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Tips for Dealing With Student Loan Debt in Michigan

Welcome to the fastest way to find out about managing student loan debt in Michigan.

Here, you'll find clear and accurate information about paying off your student loans, including how to:

To begin, keep in mind these basic tips for dealing with your debt:

Know Your Loans

You can't manage your student loan debt unless you understand what you owe and how to pay. Make sure you know the balance on each of your loans, when payments are due, and where to send them. (If your lender offers an electronic payment option, sign up for it if you can. Your payments will never be late, and you may also qualify for a reduced interest rate.)

If you don't know the basic terms of your student loans, contact your loan servicer. And if you're not sure who that is -- some borrowers have multiple loan servicers -- see Tips for Finding and Working With Your Loan Servicer.

Get Organized

Set up files for your loan documents -- perhaps a paper file for documents you get in the mail and a computer folder for electronic correspondence. Read all mail and notices about your loans and keep copies of anything important, especially documents you've signed.

Don't Miss Your First Payment

Most student loans come with a grace period -- that is, a period of time after you leave school when you aren't required to make payments. Grace periods are usually six or nine months, but they vary depending on the type of loan. A surprising number of student loan borrowers default on their loans because they don't know when their grace periods end. Mark payment due dates on your calendar -- and know that you are required to make on-time payments even if you never receive a bill or notice from your lender.

Pick the Best Repayment Plan

When it's time to start paying back your student loans, you'll probably face a variety of repayment options, from a standard ten-year plan to extended plans that base your payments on how much you earn. Learn about the plans available for each of your loans and choose the options that allow you to get out of debt as fast as possible. Many experts say that your student loan payments shouldn't exceed 8% to 10% of your gross monthly income. You may want to use that as a rough guide, keeping in mind that if you extend the life of your loans, you'll significantly increase the amount you pay in the long run.

To compare repayment plans, you can use the Repay Student Debt calculator offered by the Consumer Financial Protection Bureau (CFPB). Whether you have federal student loans, private loans, or both, this calculator is a great place to start evaluating your repayment options.

Pay High-Interest Debts First

If you have student loans at different interest rates, concentrate on paying the costlier loans first. And don't forget to consider other debts as well. It doesn't make sense to put extra cash toward paying off a student loan with an 8% interest rate if you're carrying debt on a credit card that charges 15%. Get rid of the credit card debt and put those cards away, then focus on the next high-interest debt.

Understand When Your Student Loans Can Be Canceled or Forgiven

In cases of extreme hardship, or if you work in public service, you may qualify for complete or partial cancellation of your student loans. It's not easy to meet the conditions for cancellation or forgiveness, but if you're struggling to make your payments, it may pay to know the rules of these programs. 

For information, see Can I Cancel My Student Loans? and Student Loan Forgiveness Programs.

Do All You Can to Avoid Default

Defaulting on your student loans can result in a lifetime of financial headaches, from ruined credit to relentless collection agencies, from lost wages to lawsuits. Federal loans usually go into default after nine months of missed payments; private loans may be considered in default if you miss just one bill. Fortunately, most lenders want to work with borrowers to prevent default, and there's a wide variety of options to keep you out of hot water, including deferment, forbearance, and flexible payment plans. To learn about these options and more, see Avoiding Student Loan Default.

Don't Get Scammed 

If someone promises to get you out of student loan debt for a fee, watch out. There's no charge to apply for loan cancellation or forgiveness programs. The only time it makes sense to pay someone to help with your loans is if you're having problems so severe you need a lawyer -- for example, if collection agencies are breaking the law by harrassing you, if you get sued, or if you want to try to get rid of your loans in bankruptcy. 

To learn how con artists try to take advantage of student loan borrowers, see Avoiding Student Loan Scams and Pitfalls. For more information about hiring a lawyer, see How to Find a Student Loan Lawyer in Michigan


How Do I Lower My Student Loan Payments?

Biden's 2022  Student Loan Forgiveness Plan

Supreme Court Appeal Throws Biden's Forgiveness Plan Into Doubt

Biden's Student Loan Forgiveness Plan (described below) offers substantial relief to student loan borrowers from low-income families who didn't have a legacy of "family money" to send kids to school.

The program was put on hold when a group of Republican plaintiffs claimed to be harmed by the new plan and that President Biden did not have the power to forgive loans in this manner.

The Supreme Court heard oral arguments on the issue in late February and is expected to rule by June 30, 2023. Whether or not the forgiveness program is upheld, student loan payments will resume 60 days after the court ruling. 

What Biden's Forgiveness Plan Offers

Before a court ruling suspended the program in November, President Biden's announcement on August 24, 2022 launched a new era in ways to lower your student loan payments.


How Do I Postpone My Student Loan Payments?

President Biden has announced that deferment of federal student loan payments due to the CARES act passed in response to Covid. That pause  began in March of 2020, and ends as of September 1, 2023, or 60 days after the Supreme Court rules on his expansive loan forgiveness plan announced in October 2022. The first student loan payments will become due on September 25 to January 31, unless you have some other reason to have your student loans deferred.

This covers any federal loans, either direct loans or FFEL loans (Family Federal Education Loans). 

Do you have the right kind of loan? find out by going to StudentAid.gov. You’ll see all of your federal loans there. more...  


Avoiding Student Loan Default

If you have more student loan debt than you can comfortably handle, there may come a time when you're tempted to throw up your hands and stop making payments. Not so fast. The consequences of student loan default are harsh -- see What Happens If I Default on My Student Loans -- and defaulting will dramatically increase your debt headaches. 

Here are some suggestions to help you stay out of default.

Getting Organized: Strategies for Managing Student Loan Payments

Sometimes people who have enough income to pay off their loans end up in default because of poorly organized records. You can take some simple steps to get your paperwork together and reduce the chances that a loan will fall through the cracks.



Consolidating Student Loans: Pros And Cons

Consolidating your student loans may make it easier for you to live with them.

At best, it could:

  • reduce your monthly loan payments,
  • cut your interest rate, and
  • ease the burdens of recordkeeping, and
  • qualify you for loan forgiveness programs.

At worst, it won't help with any of these concerns -- and it could cost you important benefits associated with your federal student loans.

If you're considering student loan consolidation, it's essential that you know the terms of your existing loans and understand how consolidation works before you proceed. 

What Is Student Loan Consolidation?

  • Loan consolidation is a process that lets you replace multiple student loans with a new loan from a single lender.
  • The interest rate on the consolidation loan will be based on the average interest rates of all the loans that you consolidate.

EXAMPLE: If you consolidate a $5,000 loan at 6.8% interest and a $10,000 loan at 6.0% interest, your new interest rate will be $6.375%.

  • Consolidation rules depend on whether the underlying student loans are federal loans -- such as Stafford, Direct, or Perkins loans -- or privately made. more...  


What Happens If I Default on My Student Loans?

Money Graph

Photo courtesy 401(K)2012 on Flickr

Most federal student loans default when the borrower fails to make payments for 270 days (nine months). Private loans may have different terms; they may default if you miss just one payment. Read your loan contracts carefully to be sure you understand when you're at risk for defaulting -- then do all you can to avoid it

The following lists should convince you that defaulting on your student loans can lead to overwhelmingly negative consequences.

Student Loan Default: Consequences and Penalties

If your student loans go into default, here are some of the difficulties you may face:



How to Get Out of Student Loan Default

If you've defaulted on a student loan, how to get out of default depends on whether the loan is federal or private.

Getting Your Federal Student Loans Out of Default

Your options for getting your federal student loans out of default include:

  • repaying the loans
  • rehabilitating the loans, or
  • consolidating the loans.

Paying off your loans. This is the fastest (and usually the least expensive) way to clear your default. Of course, if you could just pay off the debt, you probably wouldn't be in default. Most borrowers in default can't afford this option and must consider loan rehabilitation or consolidation.



Can I Get Forgiveness or Cancellation of My Student Loans in Michigan?

Status of President Biden's Loan Forgiveness Plan

You have probably heard about President Biden's student loan forgiveness program that was announced in October 2022. That program is on hold now pending an appeal that has reached the supreme court. The Supreme Court has decided to have hearings on this issue in February. And the court is expected to rule on the matter by the time their term ends at the end of June 2023. President Biden has announced that student loan forbearance due to the Covid pandemic will end 60 days after the court rules on the student loan forgiveness program that he has announced. So... probably End of August is when student loan payments will again come due.

For details about the 2022 student loan forgiveness program under the Biden administration see this article.

While you're waiting for that to resolve itself, you may want to familiarize yourself with forgiveness programs that pre-date the latest program announced by the Biden administration. 

Loan Forgiveness Programs Other Than the Biden Administrations 2022 plan being challenged in court

The remainder of this article covers other types of student loan forgiveness programs that were in existence before the general forgiveness program that President Biden announce in October 2022.


If your student loans are canceled, you don’t have to repay them. To qualify for loan cancellation (also called "discharge"), you must meet very specific requirements that depend on the type of student loans you have and when you got them.


 Photo Daniel Kulinski via Flickr Creative Commons



Student Loan Forgiveness Progams

Student loan forgiveness programs can bring great relief to borrowers who qualify, and now many people may qualify for them and not even realize it!

If you DO qualify, they are a magic bullet. But to qualify you muyst  work hard for them, serving your community for 10 years or more, and making regular payments for 10 years, after which your entire remaining balance on the loans is erased!

The program was launched in 2007, and the right kind of qualifying loans didn't become common until 2009, so it's only recently, as of 2019 and 2020 that people just now are eligible to qualify for getting their remaining payment wiped out.

Folks who benefit from forgiveness programs usually work for low pay in jobs that help others -- for example, teachers, public defenders, or health care professionals working with populations in need. 

If you have worked in a government or non-profit job for 10 years and have been making IDR payments on your direct student loan for 120 payments, you may qualify to have the remaining payments eliminated.

Federal Public Service Loan Forgiveness (PSLF) Program. IT WORKS! It is NOT DEAD! 

The best known and most widely used student loan forgiveness program is the federal government's public service program. The goal of the program is to encourage graduates to work full-time in public service jobs.

Under the program, the government will forgive a borrower's

  • Direct Federal Loans,
  • after they have made 120 regular IDR payments -- that's ten years' worth --
  • while working full time for a federal, state, or local government agency or for a nonprofit organization.

Despite what you may have heard, Pubic Service Loan Forgiveness is NOT Dead!

You may have heard, a while ago that 99% of PSLF applications were denied. True! BUT, according to the The Student Loan Lawyer, Joshua Cohen, those applications were rightly denied, because they lacked one of the three essential elements required for Public Service Loan Forgiveness. 



How to Find a Student Loan Lawyer in Michigan

If you think you need a lawyer to help with your student loan troubles, slow down. Most repayment problems can be solved without a lawyer. A lawyer may tell you they can teach you about repayment options, help you lower or postpone your payments, reduce your interest rates, or get your loans forgiven. But consumer-friendly, no-cost resources exist to help you with all of these tasks and more.

Repayment problems. If you’re having trouble paying your loans or have questions about their terms, you should first contact your loan servicer. Federal loan servicers are supposed to help you determine the best way to pay your loans, including educating you about the different ways to pay or postpone them. The U.S. Department of Education website offers a wealth of information about handling student loan debt. Also, see our top tips for dealing with your student loans.

Disputes with a loan servicer. If you run into difficulties with a loan servicer, you may be able to get help without calling a lawyer. Many free student loan ombudsman programs are available to help you resolve conflicts. For details, see How to Get Help With Student Loan Problems.



Can I Discharge My Student Loans in Bankruptcy?

Getting rid of student loans in bankruptcy is difficult -- but it’s not always impossible. To succeed, you must convince the court that repaying your student loans would cause you "undue hardship."

Bankruptcy: A Brief Overview

You probably already know that bankruptcy is a court procedure you can use to get your debts erased or reduced. But you may not know there are two different kinds of bankruptcy proceedings.

Liquidation (Chapter 7) bankruptcy. Chapter 7 is the most common type of bankruptcy. When you file for Chapter 7, you may have to surrender some of your property to pay creditors, but the end result is that most of your debt will be completely wiped out. But student loans are a big exception to this rule; you must file additional paperwork and meet a high standard to discharge your student loans in a Chapter 7 case.



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