Student Loans: Pay as You Earn

On January 10, 2013, in Student Loans, by Robbie L. Vaughn, Esq.

Pay as You Earn Student Loan Program

What is a Pay As You Earn Student Loan program?

According to StudentAid.Gov, the pay as you earn repayment plan is designed to make student loan payments more affordable by reducing monthly payments based on your income and family size.

 Eligibility

In order to qualify for the program you must have partial financial hardship. This means that the amount you would be required to pay on your federal student loans is higher than the monthly amount you would owe under the Pay As You Earn Repayment plan. Your federal student loan must be eligible for the program; this includes certain types of Federal Family Education Loan Programs (FEEL Program), including Subsidized and Unsubsidized Federal Stafford Loans, Federal PLUS Loans made to graduate or professional students, Federal Consolidation Loans that did not repay any PLUS loans for parents. Borrowers must have taken out their loans as of October 1, 2007 and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. To be a new borrower that qualifies, you can’t have an outstanding balance on a Direct Loan or FEEL Program loan as of Oct. 1, 2007 or had an outstanding balance on a Direct Loan or FEEL Program loan when you received a new loan on or after October 1, 2007.

Benefits of Pay As You Earn

  • Your monthly payment amount will be less than the amount you would be required to pay under a 10-year Standard Repayment Plan, and may be less than under other repayment plans.
  • In some cases, the government will pay your unpaid accrued interest on your Direct Subsidized Loans (and on the subsidized portion of your Direct Consolidation Loans) for up to three consecutive years from the date you begin repaying your loans under Pay As You Earn.
  • Any remaining balance will be forgiven after 20 years of qualifying repayment.
  • On-time, full monthly payments you make under Pay As You Earn (or certain other repayment plans) while employed full-time in a public service job will count toward the 120 monthly payments that are required to receive loan forgiveness through the Public Service Loan Forgiveness (PSLF) Program.
  • Once you qualify for Pay As You Earn, you can continue making your reduced payments under the program even if you no longer qualify for partial financial hardship.

You should contact your loan servicer to determine if your eligible for Pay As You Earn. You can also check this calculator to see if you will likely qualify and what your payments might be.

Bankruptcy Attorneys in Long Island

Call  (516) 858-2620 for Student Loan assistance. The Law Firm of Vaughn, Weber & Prakope, PLLC is here to assist you!

Debt Collectors Misled Borrowers

On September 6, 2012, in Debt collection defense, by Jason Mays, Esq.

Debt Collectors Misled Borrowers

Court Finds that Debt Collectors Misled Borrowers

A debt collection agency recently sent a letter to borrowers telling them that their student loan debts could not be discharged in bankruptcy, and must be paid. The truth is, student loans CAN sometimes be discharged in bankruptcy, although it is uncommon. Read more about this topic here.

Debt collectors misled borrowers often, judging from the number of successful Fair Debt Collection Practices lawsuits against them. If you have been harassed, lied to, contacted at unusual hours, or otherwise abused by debt collectors, you may be entitled to compensation.

Long Island Litigation Attorneys

The attorneys at The Law Firm of Vaughn, Weber & Prakope, PLLC can help in these matters.  Call (516) 858-2620 today for a free consultation!

Settle Student Loans

On August 14, 2012, in Debt settlement, Student Loans, by Robbie L. Vaughn, Esq.

Settle Student Loans

You May Be Able To Settle Student Loans

First, it really helps if the student loan you want to settle is a private student loan (not a government issued loan).

Second, as with debt settlement in general, it usually helps if you have a lump sum you can use to pay the agreed upon settlement amount. However, a lump sum is not always required. Some lenders will allow a payment plan.

Lastly, you want a no-interest payment plan with a repayment term and a monthly payment that works for you.

Important Note:  You may be able to settle your student loan debt even if you are already being sued for repayment!

The Law Firm of Vaughn, Weber & Prakope, PLLC can assist you with Student Loan Settlement and other Student Loan issues. Call (516) 858-2620 to arrange a FREE consultation with an attorney!

Bankruptcy and Student Loans

On May 11, 2012, in Bankruptcy, Student Loans, by Robbie L. Vaughn, Esq.

Bankruptcy and Student Loans

Understanding the relationship between bankruptcy and student loans.

Student Loan Interest Rates May Increase Soon.

Congress is currently at war over student loan interest rates. Interest rates on Stafford loans will double soon if congress doesn’t act. But although no one seems to want this to happen, the parties can’t agree on what to do about it. This is an important issue for people considering bankruptcy because student loan debt is more difficult to avoid than other debts.

Even if You File Bankruptcy, You May Still Have to Repay Your Student Loans.

Bankruptcy discharges many of an individual’s outstanding debts. When a debt is discharged, the debtor does not have to repay it. However, bankruptcy law makes an exception for student loan debt. Student loan debt will only be discharged under special circumstances.

Section 523(a)(8) of the US Bankruptcy Code provides:

(8) unless excepting such debt from discharge under this paragraph would
impose an undue hardship on the debtor and the debtor’s dependents,
for–

(A)(i)
an educational benefit overpayment or loan made, insured, or guaranteed
by a governmental unit, or made under any program funded in whole or in
part by a governmental unit or nonprofit institution; or

(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or

(B) any other educational loan that is a qualified education loan, as
defined in section 221(d)(1) of the Internal Revenue Code of 1986,
incurred by a debtor who is an individual;

This section means that student loans will only be discharged when requiring the individual to repay them would impose an undue hardship on the debtor or the debtor’s dependents. The question then is – what counts as an “undue hardship”?

There is no statutory definition for “undue hardship.” Courts have had to define the term themselves, and different jurisdictions have developed different hardship standards. Generally, courts look at factors such as the finances available to the debtor as they are filing bankruptcy, the debtors’ likely future earnings, and the financial needs of the debtor’s family, among other things. In New York, courts follow the test set out in Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987). In this case the court asked three questions. First, would requiring the debtor to repay the student loan debts put the debtor, or the debtor’s dependents, below a minimal standard of living? Second, is this financial situation likely to persist for the rest of the loan repayment period? Third, has the debtor made good faith efforts to repay the loans? A New York court is only likely to discharge a student loan debt if these questions are answered in the affirmative.

While the factors to be considered may vary from one jurisdiction to another, courts generally agree that the hardship must be “undue” – that is, beyond “ordinary” or “garden variety” hardship. The point is that student loans will only be discharged under extraordinary circumstances.

If you have questions about student loans, bankruptcy, or other legal issues, the Law Firm of Vaughn, Weber & Prakope, PLLC is here to help. Call us at (516) 858-2620 to set up a free consultation.

 

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. This website is Attorney Advertising. It does not form an attorney-client relationship. We are a debt relief agency and a law firm that helps people file for bankruptcy relief under the U.S. Bankruptcy Code – Title 11. Prior results do not guarantee a similar outcome. Proudly assisting residents of Long Island, Nassau county, Suffolk county, New York City, Queens, Brooklyn, Bronx, Staten Island, Manhattan



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