Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney BlogArticles Posted in Student loans
Are You Afraid of Dying with Your Student Loans?
A few things I was thinking of today. First, we received notice from Nelnet of a client approval for Total and Permanent Disability. This particular client was pretty healthy, but was of advanced age of 76. I’m pretty sure no employer would be interested at age 76. He’s been retired for 13 years from a defense contractor and the military prior to that. Since he flew jets for the military, that was an easy sell for the TPD program. The fact that the program he used to work on for the defense contractor has long since gone away, plus he no longer has a security clearance and the vast majority of his skills are likely outdated, we leaned on the SSI’s verbage for advanced age.
Under the Social Security Administration’s website at ssa.gov, the Code of Federal Regulations Section 404.1563 states under (e) that they consider that for a person of advanced age (age 55 or older), age will significantly impact a person’s ability to adjust to other work.
I’d rather not compare our client to an old dog, but you know that saying that an old dog can’t learn new tricks. Well, it kind of applies here. We sent some of these regs and arguments to our doctor and obtained the physician certification shortly thereafter. Today, we received the official notice that our client’s six figure loan balance was forgiven.
ABC Action News Story on Student Loan Repayment
We were interviewed yesterday by Mary O’Connell for an ABC Action News story on student loan repayment: https://www.abcactionnews.com/news/region-hillsborough/recent-report-sheds-light-on-how-federal-student-loan-borrowers-are-managing-repayment#google_vignette.
Fortunately, we were able to discuss the deadlines coming up in just a couple weeks!
“A lot of people are really squished on everyday living expenses that basically student loans come last,” said Christie Arkovich, the founding attorney for Arkovich Law. “And so, if you have the choice of paying rent or a car payment or food, you’re not going to choose student loans over one of those things.”
Concerned about your PSLF – student loan forgiveness for public service?
The processing of PSLF was turned over by Mohela to ED during the three months preceding July 1 and all work was paused during the transfer. Starting July 1, ED would have re-started reviews as it was doing the calculations from that point forward. Then the whole system paused July 1 with the pending SAVE litigation and injunctions against it and the 400 pages of regulations that were to take place July 1. There is nothing delaying PSLF calculations and forgiveness, but ED has not restarted those for some reason. There is a hearing Oct 24, where there may be some clarification on what ED can continue to do, but the circuit court refused to clarify its ruling about two weeks ago. I feel that ED is not processing PSLF right now as a pollical move to throw more of the educational system into chaos. Either way, we can’t do anything about it.
Eventually, PSLF will restart its calculations.
If you are short just a few months time, you could choose to do the 10 year standard payment which counts toward PSLF and then submit an application for PSLF discharge. Make sure you are using the 10 year standard, not 20-30 years. It will be higher at 10 years, but it’s the only standard payment that counts for PSLF. If that payment is too high, and they begin re-processing IDR applications (they are paused right now), you could file a request for another IDR plan other than SAVE – such as IBR. Finish the 120, then file the PSLF discharge application. We were finding that paper IDR applications were being processed, but they too seem to have stopped. Do nothing online, the entire online portals are paused. When sending a paper application, be sure to send certified mail with tracking information.
In Default on Your Federal Student Loans? Fix That This Month.
Believe it or not, there are still many people who are in default on their federal student loans. The Fresh Start initiative to allow someone to cure their federal student loan default ends September 30. The end of this month. If you are still in default after that, you’ll face collections actions for these federal loans and it’s not pretty. Wage garnishments – federal – so no state exemption are available. Tax refund seizure. Earned income tax credits gone. Social Security offsets. Poor credit scores.
Why not cure now? It’s free. Your credit report is cleared of the delinquencies. You get IDR credit for the past 4.5 years if you went into default at the beginning of Covid for instance. No need to consolidate or rehab.
We used to complain that there were so few ways to cure a federal student loan default. I even called our one time ability to consolidate to Direct loans, or rehab a loan – get out of jail cards. If we ran into someone who had done both already, sometimes the only way to cure a default was to file a Chapter 13 bankruptcy to have a plan to catch up the past due payments. Imagine having to make more than one student loan payment per month. It worked, but it wasn’t always pretty.
Double Consolidations Still Working for Those with Parent Plus Loans?
So you may have heard by now that all consolidation applications are being processed by Aidvantage. The online system is completely frozen. And that most people are being placed into forbearance while the system is frozen. Just last week, the Department of Ed asked one of the courts for clarification of its injunction order and was told that no clarification would be forthcoming. So we wait. The U.S. Supreme Court will have to rule on all this.
It’s important to still move forward however. If SAVE survives the court challenges, you want to have your Parent Plus loans in place ready to be placed into SAVE. Even if SAVE doesn’t survive, perhaps one of the other IDR plans is better than ICR. How do you move forward with the online system stuck, and only one servicer processing paper consolidation applications?
The key is to use snail mail – send half to Aidvantage, wait 45 days until the consolidation is done. Then send the second half to Aidvantage to consolidate using snail mail. Wait 45 days. Then recombine all the Parent Plus loans in a final consolidation application sent to – you guessed it – Aidvantage.
Questions about PSLF Processing for Student Loan Forgiveness and What’s Happening Now?
Some details about the current status of PSLF – Public Service Loan Forgiveness:
- PSLF processing and tracking is no longer handled by MOHELA — You can get much more specific information on your PSLF progress, including a month-by-month breakdown of qualifying PSLF payments, through your account at StudentAid.gov, which is now where PSLF tracking is located.
- Long-term forbearances can count toward PSLF under the IDR Account Adjustment. The Dept. of Ed is still in the process of implementing this — details here: studentaid.gov/announcements-events/….
Yes, It is Possible to File Bankruptcy on Your Student Loans
Right now, there is a lot of confusion regarding our federal student loan program. There are multiple federal cases and several injunctions that have pretty much frozen federal student loans.
A couple things are still working. Total and Permanent Disability discharges of federal student loans, and filing bankruptcy on them.
We’ve written a summary published in the quarterly Cramdown publication for our readers which are primarily bankruptcy attorneys and judges in the Middle District of Florida – located here. We discuss what’s working now in bankruptcy and how to obtain a discharge or IDR credit for Plan payments. Please take a look and if this helps you – you can do this now and not wait for the elections or U.S. Supreme Court rulings.
Have you Checked out our YouTube Channel for Free Help with your Student Loans?
Here’s a review posted recently about our student loan videos:
- I wish the views on this channel were much higher. Christie is both thorough and concise. It’s the best channel on YouTube regarding student loans.
I know that it’s more confusing than normal now with all the litigation and holds put on federal student loans right now. Processing of IDRs have been slowed considerably – and while you wait, your loans are placed into forbearance. This forbearance may ultimately count toward IDR but it’s a mixed bag whether it will count if you ask now.
Department of Education’s vague email today
An email went out to federal student loan borrowers today that was rather vague. It basically said to stay tuned. None of us know exactly what the Biden administration is up too, other than confusing all of us, but it’s possible that they could be talking about this:
A new student loan forgiveness plan that will be geared toward four broad categories of borrowers:
- Borrowers who have accumulated large amounts of interest.