National Student Loan Debt
As the suspensions of both federal and private student loan programs keep spreading through all types of lenders - large and small; for-profit and nonprofit; banks non-banks and credit unions; state loan agencies and schools-as-lenders - students and their families are finding themselves with fewer borrowing options to get the parent and student loans they need to pay the fall tuition bills that are coming due over these next few weeks. Two Major Lenders the Latest Casualties of Student Loan Crisis The Brazos Group a primarily nonprofit group of higher education lending servicing and other financial aid companies first announced that it would stop offering federal ollege loans back in March. In May however after the government passed the Ensuring Continued Access to Student Loans Act Brazos once again began offering federal parent and student loans saying that the governments short-term liquidity plan had renewed the organizations confidence in its ability to continue offering student loans.
For those students who opt for this route it is essential they have a loan co-signer when entering into an agreement with the private lender. Your chosen private lender then critically examines the credit report you have availed. This will help in evaluating your application and most importantly the lender will then determine the kind of risk that you pose in having the loan awarded to you. For applicants without a credit history then the lender will require that a family member Co signs the loan agreement before you are awarded the loan. Essentially Stafford loan does not need a co-signer all thanks to the process followed when borrowing the money. As such loans without co-signer actually do not involve examination of your credit score or history.
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Student loans are basically non-dischargeable almost everyone knows this. There are some very specific circumstances where even today you can have your student loan debt discharged but that is a narrow exception that often requires a fight and money to fight. We will discuss the current state of dischargeability in a future post. The landscape around student loans and bankruptcy has not always been so desolate. Not so long ago these loans were dischargeable. Back when they were dischargeable the cost of an education was much lower and the total student loan debt was a fraction of what it is now. With student loan debt currently being a 1200000000000.00 (One Trillion Two Hundred Billion) dollar problem holding people back from purchasing homes or taking part in the broader economy with a little help they may become dischargeable yet again.
As a borrowers income rises the income-based repayment cap will also go up. If the income-based repayment cap reaches a level higher than what a borrowers monthly payment would be under a standard 10-year student loan repayment plan the borrower will no longer qualify for income-based repayment for her or his student loans. Borrowers whose adjusted gross income falls below 150 percent of the poverty threshold wont be required to make any payments on those student loans that qualify for income-based repayment. Even if no payments are due however interest will continue to accrue on those college loans . Unpaid interest will also accrue if a borrowers income-based monthly payments arent sufficient to cover the full monthly interest on the qualifying college loans.