Bankruptcy

Tampa Student Loan and Bankruptcy Lawyer Blog — January 29, 2020

What can we expect and how can you manage your federal student loan payments? What can we expect and how can you deal with your federal student loan payments?

Importantly, there were no first day Executive Orders, and none so far other than the appointment of a new Secretary of Education. This is good news. This tells us that, at least to a lesser extent than it could have done, the new administration does not care about student loans. We’ve seen orders withdrawing our country from WHO, and the Paris climate whatever, but nothing about PSLF, the IDR plans, or even the elimination of the Department of Education.

However, it’s coming. It will be student loans that will dominate the news for a week. Is it wise to wait until then before making decisions? I don’t believe that’s a great idea right now.

Many people know that we have stopped doing strategy sessions on federal student loans in the past few months. This is mainly because we didn’t really know what to expect under a Trump administration, and the Biden administration had put most things on hold. We released new videos and blogs on key events we knew would be happening. We had planned to reopen our calendar for student loans strategy sessions starting February 1. This is also what we see. Why is this important? The Republicans are looking at a repeal of the IDR in a reconciliation measure. However, current borrowers may still be grandfathered in to existing plans. Will this new IDR only apply to new borrowers? Maybe. It’s possible a new IDR would be passed, which would only qualify borrowers for loan forgiveness if they pay the same amount as they would have under a 10-year Standard plan. This would include principal and interests due for 120 monthly months, regardless of income. The time-based student loans would be eliminated after a certain number of years, similar to the 20-25-year plans we currently have. This plan would be beneficial in that it would eliminate huge amounts of interest from extended forbearances, etc. It would not help those who could not complete their degree or who could not find jobs that paid enough to repay their loan. For those in low-paying jobs, the forgiveness could be extended to 30-50 years. This is fair, but honestly impossible for many. Many of our clients probably paid back a large part of what they borrowed but we helped to forgive all the excess. How can you protect yourself? You can protect yourself by enrolling in the right IDR – not Repaye or SAVE, which SAVE was meant to replace. IBR, Paye, or ICR are all examples of IDR. Remember that previous IDR payments will still count if you change to another IDR plan. You won’t have to worry about losing them. If you are married, you will need to decide how to file your tax returns. You can try to remain in forbearance as long as this SAVE litigation is ongoing and your payment will be 0 but I think it’s getting risky if your loan payments are low and you haven’t paid back much on your loans. It seems better to get back into your existing IDR and keep accumulating credits.

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