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Past Due Student Loans

Find Out More About The Income Contingent Repayment Program.

This will explain options about past due student loans, specifically how to apply for the federal income contingent repayment plan.(IBR) In most cases you will have to pay nothing or very little. You may have received a notice about a default and do not know what to do. Read this carefully.
This program only applies to federal public student loans. Private student loans do not qualify. However they cannot garnish or take any of your social security or other retirement income. Just refer them to HELPS.

Although it is not common, it is possible for a defaulted federal student loan to garnish 15% of a person’ social security. We never see student loans taking other retirement income like pensions. However, in almost all cases, garnishment of social security for student loans can be prevented. Certain steps must be taken as we will explain.

The Income based repayment plan (IBR) is a federal repayment plan for student loans based on your income. It caps your required monthly payment at an amount intended to be affordable based on your income and family size. So for most HELPS clients your family is you alone or you and your spouse.

Let me give me explain and provide examples. If your gross income is less than 150% of the poverty line your payment would be $0 per month. For one person in 2017 that is $1485 per month and $2002 per month for two persons. The monthly amount goes up bit by bit if your income is over that. For example one person making $1666 per month or $20,000 a year would have a payment at right around $25 per month. When you get on website below you can calculate your payment.

In most cases, our HELPS clients have qualified with $0 dollars paid per month. The borrower needs to re-apply each year, but as long as circumstances do not significantly change, the payment amount will remain the same.

There are a lot of websites where you can enter information to find out if you qualify for an IBR payment.

We recommend you contact this website: http://www.aie.org/pay-for-college/manage-costs/find-out-if-you-qualify-for-income-based-repayment.cfm

  1. You can fill out the easy form on the front of that website. That will tell you if you qualify and how much your payment will be. For most clients of HELPS it is $0 per month.
  2. Based on what that says if you want to apply for income based repayment, you need to telephone your lender or loan servicer.
  3. Explain that you are on social security and want to apply for income contingent payment repayment.
  4. If your social security is presently being garnished you will want to explain that.
  5. You can apply online of by submitting a paper application. We have attached the application form as a pdf. You can print that out and complete it. They will give you the address where to send the form.
  6. We have also attached an application with written notes on it to help you with your application. You do not of course submit that but use that to help you fill out your own personal form.
  7. People sometimes get confused about whether to include the spouse’s income. If you file joint returns, yes. If not, then yes but their income will not be used to determine the amount you have to pay. If you are separated you do not need to include their income.
  8. Here is a link to questions and answers: https://studentaid.ed.gov/sites/default/files/income-driven-repayment-q-and-a.pdf
  9. When the form is completed you will send it to the lender or loan servicer for processing at the address they gave you when called at first as explained in number 2.
  10. You will need to complete this form annually or as otherwise instructed.

Lender will need 30-60 days to stop any garnishment of social security. It is always best to file this paperwork before social security is garnished or immediately when you receive a notice when it is going to be garnished.

Remember arrangements are made through your specific lender or who services the loan. More information may also be obtained by calling: Federal Student Aid Information Center (FSAIC): 1-800-4-FED-AID (1-800-433-3243) -TTY (for the hearing impaired): 1-800-730-8913.

Eric Olsen Executive Director HELPS Nonprofit Law Firm

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Peace of Mind
These HELPS clients were dealing with harassing debt collectors and anxiety over old Debt. HELPS provided a solution to their financial worries.