Massachusetts Student Loans Law

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.

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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...  
  
  

_{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 list of "Consequences and Penalties of Default" should convince you that defaulting on your student loans can lead to overwhelmingly negative consequences.

If You are In Default, Act Now To Take Advantage of the Department of Education's "Fresh Start" Program

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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.

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President Biden's Loan Forgiveness Plan Killed By US Supreme Court

You have probably heard about President Biden's student loan forgiveness program that was announced in October 2022. The Supreme Court nixed that program at the end of June 2023.

President Biden has announced that the pause in student loan payments that began in the Covid pandemic will end, and the first payments will come due in October 2023.

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

So, with Biden's forgiveness plan eliminated, borrowers are left with the existing loan reduction programs offered by the Department of Education.

Loan Forgiveness Programs That Still Exist,  Other Than the Biden Plan Rejected By the Supreme 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 announced in October 2022.

If your student loans are canceled, you don’t have to repay them. To qualify for loan cancellation (also called "discharge" or "forgiveness"), 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}

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President Biden's Loan Forgiveness Plan Killed By US Supreme Court

You have probably heard about President Biden's student loan forgiveness program that was announced in October 2022. The Supreme Court nixed that program at the end of June 2023.

President Biden has announced that the pause in student loan payments that began in the Covid pandemic will end, and the first payments will come due in October 2023.

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

So, with Biden's forgiveness plan eliminated, borrowers are left with the existing loan reduction programs offered by the Department of Education.

Loan Forgiveness Programs That Still Exist,  Other Than the Biden Plan Rejected By the Supreme 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 announced in October 2022.

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. 

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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.

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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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We built this website to get you the answers you need about getting out of student loan debt. more...