Many students are aware of what happens if you do not pay your student loans. What many do not realize is what happens if you wait until December to begin paying them. The IRS is very particular about student loan debt payments and there are serious consequences for those who do not pay their student loans. There are many circumstances under which federal student loan forgiveness is possible, but it is best to make sure you are ready to deal with the possibility of federal student loan forgiveness before you sign any papers or make a big commitment to going back to school.
The first scenario in which federal student loan forgiveness might become available is if you decide on deferred repayment. Deferred repayment means that you repay your student loans over a period of time that runs from five years to ten years. You will have to pay taxes on the amount that you are currently repaying, but you can save the balance due at the end of the deferred repayment period. If you contact us as soon as you are released from deferment, we can help you work with your lender to set up a payment plan. We can also give you advice if you are considering a deferment because it makes financial sense to do so as soon as you can.
Another scenario in which federal student loan forgiveness may become available includes defaulted federal student loan debt. When borrowers default on their student loans, the federal government places a temporary halt on all collection efforts. This is done in order to give the borrower time to repay their debt. If the borrower has not made payments and causes our agency to become obligated, borrowers can experience significant negative tax consequences. In this case, borrowers will still have to deal with the resulting federal debt, but they may be able to work with their lenders to reduce the amount of debt owed. In many cases, the borrower can settle their debts in full or in part by paying less than the entire balance.
As mentioned above, our agency can also work to reduce any private student loan debts. There are several different scenarios in which federal student loan forgiveness would apply to private loans. For example, if a borrower had two outstanding loans – one from a credit card company and one from a store credit card – they would have to repay both loans in full if they were to avoid filing for bankruptcy. Some borrowers may have their federal loans completely discharged if they were to suffer extreme financial hardships. In these cases, the federal government would forgive the private loans of the borrower.
To find out more about federal student loans and if there is anything that can be done to avoid foreclosure, we recommend that you contact us as soon as possible. Our experienced staff works with our clients to help them work with their lenders to find the best repayment plan. In most cases, a borrower should be able to pay off their accounts within 60 months. In some cases, we can work with our clients to reduce the amount of interest they will owe on their accounts. If the accounts end up not being paid in full, however, our experienced staff can file bankruptcy petitions on your behalf in order to have the lender repossess the property held in default.
For those students who are behind on their student loans, there are several different options available to them. One option is for the borrower to complete partial or full-time enrollment at a community college or trade school while waiting for their loans to be paid off. Another option is for the borrower to pursue employment full-time and return to school part-time. This means that the student will make payments for a half-time period once the loans are fully discharged and the student is enrolled full-time at school. This option usually requires that borrowers arrange for a part-time job in the area in which they are attending school. Many times, full-time employment will lead to better pay than any other alternative.
For those facing an immediate need for money and immediate repayment on their student loans, it is imperative to talk with an experienced federal government debt relief company. At these companies, our trained specialists can help borrowers find the best repayment options available to them. The more informed you are about your repayment options, the better off you will be. In the event that something happens to your finances during this time, it is also good to know that the federal government has programs in place for those who experience temporary financial setbacks.
One thing that is important to remember is that if you have not started making payments on time then you are not eligible for student loans federal government relief. If you are having difficulty making your monthly payments, there is hope. There are companies out there that specialize in helping individuals to repay their student loans. In some cases, repayment programs include interest forgiveness. In other cases, deferments may be offered. It is important to speak to a specialist to get your facts straight before determining the best course of action.