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Deferments and Forbearances Are Not the Long Term Solution for Your Federal Student Loans

Steven J. Richardson
Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.
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I read an article today in the Wall Street Journal's Market Watch talking about how colleges and universities are hiring “default management” companies that reach out to former students who are behind on federal student loan payments.

What do they recommend?  Do they tell them about all of their repayment options? No! They tell them about postponing payments through either deferment or forbearance.

It's What's Best for the School

Why would they do this? Why talk about temporary shelter from the debt when they can help the student find an affordable payment? Here's why! As the article states,

"If a college’s federal student-loan default rate surpasses 25% for three consecutive years, or 40% in a single year, it could lose eligibility for federal student aid for all students, according to the Department of Education."

Uh huh! So instead of helping the students and graduates, they are just helping themselves!

What's Best for You?

For graduates in financial distress, income based repayment plans like IBR and ICR can provide them with the ability to survive financially, while contributing to the economy by buying homes, as well as other goods and services. Thus these plans provide a long term solution for the borrower, rather than staving off the inevitable.

I recently helped a client here in Woodbury, who is on Social Security Disability, deal with over $25,000 in federal student loans. She had been in a forbearance for years just trying to survive because she didn't know about the income based plans.

She has applied for ICR, and if accepted (which I expect she will be) her payment for the next 12 months will be $0.00! Even though it is nothing, it counts as a monthly payment. Now that is a real solution!

So What Do I Do?

If you live in New Jersey and are struggling with payment on federal student loan debt, don't hide out in a forbearance or deferment! I may be able to be of assistance. Just download this questionnaire, fill it out, and then fax it to me at 856-686-9911 or e-mail it to me. I will then review it to determine if I can be of assistance and contact you to discuss representation.

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