Student Loan Forgiveness Programs: PSLF and Paying Down Debt

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The costs for higher education have risen exponentially and many people find themselves mired in student loan debt. For people whose financial situation is precarious, having student loan payments of $393 a month (the average payment according to the Federal Reserve) makes meeting ends meet impossible. You may have heard of student loan forgiveness programs or student loan payoffs; you may be considering bankruptcy, and wonder if it will help with your student loan debt. Let’s explore your options.

Student Loan Forgiveness Programs

The Public Service Loan Forgiveness (PSLF) program was created in 2007; participants agree to work in public service jobs for the government and other nonprofit organizations for a period of ten years while making regular monthly payments on their loan. At the end of that time, the remainder of their student loan is forgiven. The reality is that this program has not actually resulted in much student loan forgiveness. In 2019, two years after the first participants became eligible, the Department of Education had approved only 1% of those applying for loan forgiveness. There are a multitude of reasons that applicants were rejected including not filing all yearly Employment Certification Forms needed and loans not being eligible for the program. Only direct student loans are eligible, so if you have consolidated your student loans, you will no longer qualify. Missing or mis-paid monthly payments are another reason for rejection. Basically, doing absolutely everything right under the PSLF program is essential, and if you do one thing wrong, your 10 years of public service and loan payments will be for nought.

Student Loan Payoffs

There are several volunteer organizations that will help in paying down student loans. Volunteers In Service to America (VISTA) will pay off $4,725 for 1700 hours work. That equals 42 ½ weeks of 40 hours a week. Americorps offers the same deal: 12 months of full time work earns you $4,725 off your student loan. The Peace Corps means automatic deferment of Perkins, Stafford or Consolidation loans, but that’s not forgiveness. It also offers partial cancellation of your student loan debt at 15% per year, with a maximum of 70%. So you could work full time for the Peace Corps for nearly 5 years and find yourself still owing 30% of your student loan. Wisconsin does have one state-run program called the Health Professions Loan Assistance Program. The HPLAP seeks to increase the number of primary care, dental, and psychiatrist providers working in underserved rural and urban areas of the state. Participants agree to work full time for three years in a designated area, and can receive up to $50,000 in forgiveness. It is unclear how effective this program actually is in eliminating student loan debt.

Student Loans and Bankruptcy

A casual search of student loan debt in bankruptcy will tell you that you will still be obligated to pay your student loans, even if you file for Chapter 7 bankruptcy. This is false. It requires genuine expertise in bankruptcy law in order to have your student loan debt discharged through bankruptcy, but it can indeed be done. If you can successfully prove undue hardship, your student loan will be completely canceled. Filing for bankruptcy also automatically protects you from collection actions on all of your debts. It’s important that you let your attorney know that you are interested in pursuing the discharge of student loan debt as well. It requires extra paperwork, and the development of a sound strategy. The professionals at Burr Law can advise you about the likelihood of having your student loan debt successfully discharged through bankruptcy.

Student loan forgiveness is real, but it is not easy. You might work with the PSLF program for 10 years and find yourself denied; you can work for nonprofit organizations for 3 to 5 years and hope some or most of your student loan can be cancelled. Or you can meet with the experts at Burr Law and find out whether you could submit a strong case to have your student loan debt discharged in bankruptcy.

Student Loan Bankruptcy: How to Prove Undue Hardship with the Brunner Test

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Student loan debt is a hot topic in the political arena. It was also the subject of an important recent decision by the United States Bankruptcy Court for the Western District of Wisconsin. In most cases, student loans cannot be discharged in bankruptcy unless the debtor can demonstrate that repaying these debts would impose an undue hardship. The case of Bradley A. Myhre v. U.S. Department of Education is a recent example of a case in which the court ruled in the plaintiff’s favor and demonstrates the difficulty in proving undue hardship in Milwaukee personal bankruptcy cases.

Bradley Myhre was injured on a swimming pool ladder in 1994. He suffered a C5-C6 injury to his spinal cord, which resulted in paralysis from the chest down and rendered him a quadriplegic. Myhre uses a wheelchair to get around and requires a full-time live-in caregiver to manage his everyday activities.

Prior to his accident, Myhre made hardwood trim and worked as a laborer. Afterwards, however, he relied on Social Security disability payments to provide him with living expenses. Myhre enrolled in college in 2000 and completed an associate degree in computer programming but was still unable to find a job. After five years of looking for work, he enrolled in an online course through Franklin University to obtain his bachelor’s degree. It was at this time that Myhre incurred the student loans relevant to his case.

While he was still attending online courses at Franklin University in 2010, Myhre received an offer of employment from Workforce Connections and began working at the company. The combined strain of working full-time and attending school was too much for Myhre in his disabled condition, and he stopped work on his bachelor’s degree after completing his current semester of studies.

Although Myhre attempted to support himself with his earnings from Workforce Connections, both he and his caregiver declared bankruptcy in 2012. The Department of Education argued that the student loans incurred by Myhre should not be discharged in the bankruptcy for a few reasons:

  • Myhre was already a quadriplegic when he applied for and received the student loans in question.
  • He was working full-time and was earning an income.
  • Myhre did not enroll in a repayment plan as part of his bankruptcy proceedings.
  • He also did not pay the Department of Education out of funds he received as an inheritance from his father.

The court ruled that Myhre had fulfilled the requirements of the Brunner test for undue hardship. This test requires that debtors demonstrate that repaying the loans would prevent them from maintaining a minimal standard of living, that this situation is likely to persist for a prolonged period of time and that the debtor must have made a good faith attempt to pay the loans. This allowed Myhre to discharge his student loans in his bankruptcy proceedings.

Burr Law Office offers practical solutions for Milwaukee personal bankruptcy cases to help our clients navigate the legal system successfully. Our team will work with you to represent your case effectively and to provide you with the right guidance and support throughout the bankruptcy process. Call us today at 262-827-0375 to schedule a free bankruptcy evaluation. We are here to help.

Safe Credit Card Use for Milwaukee College Students

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Credit card companies realize that the first credit card a person acquires is the card he or she will likely keep for the rest of his or her life. Many credit card companies attract new users when they enter college by sending offers or setting up displays on college campuses. Even though credit card use could lead to substantial debt obligations, students who use them wisely can end up building a favorable credit history.

Using a credit card responsibly can help students improve their credit scores so they can qualify for large purchases in the future. As this video explains, it’s best to limit credit card use to small, manageable recurring purchases. This can help students make sure to pay off their balances each month.

If you’re faced with financial problems, contact Burr Law Office for affordable bankruptcy services. You can learn more about our Milwaukee bankruptcy practice by calling (877) 891-1638.

Credit Card Mistakes that Recent Milwaukee Graduates Make

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Recent college graduates often find themselves facing new responsibilities, including managing their own finances. Not only do graduates have to find a job and a place to live, but they also need to start building up their credit histories. For most college graduates, the easiest way to start establishing a credit history is to use a credit card and avoid common mistakes that many new credit card owners make, including:

Milwaukee bankruptcy after collegeMaxing out credit cards

A credit card can help you build up a credit history and make large purchases. However, while you may now have access to thousands of dollars in credit, you should not spend up to your limit. When you begin using your new credit card, make sure you only charge what you can pay off immediately. Otherwise, you can easily become trapped in cycles of owed credit card debt and interest rates for years to come.

Failing to check a credit report

The stage of life following college graduation can be busy, as you may find yourself engrossed in a new career or enjoying an active social life. No matter how busy your life becomes, be sure to check your credit report periodically. As soon as you graduate, you should pull your credit history and start looking for any errors.

Not confirming all new addresses

In college, you likely grew accustomed to moving to a new house or apartment each year. You may have also returned home for the summer or during a certain semester. When you move to a new city or address to begin your professional career, you need to make sure that your mail follows you. Submit a change of address form and notify any important institutions of your new address so that your utility companies, bank, and credit issuers know where to send your billing information.

The Milwaukee bankruptcy attorneys of Burr Law Office focus on helping clients achieve affordable bankruptcy solutions. If you need debt consolidation assistance, you can schedule a consultation at our office by calling (877) 891-1638. You can also learn more about our range of services by visiting our helpful website.

Managing Money While Attending College in Milwaukee

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For most of us, going to college means being on our own for the first time—and while this means you have the ability to make major decisions on your own, it also means more responsibility. In this video, we take a closer look at how college students can stay on top of their finances while in school.

The first step to take is to create a detailed budget of all your spending habits. This should include the money you need for books and other academic expenses, groceries, gas, and entertainment. Check out the complete clip for tips on sticking to your budget.

https://www.youtube.com/watch?v=rt1eHhWxf8I

Are you facing large amounts of debt? Give your Milwaukee bankruptcy attorney at Burr Law Office a call at (877) 891-1638 for more information about our bankruptcy options and debt relief services.

What You Need to Know About the Fairness for Struggling Students Act of 2013

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According to a report by the Huffington Post, student loans are the largest form of consumer debt in the United States, measuring $1 trillion nationally. Regardless of this fact, student loans aren’t eligible for discharge under current code. In January 2013, three senators sought to change student loan eligibility by sponsoring the Fairness for Struggling Students Act.

Since 1978, federal student loans haven’t been eligible for discharge, because the government wanted to protect the taxpayer money used to provide the loans. However, in 2005, private student loans also became ineligible for discharge, even though private loans often carry double-digit interest rates and have no income-based repayment options.

The Fairness for Struggling Students Act seeks to return provisions regarding private student loans back to their previous state before the changes in 2005. This means that privately issued student loans would once again be treated like other forms of dischargeable debt under a bankruptcy petition.

Are you struggling to repay your student loans? Would you like to learn about your debt relief options? Call Burr Law Office at (877) 891-1638 to find out about our affordable Milwaukee bankruptcy services.

A Look at the Pay As You Earn Student Loan Repayment Program

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Each year, millions of Americans seek financial assistance from the government and private companies to help them afford undergraduate and graduate education. Unfortunately, many new graduates find themselves struggling to make even the minimum payments to their creditors.

While filing for Chapter 13 or Chapter 7 may be the best option for some debtors, the new Pay As You Earn repayment plan is an affordable alternative to bankruptcy for many struggling former students. The Pay As You Earn student loan plan caps payments for federal student loans at 10 percent of a consumer’s discretionary income and has allowed 1.6 million Americans to effectively reduce their monthly payments. If you are not eligible for Pay As You Earn, you may still qualify for Income-Based Repayment.

To learn more about how to make your student loan payments affordable, call Milwaukee bankruptcy attorney Michael Burr at Burr Law Office at (877) 891-1638. Whether you have debt from student loans, credit cards, or medical bills, our attorneys will help you find the best solution to pay down, eliminate, or settle your debt.

Do You Have Student Debt?

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Chapter 7 and Chapter 13 bankruptcy discharge a number of debts, including credit card debts, mortgages, car payments, and many other debts. However, not all debts can be discharged through the process of Milwaukee bankruptcy.

This video provides an overview on situations in which a student loan may be discharged through bankruptcy. As with child support, alimony, and back-due taxes, student loans are nearly impossible to discharge through bankruptcy. However, a student loan that comes from a private lender, such as a bank or credit union, may be an exception. Learn more in this full clip.

Attorney Michael Burr is an excellent resource, not just for bankruptcy cases but for debt relief in general. If you’ve found yourself overwhelmed by student debt or can’t keep up with other bills because of your student loans, Attorney Burr may have some great advice to offer.

Find out if filing for bankruptcy is the best option for your financial situation by contacting the Milwaukee bankruptcy attorney team at Burr Law Office at (262) 827-0375.