Non-Bankruptcy Options
only, and 25 years for those who also
took out loans for graduate school. If
your payments do not cover all of the
accrued interest for that month, your
interest accrual will be capped at 50%
of the unpaid interest. As opposed to
IBR and PAYE, federal loan servicers
will consider your joint marital income,
regardless of whether you file taxes
jointly or separately from your spouse,
when calculating your payment due.
With payments that can feasibly be as
low as $0 per month, your clients may
find that their student loan problems
are solved by merely submitting an
application to the U.S. Department of
Education.
Federal
Loan
Discharge
Forgiveness Options
and
Though not a bankruptcy matter,
federal student loans come with a host
of discharge and forgiveness programs.
The first, and most often overlooked,
program is Total and Permanent
Disability Discharge. If your client is
unable to engage in gainful employment
and expected to remain in that condition
for the foreseeable future, he or she
can provide information to the U.S.
Department of Education (ED) to prove
total and permanent disability.
Students may be eligible for a discharge
of Direct Loan or FFEL Program loan
if their school falsely certified their
eligibility to receive the loan based on
ability to benefit from its training, if they
were the victim of identity theft, or the
school certified eligibility, but because
of a physical or mental condition,
age, criminal record, or other reason
your client was disqualified from
employment in the occupation in which
he or she was being trained.
If your client is a teacher and did not
have an outstanding balance on a
Direct Loan or FFEL Program loan on
Oct. 1, 1998, and has been teaching
full-time in a low-income elementary
or secondary school or educational
service agency for five consecutive
years, your client may be able to
have as much as $17,500 of his or
her subsidized or unsubsidized loans
forgiven.
For borrowers employed in certain public
service jobs and who make 120 timely
monthly payments on Direct Loans
after October 1, 2007, the remaining
balance may be forgive