Helping people understand student loans is our job at SALT™, and few are better at it than Betsy Mayotte—the director of regulatory compliance for American Student Assistance® (our parent company). We told borrowers to “Just Ask” her questions, so check out her answers below (as well as her cat—because if Piglet can’t make student loans better, what can?).
Parent PLUS Loan Repayment
I have put two of my kids through college and I’m left with a little over $200,000 in Parent PLUS loans to repay. I don’t know how we are going to do this. My husband and I both work but have very little left over every month. Now, I’m very worried that we will not be able to pay for basic bills. We have good credit, but we are worried that we will default on these loans. They are currently in deferment/forbearance, but we know we can’t delay much longer and need serious help! Thank you!
I’m so glad you reached out. Parent PLUS loans are eligible for an option called income-contingent repayment (ICR) that could make your payments more manageable—but only if you consolidate these loans.
ICR bases your payment on your income, and it offers to forgive any balance left over after 25 years of consistent payments (or 10, if you work for a nonprofit or are a state, federal, or local government employer). You can get an idea of what your payments would look like under this plan here. Keep in mind that you do have to apply to use ICR.
If you’re interested in this option, you would first consolidate your PLUS loans at www.studentloans.gov. Then, you could use the online application at the same URL, or you can fill out an application form to send to your servicer.
Rehabilitating Defaulted Student Loan
I REALLY need to rehabilitate my default. Last year, I was told I could rehabilitate my default with nine payments of just over $500. Now, my rehabilitation option is over $1,000 a month. That seems so unfair. I am trying to do my best. PLEASE, please give me some options: consolidation, a lower rehabilitation amount, ANYTHING. I need my taxes and wages to make ends meet. I do not want to lose my home or vehicle.
I’m sorry to hear about your situation. There was a change in rehabilitation regulations last year, but this actually should make your payments more manageable—not double them.
The way rehab works now is that you are first offered a payment that is 15% of your adjusted gross income, minus an allowance for your family size. If you cannot afford that, you can request a financial hardship form from your loan holder. This will allow them to consider your full financial situation when determining a payment amount. Once you receive these two payment options, you can choose whichever works better for you.
You can read more about getting out of default here. Contact your loan holder to start this process, but let me know if you have any additional questions.
Have a student loan question you need an answer to? Just Ask.
(Note: The questions and answers above are real; however, they have been edited for grammar and clarity, but not by Piglet.)