Sherman Oaks Student Loan Repayment Lawyers
More than one in five adults in the U.S. have student loan debt, amounting to roughly $1.8 billion in total student loans, and that number is expected to rise with every passing year due to the rising cost of education and the necessity of having a higher education in order to gain employment opportunities. Many people who are in serious student debt feel like they will never be able to get out of it. While most student loans are structured to conclude in 10 years, the average person takes over double that to pay off their debt, and the longer it takes to pay off, the more the borrower ends up paying in interest. Defaulting on your student loans will end up costing you even more, as collection fees can add a significant amount to your loan balance (an additional 25 percent in some cases). The Sherman Oaks student loan repayment lawyers at Wadhwani & Shanfeld can help you explore options to improve your credit, reduce your monthly loan payments, seek loan forgiveness, get creditors off your back, and more. One option in particular that may work for you is income based repayment.
What is Income Based Repayment (IBR) and What Student Loans Apply?
Income based repayment (IBR) is a federal student loan repayment plan designed to help borrowers who are struggling with financial difficulty, have low income to debt ratio, and/or who are pursuing a career in public service. Only certain loans qualify for IBR, however. These only include federal student loans, such as Direct Loans, Grad PLUS and consolidation loans, Perkins Loans, FFEL loans, FFEL consolidation loans, and Direct consolidation loans. Income based repayment cannot be used for any private student loans, Parent PLUS loans, or consolidation loans that include Parent PLUS loans.
How Does Income Based Repayment Work?
In order to qualify for student loan income based repayment, you must fall below a certain income level, in relation to your debt size. Income based repayment is typically best for borrowers who have grad school debt, do not qualify for Pay As You Earn, have a relatively low income that is not expected to increase very much with time, and are married (and both spouses earn an income).
Once you have qualified, income-based repayment caps your monthly student loan payments at 15 percent of your monthly discretionary income. Monthly discretionary income is the difference between your adjusted gross income and 150 percent of the federal poverty line, based on the size of your family. After 25 years, any remaining debt will be fully discharged. Furthermore, by working public service, a borrower can have their remaining debt fully discharged after just 10 years with IBR.
Income-Contingent Repayment
45 million American adults have student debt. This amounts to more than one in five adults. For millions, their student loan debt is one of the most stressful aspects of their lives, and holds them back from owning their own home, changing careers, or starting a family. On average, it takes 21 years to pay off all of one’s student debt, a staggering amount of time to be beholden to high monthly payments for a degree that often does not earn nearly as much as promised. One method to reducing monthly loan payments and discharging a portion of the debt is the federal income contingent repayment plan. The Sherman Oaks income contingent repayment lawyers at Wadhwani & Shanfeld can help you apply for this life-changing program.
The Income Contingent Repayment (ICR)
The Income Contingent Repayment (ICR) plan makes repaying federal student loans easier to pay off, and is designed for people entering lower paying jobs, particularly jobs in public service. While the maximum loan length under the income contingent repayment plan for those in the private sector is 25 years (after which the remaining debt will be discharged), for those in public service the maximum length of repayment plan is just 10 years. After 10 years of public services and 120 payments made under the ICR, all remaining student debt is discharged.
What Loans Work With The Income Contingent Repayment Plan?
Income-contingent repayment is only applicable to federal student loans given by the U.S. Department of Education. Loans made by banks or lenders, even if they are government-guaranteed loans via the Federal Family Education Loan (FFEL) Program, are not applicable for ICR. However, for individuals with multiple FFEL loans, it is possible to consolidate these loans into a direct consolidation loan. No parent loans are applicable to the ICR plan.
What is the Interest Rate and How Long Does the Loan Last?
Income contingent repayment uses a fixed interest rate for the lifetime of the loan. The specific monthly loan payments you will make is based on the lesser of the following:
- 20 percent of your discretionary income (your adjusted gross income minus 150 percent of the poverty line income in California) or
- Your income-adjusted fixed repayment plan rate, based on 12 years
The longest term repayment plan can only last for 25 years (10 years for those in public service). While this may seem like a long time, the total amount you will end up repaying over this potentially lengthy repayment period is often more affordable than the average borrower’s current monthly payments.
Pay as You Earn Repayment
Student debt inhibits business growth, diminishes consumer spending, hurts the housing market, puts stress on social welfare programs, and harms the economy. Moreover, it keeps millions of people from realizing their dreams: owning their own home, changing careers, getting married, having children, traveling, being able to take a vacation, and simply enjoy life. If you are like 45 million other Americans struggling with student debt payments that you simply cannot afford, an attorney may be able to help you get your student loans under control. High interest rates keep some borrowers with student loans from ever making a dent in their debt. Those who are particularly impacted by this problem include workers with graduate degrees, people with a high level of education that work in relatively low-paying fields, and workers with stagnant incomes. There is hope for such individuals, including yourself. The federal Pay as You Earn Repayment plan offers financial relief by reducing monthly debt payments, then eliminating any remaining debt after the conclusion of the repayment plan. The Sherman Oaks pay as you earn repayment lawyers at Wadhwani & Shanfeld are here to help you apply.
How Pay as You Earn Repayment Works
PAYE, or ‘pay as you earn repayment’, is designed to help moderate to low-income workers repay their loan over a maximum of 20 years by reducing their monthly payments to just 10 percent of their discretionary income (adjusted gross income minus 150 percent of the poverty line income in California). Any remaining debt owed after 20 years is forgiven (extinguished).
What Type of Student Loans Does PAYE Work For?
PAYE is available to borrowers who have direct federal loans who took those loans out after 2007. However, other borrowers may qualify even if they took out direct federal loans before 2007.
Who Does PAYE Benefit?
Not all borrowers qualify for PAYE, and even for those who do, there may be better options for managing their student loans other than going through PAYE. However, if the following characteristics are true in your case, there is a good chance that PAYE would be highly beneficial for your situation:
- Your income is relatively low
- Your income is expected to remain the same for a long period of time
- Some or all of your student debt is from grad school
- You are married, and both you and your spouse are employed
Call a Sherman Oaks Student Loan Repayment Attorney Today
Income based repayment is a great option for public servants such as teachers, as well as other borrowers whose income to debt ratio is low, and their income is likely to remain steady in the coming years. To learn more, call the Sherman Oaks student loan repayment attorneys at Wadhwani & Shanfeld today at 899-996-9932 to schedule a free consultation.
