Articles Posted in Student loans

There are new TPD (disability) regulations going into effect on July 1, 2013 to help our student loan clients in Florida and elsewhere. These new changes apply only to applications received after July 1, 2013. In a nutshell, the significant changes are designed to make an application much more streamlined!

1. There will no longer be a requirement that student loan debtors obtain certification and medical documentation from a physician showing recent visits and lack of employability.

2. Only one application is required even if multiple loan servicers.

Too late for many, but at least a step in the right direction, Senator Al Franken (D-Minn) introduced the Understanding the True Cost of College Act on May 24, 2012.

Were you aware that the Truth in Lending Act which requires disclosure of the cost of credit in home and vehicle purchases specifically excluded student loans? I just found this out myself. An education is an expensive purchase. If you make the wrong decision, bankruptcy is not available in most cases to simply give it back. But yet the powers that be decided that students and their parents didn’t need to be informed when making decisions as to what college to attend and how much financial aid to obtain.

This bill is intended to attack the complete lack of transparency that currently exists. Instead of wondering how this could have happened during the exit interview, basic minimum information will be required to be disclosed PRIOR to incurring the debt. Things such as the costs of tuition, fees, room and board, books and supplies, the amount of financial aid that the student does not have to repay, and the net amount the student will have to pay.

Last month, it was well publicized that student loan interest rates were about to double unless Congress acted. Actually, this only involved subsidized Stafford loan interest rates. However, President Obama made the most of it and traveled around the country garnering support to help students. At the last minute, Congress voted to stop the increase. CNN reports that the rate would have gone from 3.4 to 6.8. However, this is only for a small portion of loans and doesn’t address the large mostly unaffordable monthly payments that unemployed or underemployed students are facing.

However, real reforms are on the horizon or already exist that are not being publicized at all. I won’t go into great detail about these programs because mis-application of the available programs by students seeking to reduce their student loan burden could cause further damage. This is too big of deal to screw up. Many options are a one time only thing, and the wrong step can cause an expensive default.

It is very important to consult with an attorney experienced in student loan law. Up until now, there really hasn’t been much available legal advice in this area except for the standard line: you can’t discharge student loans in a bankruptcy without an undue hardship. I can’t count the hundreds of times I myself have said that. However, I have recently learned that there are things a student can do OUTSIDE of bankruptcy to manage or survive their student loan debt. Please see our Student Loan Survival Center for more information.