People dealing with student loan issues are in a wide variety of situations – some are parents of students, some are students themselves, some are spouses of past students, some are cosigners, etc. Regardless of who you are or how you ended up responsible for a student loan balance, sometimes what seems to be a simple situation can become increasingly problematic and the assistance of a legal professional can be a great help.
Student Loan Consolidation: Similar to refinancing a loan, student loan consolidation means borrowers can consolidate all, just a designated portion, or just one of their student loans. Consolidating federal student loans can sometimes result in a lower monthly payment, and in some cases, it can be a good strategy for a borrower to get out of default. But you should almost never refinance federal loans into a private loan, as you now lose the benefits of a federal loan.
Many student loan borrowers look to student loan consolidation as a means of simplifying their life because consolidation allows you to put all your loans together and make one monthly payment. Other borrowers use consolidation to seek financial relief through a reduced payment. Obtaining a reduced payment through student loan consolidation can be an effective solution in some circumstances, but it also extends the repayment period, and therefore the time during which you accrue interest. Consolidation may offer an interest rate break, particularly for borrowers who have variable rate loans. The process also allows those who are in default to get back into current repayment status. The federal student loans have many programs that allow for discharge of some or all of the debt. There are programs that have principal loan forgiveness for federal, state, county and city employees; for 911 victims; for non-profit employees; for teachers; and for permanently disabled persons. Without proper guidance, you may not even realize that you could qualify for a plethora of programs that can reduce your payments and principal due.
You may also be losing rights associated with federal loans if you consolidate to a private consolidation loan, as well as some options and protections associated with specific types of student loans.
Student Loan Litigation: Student loan litigation occurs when a lender files a lawsuit in response to a borrower’s nonpayment of their student loan. Lawsuits are not very common in federal student loan collection, but they are a possibility. The reason it is less common for the government to sue in order to collect on student loans is because there are so many tools available to them to use to collect outside of court. In comparison, lawsuits are the main collection tool that private lenders have at their disposal. Once a lawsuit is initiated for a private student loan, it is essential to assert your rights as there are several strategies that can greatly reduce the debt or sometimes even dismiss the entire debt.
If you are considering student loan consolidation or facing student loan litigation, don’t do it alone. Get in touch with the experienced student loan litigation attorneys at Aronow Law, P.C. so we can help you determine your best course of action.