Student Loan Repayment Options

Student loan debt has entered the national conversation as a topic of considerable interest. Too many young people exit college saddled with thousands of dollars in debt and burdensome monthly payments that shackle their futures just when they are on the cusp of starting out on their own, entering the professional workforce, buying a home or building a family. Fortunately, the federal government does make many different repayment options available to borrowers. Each program has its own eligibility requirements, monthly payment amounts, and pros and cons, so it’s wise to review your options carefully before committing to a particular plan. Bankruptcy or other forms of debt relief might also be an option to consider; in some cases, a bankruptcy discharge can offer much more effective relief, assuming you can qualify and achieve it.

Learn about student loan repayment options below, and contact Rounds & Sutter to have a discussion about student loan debt or other financial stressors that are keeping you from living your best life. Our Ventura law firm is committed to finding solutions that meet our clients’ needs.

Federal Student Loan Repayment Plans

1. Standard Repayment Plan

• Eligibility: Available for all federal student loan borrowers.
• Monthly Payment: Fixed monthly payments over a 10-year term.
• Pros: Pay off the loan quickly and pay less interest over time.
• Cons: Higher monthly payments compared to other plans.

2. Graduated Repayment Plan

• Eligibility: Available for all federal student loan borrowers.
• Monthly Payment: Payments start low and increase every two years over a 10-year term.
• Pros: Lower initial payments, payments increase as income hopefully grows.
• Cons: Pay more interest over time compared to the Standard Plan.

3. Extended Repayment Plan

• Eligibility: Available for Direct Loan and FFEL Program borrowers with more than $30,000 in outstanding loans.
• Monthly Payment: Fixed or graduated payments over a 25-year term.
• Pros: Lower monthly payments than the Standard Plan.
• Cons: Pay more interest over the longer repayment term.

4. Income-Driven Repayment Plans

• Eligibility: Available for borrowers with federal student loans, offering payment caps based on income and family size.
• Monthly Payment: Generally set at 10-20% of discretionary income.
• Types:
  • Revised Pay As You Earn (REPAYE) Plan: No income eligibility requirements, 10% of discretionary income, remaining balance forgiven after 20-25 years of payments.
  • Pay As You Earn (PAYE) Plan: Must demonstrate partial financial hardship, 10% of discretionary income, remaining balance forgiven after 20 years of payments.
  • Income-Based Repayment (IBR) Plan: Generally, 10-15% of discretionary income, remaining balance forgiven after 20-25 years of payments.
  • Income-Contingent Repayment (ICR) Plan: 20% of discretionary income or what would be paid on a fixed 12-year plan, whichever is less, remaining balance forgiven after 25 years of payments.
• Pros: Lower payments based on income, forgiveness after a certain period.
• Cons: May pay more interest over time, forgiven amount taxed as income.

5. Public Service Loan Forgiveness (PSLF)

• Eligibility: Available for borrowers working full-time in qualifying public service jobs and making 120 qualifying payments.
• Monthly Payment: Payments under an income-driven plan.
• Forgiveness: Remaining loan balance forgiven after 120 qualifying payments.
• Pros: Potential for loan forgiveness after working in public service for 10 years.
• Cons: Requires specific employment and 10 years of payments.

6. Saving on a Valuable Education (SAVE) Plan

• Eligibility: Available for certain federal student loans, primarily for borrowers in the military.
• Monthly Payment: Based on income, similar to other income-driven plans.
• Pros: Tailored for military personnel, lower payments based on income.
• Cons: Limited to specific borrowers.

Understanding these student loan repayment options can help borrowers choose the plan that best fits their financial situation and goals. It’s important to review each plan’s terms and conditions carefully and consider consulting a financial advisor or student loan counselor to make an informed decision.

Bankruptcy

Student loans are dischargeable in Chapter 7 bankruptcy, but they require a showing of undue hardship. In the past, the bankruptcy courts have applied a very strict view of what constitutes an undue hardship, and few debtors could qualify. That hard line has been softening in the past few years, however, and more and more borrowers have found themselves able to discharge at least some of their student debt in bankruptcy. The bankruptcy attorneys at Rounds & Sutter can analyze your situation and determine whether you meet the standards of the Brunner test for a student loan discharge in bankruptcy. Bankruptcy is just one option among many; you can count on our dedicated debt resolution attorneys to advise you on the possibilities and assist you in the manner that makes the most sense in your particular situation.

Contact Rounds & Sutter for Help With Student Loan Debt Today

If your student loan debt is overwhelming you, either alone or when combined with medical bills, credit cards, and debts, Rounds & Sutter can help you find the solution or solutions that will pull you out of debt and let you take back control of your finances. For help in Oxnard, Camarillo, and surrounding areas, call Rounds & Sutter at our offices in Ventura and Westlake Village at 805-650-7100.