Other Forgiveness Options for Federal Loans Borrowers

According to the claims of the FTC, the university engaged in misrepresentation to attract students. FTC claimed that the university’s ad called Parking Lot created false expectations about job opportunities.

As a result of this lawsuit, the university and the parent company agreed on the all-time greatest settlement amount for such cases $191 million.

Out of this money, $141 million was in the form of University payday loans Hawaii of Phoenix Student Loan Forgiveness, and the rest was cash refunds to borrowers.

Besides, the parties were responsible for notifying credit report agencies to delete any debt-related issues from the credit performance of borrowers.

Who can Benefit from the Settlement?

Previously, we have discussed the Borrowers’ Defense to Repayment program and its benefits for federal loans. However, students use different ways of funding for their educational loans.

In the lawsuit, the settlement and agreed forgiveness amount only benefit borrowers who owe directly to the school and who enrolled between 20 December.

For instance, Public Service Loan Forgiveness helps borrowers eliminate the debt once they make 120 successful payments. It takes around ten years of dedication to get the rest of the debt eliminated with the help of the PSLF program.

Another opportunity can be Perkins Loan Cancellation which discharges some portion of the debt per year of service in return.

Discharge Programs

During this period, it becomes challenging to rent an apartment, get a job, insurance, or a new line of credit. Besides, bankruptcy does not ensure that the debtor will successfully eliminate the loan.

Sometimes, bankruptcy can bring a more favorable repayment plan. Therefore, it is not an effective way of receiving loan forgiveness.

Consolidation

If a borrower cannot eliminate the debt through University of Phoenix Student Loan Forgiveness and other federal programs, it is better to start looking for ways to repay the debt effectively.

Consolidation is one of the methods which makes the debt repayment process more manageable. In general, consolidation of debt means combining multiple loans into one.

However, this process can bring several benefits. First, you can get a lower interest rate for your new loan. In this case, the borrower will make one monthly payment lower than the total payments of multiple loans.

Plus, having one payment makes debt management simplermonly, the debtors forget about their payment amounts, deadlines, and other loan terms if they have multiple loans.

With one loan, it is easier to keep track of the payments. Though consolidation does not erase even a tiny portion of the debt, it can help the borrower end the debt spiral by paying it back fully.

Repayment Plans

Consolidation is not the only program available to federal loans which aid borrowers to repay the debt. Many repayment plans create favorable conditions for the debtors to meet the obligations with their current financial capabilities.

One of such repayment plans is Standard Repayment. This plan requires a fixed payment per month so that the borrower can finish debt payments within ten years.

This program aims to aid borrowers who have the financial capability to meet obligations, but they want to get rid of this best as soon as possible. Another program is a graduated repayment plan.

It mostly benefits borrowers who pass through financial difficulties. Hence, this program requires low payments initially and then gradually increases the payments.

Debtors also mostly get the help of Income-Based Repayment plans because this program fits their revenue levels. For instance, the repayment plan is based on 10-15% of the discretionary income.

What About Private Loans?

Let’s quickly summarize the proposed University of Phoenix Loan Forgiveness options. The settlement that brought $141 million worth of loan forgiveness was for the debt directly owed to the school.