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Student Debt Modifications

HOW TO DEFER OR DISCHARGE STUDENT LOAN DEBT student loan forgiveness program


Why Student Loan Forgiveness?

Under this plan the required monthly payment will be based on your income during any period when you have a partial financial hardship. Your monthly payment may be adjusted annually. The maximum repayment period under this plan may exceed 25 years. If you meet certain requirements over a specified period of time, you may qualify for cancellation of any outstanding balance of your loans.


You’ll likely need one of these plans if you’re finding it extremely difficult or impossible to make monthly payments according to the promissory note you signed. If your income is reasonably good, and you want to cut your payments to improve your lifestyle, you’re unlikely to benefit and would probably be ineligible anyway.

The amount you have to pay is assessed on your actual earnings. The calculation is based on your “discretionary income,” which the U.S. Department of Education defines as “the difference between your income and 150 percent of the poverty guideline for your family size and state of residence.”

Which Plan Should I Choose?

 There are three income- based plans, and all of them cap your monthly payments at the sum that would normally be due under your original loan agreement:

  • Income-Based Repayment plan (IBR plan) – You have to pay 10 percent of your discretionary income, unless your original loan agreement was dated on or before July 1, 2014, in which case you should pay 15 percent.
  • Pay As You Earn Repayment plan (PAYE plan) – You have to pay 10 percent of your discretionary income.
  • Income-Contingent Repayment plan (ICR plan) – The lesser of:

a) The amount you would be paying on a 12-year repayment plan with fixed monthly payments, adjusted according to your income, OR

b) 20 percent of your disposable income.

For Example: Based on a single person living in one of the 48 contiguous states or DC. The federal poverty guideline for 2015 is $11,770, and 150 percent of that is $17,655. 

Your discretionary income is the difference between your actual income and $17,655. So, if you actually earn $20,000 a year, your discretionary income will be $2,345.

Your student loan payments would be 10 percent of that, which is $234 a year, or $19.50 a month. If you earn $17,655 or less, your payments are zero.

If your financial circumstances take a unfavorable  turn midway through, you can update your loan servicer right away. so you can  reduce your payment  more quickly than waiting  for your annual re-certification date. 

What Does This Do to My Repayment Term?  

As with all loans, the smaller your repayments, the longer your debt  it takes to rid of them. However, I'm sure we all know you can't squeeze blood out or a turnip. Don't let your debt cause you stress and anguish. 

After all, we can't take out debt with us when it's time to clock out. We all need a little help sometime.

What are the maximum repayment periods for each plan?

  • IBR plan for new borrowers (after July 1, 2014) – 20 years
  • IBR plan for borrowers with loan agreements dated on or prior to July 1, 2014 – 25 years
  • PAYE plan – 20 years
  • ICR plan – 25 years

What if I Still Owe Money at the End of My Repayment Period?

If your income doesn’t go up as quickly or as much as you hope, and you still have a balance at the end of the 20- or 25-year period your plan is supposed to last. This is the really good news: 

Your remaining outstanding debt is forgiven. The only downside? The financial benefit you receive when the loan is forgiven may be taxable. However, if that becomes an issue.

Talk with  your accountant as she/he may be able to help you. 

What’s the Bottom Line?

As with any loan in the realm of borrowing and lending.  The longer you hold on to debt. The more you pay in interest. Unless you end up getting your student loans forgiven on the back-end 

What are some common issues?

  •  Servicers systematically and illegally failing  borrowers at every stage of repayment.
  • Servicers creating unnecessary obstacles to repayment by providing bad information.
  • Servicers failing to act when borrowers complained.
  • Servicers Illegally cheating many struggling borrowers out of their rights to lower payments. (causing them to overpay for their student loans)
  •  Borrower's submitting annual re-certification application within the period her loan servicer had recommended, and it was the company’s rather than his or her fault that it hadn’t been processed on time. 

Pay close attention to your mailbox, phone calls, and  make sure you set up an online account with your servicing company. Moreover, upload your application you submitted on the website along with any supporting documents, such as proof of income, public service loan forgiveness applications or any other documents they may asked you for.

Note: Applying for Student Loan Forgiveness could be one of the most gainful decisions you make in your lifeblood.