Student Loans in Default?
- Have you fallen behind in your student loans?
- Are debt collectors calling and harassing you?
- Are banks and collectors demanding payments you can’t afford?
If you are a current or previous college student or the parents of a current or past college student, use this FREE site to learn about your student loan responsibilities and options for NOT paying back student loans that are in default.
Also covered are student loan consolidation options, deferment, and forbearance issues, and instructions for avoiding and stopping debt collection and garnishment actions.
Learn all about the various student loan repayment plans and incentives and discover how to properly dispute defaulted student loans or get PLUS student loans canceled outright!
Student Loan Consolidation Eligibility
Virtually all federal student loans are eligible for consolidation!
Even if your loan is in default, you may still qualify for student loan consolidation.
Also, lenders may not refuse to consolidate your loans because of the number or type of loans you want to consolidate, the type of school you attended, or government-mandated low-interest rates and repayment schedules.
The only exception to eligibility is if a judgment or wage garnishment is already in place.
Student Loans in Default (Programs Rules)
No Fees: There are no application fees or prepayment penalties when consolidating student loans!
No Credit Checks: Consolidating student loans is a FREE government program that does not require credit checks. (Exception: PLUS borrowers are subject to a check for adverse credit history.
Payback Period The payback term ranges from 10 to 30 years, depending on the amount of education debt you need to repay and the repayment option you select. Lenders consider your other education loans not included in the consolidation loan to determine the maximum payback period.
Interest Rates: Federal statute sets the interest rate on consolidated student loans at NO HIGHER THAN 1/8th of a percent more than the effective rate on your loan’s fixed rate for the life of the loan; thus, protecting you from future increases in variable rate loans!
There are three basic repayment options for consolidation loans:
Level-repayment – equal-installments;
Graduated repayment – increases over time; and
Income-based payment plans – increases/decreases based on income.
Repayment incentives come in the form of lower interest rates (or rebates) based on your on-time repayment history and payment amount. Higher payments mean sooner payoff, which equals better incentives.
Two federal income tax credits—dollar-for-dollar reductions in tax liability—are available for higher education expenses.
The Hope tax credit, worth up to $1,500 per student, is available to first- and second-year students enrolled at least half time.
The Lifetime Learning tax credit is equal to 20 percent of a family’s tuition expenses, up to $5,000, for virtually any post-secondary education and training, including subsequent undergraduate years, graduate and professional schools, and even less than half time study.
Also, interest on student loans might be tax-deductible!
Note 1: Beginning with the tax year 2002, you may deduct interest paid beyond the first 60 months of repayment. For details or assistance contact a qualified tax advisor or the Internal Revenue Service at http://www.irs.gov
Note 2: Married couples may consolidate their student loans into one payment; however, they become jointly and severally liable for repaying the entire consolidation balance, even in the event of a divorce, death, or total and permanent disability of a spouse. Consider this option carefully!
Note 3: For more information on the Hope and Lifetime Learning tax credits, visit www.ed.gov/updates/97918tax.html or see the IRS Publication 970, view or download the publication from the Internet at www.irs.gov/prod/forms_pubs/ Interest