Student loans have increased rapidly over the years, due to significant increases in college tuitions. Even state schools have hiked their tuition costs, making it very difficult for students to attend school without some sort of financial assistance, such as student loans.
There are two types of student loans: federal and private. Federal loans are distributed by the government, while private loans are offered by financial institutions like banks. When you’re considering where to go to get money for college, you may want to opt for federal loans. They have certain advantages:
They tend to offer lower interest rates;
They allow a grace period after you graduate from college so that you can get established in your job before you have to start repaying them;
They offer a wide variety of repayment options;
They also have forbearance and deferment options for students who are struggling to make even the most minimum payments;
They offer a Public Service Forgiveness Program: this program allows students who go to work in certain jobs in the public sector may be allowed to have any remaining amounts of their student loans forgiven after they’ve made 120 payments (which equals roughly ten years’ worth of payments;) and
They offer loan cancellation programs for teachers who work in low-income areas.
Private loans are available to all types of students, and can sometimes help fill in financial gaps for students who are facing particularly expensive college tuitions. But private loans often come with higher interest rates and don’t offer a grace period, so once you graduate, you need to start repaying them. Private loans also do not offer different repayment plans, nor do they allow you to temporarily defer payments if you are facing financial constraints.
Can Student Loans Be Forgiven?
It can be very difficult to get student loans forgiven, but it’s not impossible. You may be able to get your federal loans forgiven through the following options:
Bankruptcy (these cases are incredibly rare so you may want to speak to a bankruptcy attorney to see if you might qualify);
Death discharge: for students who pass away and still owe;
Total and permanent disability discharge: For students who become disabled;
Borrower defense discharge: for students who attended a college that acquired students through false advertising and dishonest marketing practices;
Public Sector Forgiveness Program: as described above.
The above list does not include all options, which can be viewed on the federal student loans website.
It can be even more difficult to get private loans forgiven. To qualify, you have to prove that you are suffering from some sort of excessive financial hardship that is preventing you from paying your loans. As with federal loans, you may be able to discharge loans in bankruptcy, but again, it can be difficult to get this approved.
Contact a Bankruptcy Attorney
Thomas M. Denaro, Esq. has over 34 years of experience with bankruptcy and other aspects of financial law. He can help you with your legal matters and also offer education on how to rebuild your credit and stay debt-free. Mr. Denaro offers flat fees based on how involved your case is, and can also suggest affordable payment plan options. Call Thomas Denaro today at 718-863-6000 to see how he can help you.