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I have $80K in student loan debt from two degrees that I can’t even use. How can I repay these loans?

I have $80K in student loan debt from two degrees that I can't even use. How can I repay these loans?
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Question: “I have over $80,000 in loan debt from my bachelor’s and master’s degrees. I am now disabled and unable to use my degree. My existing loans are on hold, but I don’t currently have income due to unemployment. Any advice would be greatly appreciated.”

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Answer: Student loans ideally help to get a job that in turn adds to the income to pay off the advance. Disability due to illness or accident that makes it impossible to work turns the equation around. Here’s what the professionals say, and people in a situation similar to yours, may want to consider helping ease your student loan debt burden, from loan forgiveness to changing your repayment structure.

Public finance gurus agree that in your case, two main variables are at play: what type of loan (federal or private) and how severe your disability is (permanent or temporary). “Not being able to use your degrees and not being able to work again at all are two different issues,” says financial and debt solution attorney Leslie Taine, founder and managing director of Tayne Law Group. Either way, take action. With student loan repayments resuming in May 2022, some urgency is afoot. “You can’t wait for the government to act, and I hope you’ll be part of a group where they give loans,” she says.

If you have been unable to work for an extended period, you may qualify for federal student loan forgiveness through the Total and Permanent Disability Release (TPD). This program absolves you from having to pay off a Federal Direct Loan, a Federal Family Education Loan Program (FFEL) loan, and/or a Federal Perkins loan or to complete a TEACH grant service obligation. There is some complexity with discharging a TPD, including methods of applying and qualifying for it, according to financial aid expert Mark Kantrowitz, author of several books including How to Appeal for More Financial Aid for College. Eligibility requires proof that you are completely and permanently disabled, and that can come through a Department of Veterans Affairs (VA), Social Security Administration (SSA) or physician certification. Eligibility requirements include that the disability must have lasted five years, will last five years, or will eventually lead to death.

But a note: agreeing to discharge is not the end of the story. “There is a possibility of a three-year post-discharge monitoring period, during which earned income must be less than 100% of the poverty line for a family of two,” Kantrowitz says.

Some good news: The Biden administration has made it easier for older borrowers with disabilities, says Andrew Bentis, loan expert and certified student loan advisor at StudentLoanHero. In August, more than 323,000 student loan borrowers with complete and permanent disability had their debts canceled, adding up to $5.8 million in forgiveness. The change was applied to selected borrowers by matching their SSA data.

If you do not meet the requirements to be eligible for a TPD, consider enrolling in an income-driven repayment plan that allows you to set your monthly federal student loan payment to an amount you can afford based on your earned income. This would keep your monthly payments at $0 as long as you have no income. “This would give you a bit of a temporary respite to make sure your loans are valid,” Bentes says. “You avoid deviation and all the negative effects of that.” StudentAid.gov provides an in-depth look at loan forgiveness and service loan programs.

But what if you Private student loan borrower? Go to your loan source—the bank, credit union, or private lender—to inquire about deficit debt forgiveness. “It’s really a lender by case of a lender,” Bentesse says. “Each lender has its own application procedures and policy.” In any case, you will need to show evidence of your disability.

Resorting to Plan B, as in the case of bankruptcy, may be a long way to explore. “The bankruptcy court considers certain factors to determine whether paying off student loans is causing undue suffering, justifying the discharge of some or all of the student loan,” says Taine. Difficult to prove the circumstances. “The odds are long and slender, but this might be a possible option,” says Tyne.

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