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Student Loans are presently near One Trillion Dollars!  Americans now have more student loan debt than credit card debt!  Additionally, student loan debt default rates are now higher than the default rates for other debt.  The current default rate (more than 90 days behind) is presently 11%!  So what do you do if you have student loans?  There are many options depending on the type of student loan you have (Federal, State, School Provided, and Private).

Options vary from complete forgiveness to convenient payment plans.  The following options may be available depending on the type of student loan you have:



A deferment excuses you from making student loan payments for a set period of time because of a specific condition in your life — such as returning to school, economic hardship, or unemployment. Interest will not accrue on subsidized loans during the deferment period.



In a forbearance, your loan holder gives you permission to stop making payments for a set period of time or to temporarily reduce payments. Interest always continues to accrue during a forbearance. In some circumstances, a forbearance may be available even if you have defaulted.



In certain limited circumstances, you may be able to cancel your student loan — meaning that you no longer have to pay it. Doing this is not easy; you’ll have to meet specific conditions depending on the type of loan you have.


Often, when you cancel your loan, the government will also reimburse you for payments already made, and help clean up your credit record. In some situations, you won’t be able to cancel the entire loan, but you may be able to get rid of a portion of the loan.



A consolidation loan allows you to combine your federal student loans into a single loan with one monthly payment.  It does not apply to private loans and one can not consolidate loans with a spouses loan either.


Repayment Plans: The following apply to Federal Student Loans, not private or school issued loans.


Standard Repayment Plan

This is the repayment plan offered by your lender. You make payments for up to ten years. Your monthly payments are higher than in other plans, but your total payments are lower because you pay less interest.


Graduated Repayment Plan

Under a graduated plan, payments start out low and increase during the repayment period — usually every two years. This is a good option if your income is low when you graduate but will increase quickly.


Extended Repayment Plan

An extended plan allows you to stretch your repayment over a period of up to 25 years, depending on your loan amount. To be eligible for this plan, you must have an outstanding loan balance of more than $30,000.


Repayment Plans for Financial Hardship

There are a number of plans available if your income is low or unstable, or you have moderate income with very high student loan debt. You might be eligible for these plans even if your financial troubles are temporary. Which plan is available to you depends on what type of loan you have.  Your payment could be as low as $0.00 per month!  Moreover, if you haven’t paid off your loan after 25 years, the balance can be forgiven!



In limited situations, Chapter 7 can completely or partially eliminate any student loan if you qualify for the hardship discharge.  While this is a very hard threshold to prove, it may be available in extreme cases.  Likewise, Chapter 13 can lower payments and/or eliminate all payments for up to 5 years.


For more information on Doan Law, click here.