrowers who do not qualify for the income-based repayment plan can use the income-contingent repayment plan to pay lower amounts. Their remaining debts are forgiven after 25 years.
Public Service Loan Forgiveness
Under this plan in the Act, recipients of Federal Direct student loans can work for a federal, state, or local government, the Peace Corps, or AmeriCorps in exchange for reduced repayments. Graduates must work for a certain number of years to maintain plan eligibility, and their payments can be as low as $0. Loans are forgiven after 120 monthly payments.
Bankruptcy courts generally do not discharge student loan debt. However, experienced bankruptcy lawyers know that in rare cases, courts do discharge such debts when they find them unreasonably burdensome. Debtors must show that conditions they can’t control make it impossible to pay the amount owed now or in the future.
Eugene S. Melchionne, Attorney at Law, is a bankruptcy lawyer with more than 30 years of experience helping residents in Waterbury, CT, and surrounding areas solve their financial problems, including burdensome student loans. Call (203) 757-3437 or visit his website today to arrange your consultation.