Consumer Bankruptcy Journal Summer 2015 - Page 45

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