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Find Student Loan Debt Relief

Mark Cappel
UpdatedDec 1, 2010
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    4 min read
Key Takeaways:
  • The Dept. of Education offers six payment options.
  • IBR will help people struggling with limited income.

Learn all About Student Loan Debt Consolidation & Your Other Options

The average college student graduates with more than $20,000 in student loan debt, but many carry much more. For students continuing on to professional or graduate school, or those who attend private schools, the tally can top $150,000.

Student loan debt repayment cannot be avoided through bankruptcy, except in rare circumstances, but there are several ways to take the sting out of the monthly bill. Below are some tips and tactics to pay off student loan debt.

Pre-Pay Student Loan Debt

If possible, repay some of your student debt before you graduate or your interest deferral period ends. Early payments for subsidized loans are applied to the principal, which reduces both your principal balance and the interest you pay over the life of the loan. Payments toward unsubsidized loans are first applied to accrued interest, but that can also reduce the life of the loan and save you money in the end.

Consolidate Student Loans to Create New Payment Options

Federal student loans issued before July 1, 2006 have variable rates, which means the interest rate resets annually on June 30. Federal loans issued after that date have a fixed interest rate.

If the current interest rate on your federal loan is variable, consolidate the loan to lock in a fixed rate. Consolidating fixed rate loans also has advantages, including the ease of a single monthly payment. Many lenders also offer bonuses for consolidation such as a rate reduction of .25 to 1% after a number of on-time payments, and possibly an additional .25 to .50% rate reduction for automatic payments.

In addition to the potential rate reduction of up to 1.5%, most consolidation loans include choice of repayment plans. Repayment plans determine your payments by dividing the principal plus total interest by the life of the loan. The amount of the payment depends on the plan you choose:

  • Standard repayment: Equal payments for the life of the loan, usually ten years, and minimum payments are $50.
  • Extended repayment: Equal payments over a longer term (up to 25 years), which reduces monthly payments but increases the total interest expense. Must have more than $30,000 in outstanding FFEL Program or Direct Loans.
  • Graduated repayment: Lower payments at first, when your income is lower. Payments increase every two years until the loan is paid off. Payment term is 10 years.
  • Income Based Repayment: Income Based Repayment (IBR) is a new repayment plan for the major types of federal student loans. Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on income and family size. You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan.
  • Income Contingent Repayment: For federal Direct Loans. Monthly payment amounts are reset each year based on your annual gross income as reported on your US tax return.
  • Income-Sensitive Repayment Plan: For FFEL Loans. The monthly loan payment is based on your annual income. As your income increases or decreases, so do your payments. The maximum repayment period is 10 years.

Before you consolidate, research various lenders until you find one that offers the best terms.

Some lenders offer a two- to nine-month grace period following your graduation. The grace period may include interest subsidies. To ensure you receive all the subsidies, ask your consolidation lender to accept your paperwork in time to receive the best rate, but delay processing until your grace period is about to expire.

Do Not Let Financial Hardship Lead to Financial Ruin

When money is tight or you experience a financial hardship, it is tempting to skip a payment, or stop paying altogether, but default penalties are severe. Instead, contact your lender as soon as you know you are in trouble and ask them for help choosing a different repayment plan or applying for a deferral or forbearance.

Student loan debt can feel overwhelming, but taking advantage of consolidation offers can help you get a handle on your payments, and reduce the number of bills you pay every month.


DDale Johnson, May, 2021

Who do I contact to investigate whether or not, do I have a student loan debt?? My phone: 805-310-9950

JJosh, Aug, 2021

Hello Dale,

Thank you for reaching out. You may want to look into to determine if you have any loans. You can also pull your credit to see if you have any student loans posted in your credit. Dale, if you have any other questions please check out our website We would be happy to assist you further if you need anything else.

Regards, Josh

SSteve, Sep, 2012
I have had my wages garnished for over 10 years now. While I took out a few federal student loans more than 12 years ago in college, my wages have been garnished ever since. No one seems to know where any of the money has gone. In addition, no collection agency will provide any proof that I owe the money claimed (which is over $100,000). How can I stop the garnished wages to get this mess straightened out? This has gone on for far too long.
BBill, Sep, 2012
I recommend that you contact the The Federal Student Aid Ombudsman Group of the U.S. Department of Education. They can help you "resolve discrepancies with loan balances and payments," if you have not been able to resolve disputes directly with your lender. Start by going to the Ombudsman Group Web site, using the link that I inserted above.

Even if you straighten out the balance issue, that will not stop the garnishment, and I don't think the Ombudsman can help you there. If one of the key issues is that the size of the monthly garnishment is killing you, then you may want to speak with a bankruptcy attorney. See if a payment demanded in a Chapter 13 would be smaller than what you're required to pay in the garnishment.
mmuhammad, Feb, 2012
My 2011 return was setoff for the full amount! I contacted the irs, and they said it wasnt them, contact the education department! I contacted them but it has been sent to a collections agency! I contacted the collection agency and set up a repayment plan! My 2011 tax reutrn has not posted towards the loan! It is being held as repayment for hte loan! How can I get my return back and offer to pay them some of it? The person at the collection agency told me to talk with a tax consultant! Everyone I talked with gave me some information but will not really tell me how to get my return back or offer some of it!
BBill, Feb, 2012
I am not sure where your refund is. Did the IRS send you information about the amount of the refund and where it was sent. If the money was taken for the debt, then the creditor should be able to show in which manner the money was applied to the debt. If you don't know where the refund was sent, then I recommend that you check with your tax preparer.
TTammy, Jan, 2012
My husband had a federal student loan in the late 1980s. We were married in 1992 and filed for bankruptcy in 1993. He was under the impression his father paid off his student loan so he did not include it in the bankruptcy paperwork. The bankruptcy was discharged in January 1994.

Approximately 10 years after that, we received a debt collection letter from the ECMS. I contacted them and was told to speak with the original loan provider. I did, and the bank said they had never received a single payment on the loan, and that if I disagreed I would have to provide proof of payment. By this time, my husband's father had passed away, and I had no way of verifying whether he had indeed paid off the loan, and any proof of payment. Another year or two went by, and the ECMS started taking our income tax refund away. I spoke with someone at ECMS and was told that if I paid $75/month for 9 months, the loan would be taken out of default, and then we would be contacted to make affordable payments at that time.After the 9 months, we started receiving bills for $300+ from a new loan provider. Nobody had contacted us to set up affordable payments. This new loan went into default because we could not afford such a high payment.

I am wondering, can we rely on the old 1994 bankruptcy to stop this debt, or did I ruin our chances by paying $75/month?
BBill, Jan, 2012
Your comment is a perfect illustration of why it is important to follow a lawyer's instructions and the bankruptcy statute and include every debt you have in your bankruptcy filing. This statement is true even if you think "someone else" paid the debt or another person has liability for the debt. Include everything and let the bankruptcy trustee sort it out! I realize this does not help you, but it may help other readers who will file for bankruptcy.

In some cases, a bankruptcy court will re-open a bankruptcy that has been discharged so that another debt can be included. Given that 18 years has passed, this is no longer an option. I also doubt that a bankruptcy court in 2012 would allow anyone to file for bankruptcy and apply the court's 1993 or 1994 rules, which allowed the discharge of a student loan, to a current filing.

Federal student loans do not have a statute of limitations, so your paying $75 per month did you no harm.

You have several options to repay this federal student loan. See the resource Default on Federal Student Loan for a list of Dept. of Education repayment options.
AAlex, Sep, 2011
Is there any recourse for private loans when you've exhausted your deferment/forbearance options? Every time I get a small raise or promotion and start to make some headway, my variable interest rate changes, I move into a new payment schedule, other financial situations occur (job search, medical bills). I'm spinning my wheels and making no headway. AES is the servicer for most of my private loans; they were guaranteed through TERI or Natl Collegiate Trust. Those companies seem to not exist anymore from what I can find online. In short, I easily use over 40% of my monthly income for student loans - fed and private combined. I have good credit, good payment history on all accts so far, and 1 credit card (remaining balance from tuition not covered by a loan). I have no assets and own no property. I have no family to borrow from. My profession (physical therapy) is working to increase assistance from government programs for loan assistance because tuition has soared from the recent change from master's to doctorate programs. Eg. PTs aren't eligible for assistance through the Nat'l Health Corps. AES seems to not care at all about helping me. I'm contemplating not making payments for 6-8 months to AES to pay off some other balances, then return to making my AES payments with no problem. Would the sacrifice to my credit be worth it? Would it harm my parents as co-signers? How hard is it to rehabilitate from default? Is there a company or organization that can help me? I'm not sure wage garnishment would make a huge difference, the AES payments are about 22% of my monthly income which is close to the max allowed by Illinois for garnishment. Any advice would be greatly appreciated.
BBill, Sep, 2011
Sadly, there is a lack of good options for private student loan borrowers.

If your parents co-signed on the loan, your choosing to not pay the loans for 6-8 months could lead to them suffering collection efforts and harm to their credit rating. There are also severe financial penalties. You want to avoid default if at all possible.

See the resource Private Student Loan Default to learn more.