For a record 44 million borrowers, the $1.5 trillion in student loan debt in this country is taking a toll. More former students are looking for how to get out of student loan debt without defaulting or breaking the law. You might know that there are forgiveness programs to help students with excessive debt. If you’ve looked into having your loans forgiven, you also will know that most applications for forgiveness are denied.
Why Student Debt Is Growing
Of those who have outstanding student loan debt, about 5.6 million owe more than $50,000. Most people assume that rising tuition rates are to blame, but that’s only part of the problem. The growing number of parents taking out loans for students hints at another issue. American families aren’t making enough money to pay for their children’s tuition. At a time when the need for a college degree is on the rise, they’re turning to other means of financing to pay for it.
For those graduates who do face large debt once they finish school, the pay for their first job might fall well short of covering the large payments on their debt. Although they’re just starting out with a new career and lifestyle, they already have more debt than they can afford to pay.
One thing that you may have in common with millions of other college graduates is the financial and emotional stress that being in debt causes. It’s a problem that doesn’t go away and you probably feel like there aren’t any realistic solutions. Defaulting on your loan can have a serious impact on your credit. It might keep you from buying a home or a vehicle that you really need.
You might, however, have more options than you think. The types of loans you have and the original agreement you signed might provide you with a way out.
How to Get Out of Student Loan Debt Before You Lose Your Mind
1. Enroll in Income-Driven Repayment
If you have federal student loans that require a large monthly payment, you might be able to have your payment amounts reduced. An income-driven repayment plan (IDR) determines a reasonable payment based on your income. Once you reach the end of your repayment period, it also forgives any remaining balance.
We aren’t seeing the end results of these plans yet. The first plans began in 1994 and they last from 20 to 25 years. If this ends up being the best plan for you, make sure you stick with it until the end of your repayment plan. You’ll still have to make payments for a long time – but lower payments will put less of a strain on you financially and emotionally.
2. Apply for a Disability Discharge
This isn’t the option for everyone trying to get out from under a mountain of student loan debt. But for those who become disabled after achieving their college degree, it’s an option that exists. The Total and Permanent Disability (TPD) Discharge program can eliminate all of your student debt if you qualify.
Apply online and provide your documentation proving your disability status. The program applies to most federal student loans. Make sure your loan qualifies before submitting your application.
3. Look Into Loan Repayment Assistance Programs
Loan repayment assistance programs (LRAPs) include a broad range of programs targeted at forgiving some or all of your student loans. Unlike federal programs, LRAPs operate at the state and local level. Some require you to share skills such as teaching or providing health care services.
If your degree is in one of these in-demand industries and you live in a high-need area, you might qualify for a forgiveness program. Find out what’s available in your area and make sure you understand all the conditions that apply. Many programs apply taxes to the debt they forgive. Still, you could end up paying back thousands less than if you repaid the full amount of your debt.
4. Consider Working in Public Service
Just as some programs forgive your student loan debt in return for your services as a teacher or medical professional, Public Service Loan Forgiveness (PSLF) does the same in exchange for public service work. You must acquire employment with a qualifying employer in the public service sector. Having your debt paid off without incurring taxes on the amount forgiven is an additional perk. If you’re wondering how to get out of student loan debt without paying anything, this might be a good option for you.
Like most benefits, this plan has a trade-off. This one means working for a nonprofit or government job and getting lower pay for 10 years. But you could still come out ahead financially. If your debt is significant, your monthly payments might be significant too. Considering the large payments you’ll have to make without a program, the PSLF could make a big difference in your financial situation.
If you’re already working at a low-paying job in public service and making payments on your student loans, you might be due for a tax-free gift.
5. Join the Military
Joining the Army, Air Force, Navy, or National Guard might give you eligibility for student loan forgiveness. It’s a big career change for anyone, but it could also take the burden off your finances. Each branch is different but most pay enough to cover the majority of even the largest debts. For example, the Navy pays as much as $65,000 over the duration of your service. Each branch has its own requirements and terms. If you decide to make this big commitment, make sure you know your potential benefits.
6. Choose an Employer That Will Help
Employers are aware of the problem with college debt in this country. As a result, many are competing for new talent by offering loan repayment assistance programs. Your options depend on your area of study and your skills. The number of employers offering these plans is still small but growing. Some offer to make your payments for you while others offer refinancing plans that improve your payment options.
7. File for Bankruptcy
Students are often told that student loans don’t qualify as dischargeable debt in bankruptcy. In a lot of cases, it’s true. If you can, however, prove in court that repaying the loans would present an undue hardship and that your situation will persist over a large portion of the repayment period, you’re part of the way there. You also have to show that you’ve made a good-faith effort to meet your payments.
You should only consider bankruptcy if you don’t have other avenues to try. If you fail to meet the burden of proof, your student loans won’t get discharged. Another problem is that filing for bankruptcy will automatically put your loans into default. That means you no longer have the option of paying them off in installments. Talk with an attorney before you decide on this option.
8. Choose a College with Loan Repayment Programs
If you don’t already have college debt and are still in the planning stages, add one more feature to your college criteria. Instead of basing your choice on tuition alone, consider which colleges have a built-in loan repayment assistance program.
More colleges are offering help paying for tuition. The plans vary from college to college, but most reward students who go to work full-time after graduating and make under a certain salary.
Refinancing might not be as appealing as wiping your debt clean altogether. But you can save thousands of dollars just by refinancing. In addition to paying less overall, you can also lower your monthly payments significantly.
10. Consider an Attorney-Based Modification
One reason that so many students are facing historical student loan debt is due to predatory student loan companies. These companies provide students with loans with unfair terms and deceptive agreements. Through an attorney-based modification, you can have your student loan debt reduced by at least 30 to 70 percent.
Many students looking for information on how to get out of student loan debt haven’t heard of attorney-based modifications. It is a relatively new idea that is based on errors or fraud in student contracts. The idea is to reduce or dismiss student debts that shouldn’t have occurred in the first place.
Before You Apply for Help
One of the problems with many state and federal forgiveness programs is that most students don’t qualify. Of the thousands of students who apply, only a few hundred will receive loan forgiveness.
If loan forgiveness is out of the question, there are still options that can help. Having your loan debt reduced means paying less each month and for a shorter duration. It’s up to you to find out which options you are eligible for and the best approach for your needs. It isn’t enough to choose a program randomly and apply. They aren’t all the same.
For example, if you apply for income-based repayment (IBR) instead of income-driven repayment (IDR), your payments will be less but you will still pay the full amount over a longer period of time. Is it really worth it to reduce your payments if you end up repaying your loan for an additional five or ten years?
Some programs only forgive certain types of loans. Those that require you to have an eligible employer have specific guidelines about who that includes. You might have to make a certain number of payments before you are eligible for forgiveness. Even the dates that you took out your loans can determine which programs you are eligible for.
Get Your Life Back by Learning How to Get Out of Student Loan Debt
Students don’t always make the best choices in college. They see money that’s available to them and they take it whether they really need it or not. The challenges of college life make it easy to put financial matters on the back burner. All that matters is the “here and now.”
After graduation, most students are ready to find a job, get their own place, and start enjoying an independent life. It isn’t until that first payment notice arrives that their debt becomes a reality. Lower wages and higher loan amounts are why so many students are buried in student debt. It’s also why the number of students defaulting on their loans is on the rise. If you are feeling overwhelmed by student debt, you do have options.
Defaulting on your school debt is never the answer. It can hurt your credit and prevent you from making purchases you need in the future. Other penalties include wage garnishment, withholding your tax refund and/or benefits, and potentially taking you to court.
Once you default on a loan, you can no longer receive any federal student aid and you no longer qualify for deferments or forbearances. You could also start your life as an employed adult receiving phone calls from your lenders trying to make you pay. That means you need a plan for dealing with your student debt whether it’s managing your payments or one of the forms of debt forgiveness available.
Overwhelming student debt can change the way you live now and how you look to your future. Planning for your first home, starting a family, and even saving for retirement suddenly takes a backseat to worries about paying your debt.
How to Get Out of Student Debt with the Help of an Attorney-Based Service
Student loans work a lot like any other loan. You fill out an application, sign a contract, and receive the amount of funds agreed upon. Contracts are legal documents that bind you to the terms you agree to. The problem is that sometimes students don’t understand the terms of the contract. When the lender uses confusing or misleading wording deliberately and it places a financial burden on the borrower, the borrower has the legal right to take action.
No one understands the laws or how to negotiate a fair Loan Modification like an experienced attorney. Often, those people who are most affected by unfair or fraudulent acts can’t get the representation they need to resolve their issues.
Ironfist Legal is a registered legal services company headquartered in Los Angeles, California. The company implements the aid of lawyers to find discrepancies in student loan contracts to help former students get their loan debt reduced by 30 to 70 percent or more.
Contact Ironfist Legal to schedule your free consultation. We guarantee our services and you pay nothing if we don’t reduce your debt by 30% or more. Stop letting your student loan debt control you and your future.