The moratorium on repayment of federal student loans expired in 2023. For those individuals still burdened by student loan debt, new rules and regulations can affect your situation. At Site:BusinessName}, we can provide the counsel you need to understand where you are concerning your student loan and what can be done to help you handle the matter.
Currently, the Biden Administration is pursuing its second attempt to achieve student loan forgiveness. This attempt involves rewriting the Higher Education Act (HEA) to allow immediate forgiveness. However, it requires a period of public comment and the arduous process of rewriting rules, with no guarantees that the U.S. Supreme Court will not eventually rule against the effort.
Income-Driven Repayment Plans
Currently, nine repayment plans can be pursued under HEA. All plans are allowed “by right,” meaning eligible debtors cannot be denied. Four plans are based on your loan balance, while the remaining plans are income-driven. Balance-based plans allow for full repayment of the loan with interest over time.
Income-driven plans allow for payments based on your disposable income. They include provisions for forgiveness at the end of the plan. They also include Public Service Loan forgiveness for government and nonprofit entity employees. These plans generally last for 10 to 25 years.
Borrowers must enroll in a plan and recertify their income annually.
The Saving on a Valuable Education (SAVE) Plan
The Revised Pay as You Earn (REPAYE) plan has been turned into the SAVE plan. These plans became immediate upon the restart of student loan payments. Those debtors enrolled in REPAYE are automatically converted to the SAVE plan.
Under SAVE, your discretionary income contribution is reduced from 10 percent to five percent for undergraduate loans. Graduate loans remain at the 10 percent rate. Debtors in other income-driven repayment plans can re-enroll into SAVE.
10-year forgiveness is allowed for those with less than $12,000 debt; 20-year forgiveness applies to those with over $12,000. Implementation was announced in February 2023.
New Process for Seeking Bankruptcy Discharge of Student Loans
You can seek a discharge under any bankruptcy chapter. While your case is pending, you must file an Adversary Case against your student loan lender. This is similar to a lawsuit seeking a type of relief.
This involves the following steps:
- Debtors prepare and submit an attestation to the Offices of the U.S. Attorneys (AUSA) at the Department of Justice (DOJ)
- The Department of Education (DOE) provides AUSA with a “litigation report” containing the record of your account history
- AUSA “consults proactively” with DOE to evaluate the specific circumstances of the case
- The AUSA makes recommendations of dischargeability, which can be a complete discharge, partial discharge, or no discharge
Financial Relief Law Center, APC: Helping Student Loan Debtors Find Relief
Our firm is dedicated to helping individuals resolve debt through appropriate options and plans. If you would like advice and guidance on confronting student loan debt, one of our Irvine attorneys can provide the assistance you need. We recommend that you take advantage of a free consultation to learn more.
Contact us online or at (949) 787-1889 to schedule a free case review with an Irvine lawyer today.