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?).
Unable To Find Work Due To Special Circumstances
I have student loans that are in default and have placed them in forbearance and deferment for almost 10 years. I’ve applied to have them forgiven, I was denied because 12 years ago I had student loans forgiven. The basis of that forgiveness was my criminal record. Since then, I’ve had my record esponged (sic), which I thought would wipe my record clean. So, I went back to school for law enforcement.
All throughout my schooling I asked several times if the espongement (sic) or my past record would hinder me from employment. I was informed repeatedly that it wouldn’t. After working on my bachelor’s degree for 7 months, I was denied employment because of my record. At that point I stopped going to school. I cannot get a career in the profession I went to school for, even after I asked several times and was misguided by the schools. I also have psychological and medical issues that would hinder me even if my record didn’t. Please advise what I can do. I cannot afford to repay these student loans.
Assuming these are federal student loans, there are a couple of options you should look into based on what you’ve told me—an ability to benefit discharge and the disability discharge.
For the ability to benefit discharge, you would need to show that the school was aware of the circumstance that would prevent you from working in the field you were studying and provide the federal or state law or regulation that states that your record causes you to be ineligible to work in that field. Here’s the application for this discharge.
For the disability discharge, you would have to either have a doctor certify that you are unable to work and earn an income for at least sixty months due to your medical condition, or be on social security disability benefits with a status that states you only need to be recertified every 5-7 years. You would apply for this discharge at www.disabilitydischarge.com.
If you are not eligible for these discharges, my recommendation would be for you to resolve the default through rehabilitation or consolidation. From there you could apply for income based repayment—this plan would keep your monthly payments at no more than 15% of your income, minus an allowance for your family size. If your income is very low, it could mean a payment of as low as zero dollars per month. After 25 years on this plan, any remaining balance would be forgiven. You can read more about these options here and here.
Check out this information then let me know if you have additional questions.
Waiting List And Grace Periods
If I receive subsidized and/or unsubsidized Stafford loans while completing prerequisites for a specific degree program, but I and have to be put on a 2 – 4 year waiting list for that program, will I have to make payments on those loans during that waiting time? Also, will I have to continue to pay them back while I am completing the program, once I get in?
I have not applied for any type of loan yet.
If you’re enrolled in school less than half time for 180 days or longer, your federal student loan will go into repayment. Once you return to school on at least a half-time basis, you’ll again be able to defer your payments—but you’ll no longer have a 6 month grace period available. That’s the short answer—here’s the long one:
Federal Stafford loans have a six month grace period. Every Stafford loan you get is entitled to one—even if you’ve already used it on a prior loan. There’s a common myth that you don’t go into repayment until you graduate. That’s actually not true. If you’re not in school at least half time for six months or more, your loan will go into repayment. Grace periods are all or nothing—you either use all six months of it or they look at it like you didn’t use any of it. Let’s say you drop below half time in school because you dropped some classes or maybe you even graduated. If you stay below half time in school for 179 days, but then start classes again on at least a half-time basis, then the next time you drop below half time in school, you will have that entire 180 days of grace period available to you on those loans. If you don’t go back until day 181, that’s it—next time you drop below half time your loans will go right into repayment. If you use up your grace period on some loans and then take out new loans, you will get a grace period on the new loans but not the old ones. You cannot choose when you use your grace period—if you drop below half time, it will start.
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.)