May 19, 2024

 

The U.S. government has stopped paying interest and payments on student loans due to the financial hardship caused by the coronavirus pandemic. Many people are now wondering how long the student loan forgiveness program will last, even though schools and businesses have reopened. This is what it means for students who have student loans.

What You Need to Know About Student Loan Relief

You may have been able to get some relief if you had student loans when the COVID-19 epidemic began in 2020. The U.S. government placed student loans that were held by the U.S. Department of Education under a moratorium because of widespread unemployment. All payments, interest, collections, and other activities were suspended. The moratorium was originally set to expire in September 2021. However, it will now expire on January 30, 2022.

News reports also discuss student loan debt relief, such as cancellations in amounts of $10,000 to $50,000. A moratorium is a different type of cancellation. A moratorium is a temporary halt for a specified time. After that, you will have to start making monthly student loan payments. Cancellation removes your debt so that you no longer owe it.

There are currently no plans to cancel student debt. If you are having difficulty paying your student loan debt, don’t assume that it will be canceled. A firm strategy is required, not a wish.

Forgiveness And Moratoriums: A Short Explanation

Your payments for student loans that are held by the U.S. Department of Education will resume after January 31, 2022. The government indicated that it would not extend the moratorium any further.

Private lenders did not have student loans that were covered by the moratorium. The moratorium did not apply to student loans held by banks or financial institutions. You run the risk of default if you don’t pay your student loans on time.

You will need to verify with the lender if you are unsure if your loans are being held by the U.S. Department of Education.

Keep in mind that neither the pandemic-related cancellation moratorium nor the discussion about cancellation is related to any other forms of forgiveness for student loan debt. For those who work in the public service sector, such as teachers or emergency responders, forgiveness programs are available. The program requires that the borrower works for at least 10 years in the respective sector before the loan is forgiven. After the loan is forgiven, the participants no longer owe it.

If you are permanently and totally disabled, student loans can be forgiven. A new law was passed recently that matches data from the Social Security Administration and the U.S. Department of Veterans Affairs automatically with student loan holders to determine who is eligible for forgiveness. Both agencies provide benefits to the disabled.

What if you don’t qualify for student loan relief but need help with the debt?

Many people are facing problems with student loan debt. According to estimates, 30% percent of adult U.S. citizens have student loan debt. While the average monthly payment is $200-$299 for most people, many owe more.

There are many options available if you have difficulty paying the bills. You can first apply for an income-driven payment (IDR) plan. IDRs are designed to reduce your monthly payment based on your income.

You can also apply for the consolidation of your loans. Consolidating your loans will reduce your monthly payments. You can also check to see if a refinance of student loans at a lower interest rate will reduce your monthly payments.

Temporary forbearance is available if you are unemployed or in a difficult payment situation. While you may be able to get a reduction in your monthly payments for a limited time, it will not affect the total amount of interest of your loan.

What if you have difficulty making your payments? Or if the government student loans payments begin up again in the early part of next year?

Bankruptcy Could Be The Solution

If you are having trouble paying multiple creditors such as student loans, mortgages, mortgages, medical debts, or credit card debts, bankruptcy can be an option.

There are two types: Chapter 7 bankruptcy and Chapter 13. Both Chapter 7 and Chapter 13 bankruptcy are different. In each case, the court will talk with creditors to come up with a payment plan that is acceptable to both you and them. Your debt is discharged once all payments have been made.

It is important to remember that bankruptcy does not usually discharge student loan debt. You must convince the court that your payment would cause undue hardship for your family to have the bankruptcy discharged. This is possible but not common.

What bankruptcy can do is help with your other debt. Your creditors might agree to forgive your medical or credit card debts in bankruptcy. If you have $500 in credit cards payments and $200 student loan debt, you may be able to reduce the $500 payment (and eventually eliminate) through bankruptcy. This will help you pay $200 student loan debt.

This post was written by Trey Wright, one of the best bankruptcy lawyers in Tallahassee FL! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.

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