White House Offers New Relief To Student Borrowers

October 28, 2011

President Obama has announced a plan that seeks to lessen the burden of paying back student loans. The plan calls for lowering the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent for eligible borrowers. This plan goes into effect in 2012 and any remaining debt would be forgiven after 20 years. The White House said about 1.6 million borrowers could be affected. The Obama plan also allows borrowers with direct loans from the government to consolidate them at an interest rate of up to a half percentage point less. This could affect 5.8 million borrowers, according to the White House.

Currently the total outstanding student debt is $11 trillion, more than the nation’s total credit card debt. Federally guaranteed student loans have made borrowing for college easy, which has had two serious consequences: first, students are graduating with unprecedented debt. 56 percent of bachelor’s degree recipients at public schools graduated with debt averaging about $22,000. Second, colleges and universities are continuing to raise tuition. The average in-state tuition and fees at a four-year public college rose an additional $631 this fall, or about 8 percent. In today’s tough economy, many graduates are unable to find jobs, consequently the national student loan default rate for the 2009 budget year rose to 8.8 percent.

In order to guarantee repayment of federal loans, Congress made changes to the normal consumer protections. Student loans are not discharged in bankruptcy except under the most extreme circumstances. Your tax refund, and even your paycheck, can be garnished without a court order. The government can also take some federal benefit payments (including Social Security retirement benefits and Social Security disability benefits, but not Supplemental Security Income) as reimbursement for student loans. The government cannot take any amount that would leave you with benefits less than $9,000 per year or $750 per month. And, it cannot take more than 15% of your total benefit.

If you are struggling to pay student loans, speak with an experienced bankruptcy attorney and investigate options to restructure your finances. After discharging unsecured monthly bills like credit cards and medical bills, many debtors are able to make monthly payments under one of the available student loan repayment programs. Take control and use the law to your advantage!

More Blog Posts

CONTACT US

Use the form below to send us a note, call us at 214.890.0711 or chat with us live. We are eager to help with all your legal needs. Please keep in mind that any unsolicited information sent through our website cannot be treated as confidential. Contacting us through this site does not create a representation relationship with Fears | Nachawati.

Inquiry Type

  • General
  • Personal Injury
  • Immigration
  • Bankruptcy
  • Drug Litigation
  • Family Law

Locations

With offices in Texas, Florida and Colorado and attorneys licensed in Texas, Florida, Colorado, Arkansas and Oklahoma, Fears | Nachawati is dedicated to attaining the best possible solutions for our clients’ business and personal needs. We strive to be professionals who are creative, empathetic and reliable.

All Areas Served

We Can Help

Contact Fears Nachawati today

Free Consulation

Live Chat (Online Now)