Student Loan Survival Center

I would not be a lawyer today if it were not for the availability of student loans. I will always be grateful for that. That was one of the reasons I began to represent Sallie Mae and the other student loan guarantors in nearly 50 bankruptcy cases in the late 1990s and early 2000s. I wanted to help preserve a system to allow other disadvantaged students the ability to obtain professional degrees. However, when I graduated from a private law school in 1992, I owed approximately $45,000 and my first job paid $40,000. Roughly a 1-1 ratio. Repayment was very reasonable and achieved easily in less than ten years. Nowadays, the ratios are all out of whack, some nearing 8-1. With new graduates barely able to find employment, and with college tuitions rising over 900 percent since 1978, it is becoming an impossible situation for many borrowers. Defaults are skyrocketing with approximately 14 percent of all students that graduate with student loan debt end up defaulting within three years of making their first payment.

“I would have never thought that anyone could get me out of debt especially $78,000 worth of loans, she really was great. Thank you so very much for making my life so much easier and less stressful.”

“I needed someone to take over a mess I could not escape and ‘save me’, frankly. Attorney Arkovich did just that.”

“Christie Arkovich negotiated with private student loan companies on my behalf. The results of her efforts have had a very positive effect on my quality of life.”

“[Arkovich] helped us through a very difficult set of circumstances and helped set us back on track to a sustainable existence.”

“I had a nasty, un-payable, student loan hanging over my head for years. I went to several lawyers and got advice all over the board. I went with Christie Arkovich because she seemed the most reasonable, professional, and experienced. I was right. I could not have dreamed of a better outcome than what Christie was able to arrange for me. I am very happy!!!!”

The non-transparent nature of the student loan system that exists presently is also among the worst I have ever seen. No one seems to know what to do, and what options to choose for their various federal and private loans. Clients tell us they wish they had known of the options we presented to them years earlier. Many people rely on their loan servicers to make the decisions for them – not realizing that the servicers are in reality debt collectors and their primary duty is to represent the creditor – not the borrower. Borrowers are often placed in forbearance where the interest capitalizes every year and the balance rises to often 2-3 times what was originally owed. They are placed into generic income based repayment programs without regard to better options that may be out there. With six different income based programs, they are not “one size fits all” and picking the right one can save tens of thousands of dollars over the life of the loan, as well as shave years off of the repayment period before debt forgiveness kicks in.

There are also non-reputable student loan companies out there that are taking advantage of this crisis and lack of transparency. Many don’t do what they say, but yet they take your money. Some people think they are dealing directly with their loan servicer, when in reality they are dealing with a separate company whose name sounds like their servicer.

The key in dealing with your student loans nowadays is to take the time to learn all about the system, the players, the loan types and their differences, the options available etc. Or if you don’t have the time, desire or ability to do all of that, then hire someone who is on your side. There is a new area of law called “student loan law” and there are a bunch of us nationwide who call ourselves “student loan lawyers”. We’ve taken the time and spent the money to learn all of this. We’ve represented hundreds of student loan clients over the past few years with outcomes we are very proud of and our clients are very thankful for.

Our goal in every case is to try and get our client an affordable and sustainable payment with an end in sight. We put a plan in place to get these loans behind you so you can move on with your life.

Avoiding default on your federal loans is critical. Most people are unaware that a default will cause up to 24.5% added to your loan balance for federal loans. And you can default multiple times. Defaults also can lead to wage garnishment, social security offsets, interception of tax refunds and damage to your credit.

You can actually be behind in your payments for up to 270 days on a federal loan before it is considered in default. Since they add up to 25% to a loan balance upon default, I’m glad there is a little time – 9 months -- to try and get a plan together to avoid default.

We can cure a default once it occurs through a rehabilitation or consolidation. There are key differences between these options and how they apply.

Private loans are a little different, for those we actually often recommend default. While it will hurt the borrowers credit, sometimes a settlement for 10-50% on the dollar and a reasonable payment plan where payments go to the reduced principal balance instead of solely to interest is the best way to go.

There are presently six income driven plans, not all of which provide for debt forgiveness at the end of the repayment period. Each are different and fit different needs, and I have yet to have a client come to me that understood the plan they were on. We often see people on the wrong plans. Sometimes people will consolidate all of their loans together when they should keep some separate for hundreds of dollars per month difference in payments. You can opt to change your loan type to be eligible for different plans. If you don’t know the differences and are unsure if you are on the best plan for you, a checkup with a student loan lawyer could save you tens of thousands of dollars and shave years off of the repayment period before debt forgiveness kicks in.

Unfortunately, this is a very misunderstood program. As the first batch of people are starting to reach the 10 year discharge target date in late 2017, we are starting to see the results of this system. Some of these results are tragic when people are counting on a discharge after ten years of faithful payments as a public sector employee, only to realize that they have made a fatal error and do not qualify for relief. FFEL loans do not qualify for PSLF, only Direct loans do. You have to be on an income based plan working full time for ten years to qualify. There are lots of nuances to the program and more people will be denied than are approved unless they have an advocate on their side to navigate the pitfalls. I wish the system were easier, but it’s not and I can’t change that. So we have to help steer our clients through the quagmire to a successful discharge.

See below for a Crushing Debt interview with Christie Arkovich about public service loan forgiveness with tips about what to look out for, and how to qualify!

There are key differences between the repayment options for federal versus private loans. The starting point is to realize which of your loans are private versus federal. Second, is to learn what type of federal loans you have. Once we know that, we can help our clients create a plan to repay their loans in a manner that is both affordable as well as with an end in sight.

There are advantages and disadvantages to consolidation. Sometimes it’s a good idea, sometimes not. Most people think of consolidation solely in terms of combining their loans into one to simplify repayment or to reduce interest rates. However, in reality a consolidation does not typically reduce interest rates and you don’t always want to combine all loans such as in the case of Parent Plus loans or you limit your options going forward. A consolidation is best used to cure a default, get to a servicer that is more reputable if you don’t like your present servicer, or to change your loan types to increase eligibility for better programs etc. Consolidation is one of the most misunderstood options when I am advising our clients.

Discharging student loans in a bankruptcy continues to be a rarity. Yes, it can be done, but the standards are very strict and most people remain ineligible for such relief despite not being able to pay what the student loan servicer is demanding. There are a few instances where bankruptcy is a possible solution and anyone considering this option will want to consult with experienced counsel to explore this option further. We are having success right now in cases with private loans where no reasonable repayment options exist or where they do not meet the “qualified educational loan” requirement in order to be considered non-dischargeable.

Often an experienced attorney can make a difference in the outcome of a disability application. You basically have to prove that you cannot gainfully work in any field. Your doctor will likely only give a brief one or two line comment about your diagnosis and won’t address how that diagnosis affects your day to day functionality and whether you can do various job functions. This is where our former work in employment law and the Americans with Disabilities Act comes in handy.

This is a program that has gone through a lot of changes over three administrations. At the end of March 2021, the Department of Education announced that it was applying $1 billion that Congress allotted for previously approved BDTR discharges. This is great news, as those borrowers often only received 10% forgiveness, if anything. We expect many will receive full forgiveness. For pending or new BDTR applications, the rules will be streamlined and revamped, so please stay tuned for updates from us by visiting our blog or doing a 1 on 1 consultation with us. We also have a Youtube channel with a Student Loan Sidebar video series about Stimulus and other things every student loan borrower should know about. Click here to become a subscriber.

It is possible for a wage garnishment to result from both federal and private student loans that are in default. It is imperative to consult with a student loan attorney quickly, as once the garnishment starts if often cannot be stopped for five months even if you later cure the default.

Again there are key differences between federal and private student loans and whether the student loan can be settled for a lump sum reduced amount. Private loans do settle after they are delinquent or in default, and many times do not require payment of the settlement all at one time. In fact, it is often our preferred option in trying to address private loans especially those with very large balances. Federal student loans do not settle unless the default is very old and the Department of Justice has gotten involved. Typically these borrowers are self employed and not subject to garnishment so the government will look to other means to repay at least a portion of the debt through settlement.