Student Loan Debt Questions
A student loan helps students pay for university tuition, books and living expenses. There are two types of student loans in the United States, Federal student loans and private student loans. Federal student loans are granted by the Federal Government and private student loans that are normally granted by schools that are state-affiliated non-profit organizations or institutions Due to the budget cuts, many public and private colleges have drastically increased the tuition fees resulting in several students opting for student loans to complete their studies. In many cases, a person may not know where to turn to find answers to questions regarding student loan debt. Read below for answers to the most commonly asked questions related to Student Loan Debt answered by the Experts.
If a student loan borrower does not make the student loan debt payments what recourse can a lender take?
If the borrower does not make the payments by the end of the forbearance period, a collections attorney could get involved and a suit against the borrower could be filed. If a judgment against the borrower is passed, the lender could have a legal right to keep or sell the borrower's property as security for a debt.
If an individual has an outstanding student loan debt, can the spouse’s gifted property in Nevada be considered a lien to help repay the debt?
The Nevada Supreme Court clearly states that a spouse has a right to separate property and hence cannot be considered a lien for the outstanding student loan debt. In most cases, the spouse will need to have written documentation that the property was received as a gift. The person giving the gift would need to complete a gift tax return, to authenticate this. The husband and wife may create a legal document that the property is a gift and not a community property.
If a student loan borrower in Louisiana is not working, can a spouse’s income be garnished by the lender to discharge the outstanding loan?
Given that Louisiana is a ‘community property’ state, the lender can garnish the borrower’s spouse’s income to satisfy the outstanding loan since the spouse’s income is a ‘community property.’ The creditor can offer an extended repayment plan, forbearance or other alternative plan involving repayment. If the loan qualifies, then an Income Based Repayment Program may be considered. As per the Income-Based Repayment Program, the student loan borrower’s annual plan is limited to 15% of his/ her income after tax deductions minus the ‘poverty line’ income for an individual. Post payment of the loan for 25 years, the remainder of the loan, if any will be forgiven.
Can a student loan be completely paid off at a reduced amount?
Many times, if the student loan is funded by a private loan or institution, then the borrower may negotiate to settle it completely at a reduced amount. However, if the student loan is from the Federal Government like Stafford Loans, Grad Plus Loans, Perkins Loans, etc. they usually cannot be settled for a reduced amount.
Can a disabled person file for bankruptcy to help dismiss a federal student loan debt?
A person that is disabled, on a fixed income such as Social Security and has a federal student loan cannot usually dismiss his/ her outstanding loan by filing bankruptcy. If that person’s only source of income is or will be by Social Security payments, the borrower should receive at least 85% of the Social Security payment each month since only 15% of that payment can be garnished by the Federal Government towards student loan repayments. In March 2012, the Consumer Financial Protection Bureau declared that student debt had passed $1 trillion. The student’s debt amount varies based on the school/ college attended. Tuition, other fees, the availability of financial aid and the cost of living all factor into the amount of debt students accumulate. The borrowers may ask an Expert for clarifications related to student loan debt repayments, negotiations with the creditors for complete repayment of the student loan debt, forbearance, forgiving of the student loan and any other related questions.