Boston Student Loan Lawyer

Law Office of Adam S. Minsky

Who Should Switch to REPAYE?

| Articles Current Events Income-Based Repayment Income-Driven Repayment Pay-As-You-Earn Policy & Reform

A couple of weeks ago, the U.S. Department of Education released final regulations governing its newest income-driven repayment plan, the “Revised Pay-As-You-Earn” plan, or “REPAYE.” Because of the nature of our student loan system, the new program is complicated, confusing, and in many ways contradictory to its original intent. It has some good features that will undoubtedly help many borrowers, but it also has some twists and caveats that will exclude others, or at the very least, make it a less desirable option than some had hoped.

So, can or should you switch to REPAYE? The answer, as is all-too-often the case, is “it depends.” I hope my analysis below is helpful, but please understand that this is not intended as legal advice, and this is not a substitute for getting a personalized recommendation from a qualified student loan expert.Read More

BREAKING: New REPAYE Federal Student Loan Repayment Plan Details and Release Date Announced

| Articles Current Events Income-Driven Repayment Loan Forgiveness Policy & Reform

Yesterday, the U.S. Department of Education announced that it has released final regulations governing the newest income-driven repayment plan, called the Revised Pay-As-You-Earn (“REPAYE”) plan. This new income-driven plan may provide substantial relief to millions of federal student loan borrowers who are currently ineligible for the Pay-As-You-Earn plan due to that plan’s strict eligibility requirements.

The final regulations for the REPAYE plan essentially reflect the draft regulations that were released a few months ago. Here are the key details:Read More

Senator Introduces Bill to Waive Taxability of Loan Forgiveness

| Articles Current Events Income-Driven Repayment Policy & Reform Taxes

Federal income-driven repayment plan programs such as Income-Based Repayment (IBR) and Pay As You Earn (PAYE) are imperfect but much-needed plans that allow many student loan borrowers to repay their loans using formulas based on their income and family size. For many student loan borrowers, they are the only affordable repayment plans available, and they help prevent default, which can be disastrous.

These programs also have an important safety net: after completing the plan’s repayment term (25 years under IBR, and 20 years for PAYE), borrowers can get any remaining balance on their student loans forgiven. Most borrowers are expected to repay their loans in full before they reach the end of their repayment term. But if a borrower’s income is insufficient to repay their loans in full, loan forgiveness means they won’t have to spend the rest of their life pouring a percentage of their income into a black hole. There is an eventual light at the end of the tunnel.

But of course, there’s a caveat. Read More

“Earnest” Student Loan Refinancing: The Inside Scoop

| Articles Default Income-Driven Repayment Private Student Loans

Student loan refinancing is the process by which a borrower can obtain a lower interest rate on their student loans, usually by taking out a new student loan that pays off the old one. If this new loan comes with a lower interest rate and better repayment terms, the borrower may save substantially, both on a monthly basis and in total.

During the past few years, up-and-coming private student loan refinancing companies have been offering various options to student borrowers. These programs are relatively new, and they tend to be restricted to people with good income and excellent credit, so we don’t know much about them. But as more and more borrowers turn to these programs in the absence of federal student loan refinancing options, I’ve been trying to find out more information about them.

Last week, I wrote a review of “SoFi” student loan refinancing based on a borrower’s experience and my analysis of their loan contract.

This week, I’m taking a look at “Earnest” student loan refinancing. Like SoFi, Earnest offers student loan borrowers with various refinancing options. However, Earnest seems to focus more on its technology-based application process and customer-service-oriented approach.

I recently had the opportunity to talk with a borrower (we’ll call her “Amanda”) who refinanced her student loans through Earnest. Like “Aaron” (who refinanced his loans through SoFi), Amanda graciously answered my barrage of detailed questions about her experience, and also provided me with a copy of her Earnest loan contract so I could write this article. Here’s what I found. Read More

An Exclusive Look at “SoFi” Student Loan Refinancing

| Articles Default Income-Driven Repayment Private Student Loans

Student loan refinancing is the (somewhat elusive) process by which a borrower can obtain a lower interest rate on their student loans, often by taking out a new student loan from a different lender. If this new loan comes with a lower interest rate and more favorable repayment terms, the borrower may save a good deal of money, both on a monthly basis and in total over the course of repayment.

Right now, there’s unfortunately no way to refinance federal student loans within the federal student loan system, which is troublesome for many borrowers who have high-interest federal student loans. Private student loan refinancing largely dried up during and after the financial crisis of 2007-2009. However, in the past few years, new and somewhat unique private student loan refinancing companies have begun offering some options to borrowers. Because these companies and their programs are relatively new, and student loans generally must be repaid over a long period of time, we don’t yet know enough about these companies to say with certainty whether they provide viable long-term solutions for borrowers. What we do know is that these programs tend to be geared towards borrowers with excellent credit and good earning potential, which effectively locks out many borrowers who need the most relief.

One of these new student loan refinancing companies is called SoFi (short for “Social Finance”). SoFi offers student loan borrowers with various refinancing options through a unique investor-based funding mechanism. It’s one of the leaders in this nascent industry.

I recently had the opportunity to sit down with a borrower (we’ll call him “Aaron” to protect his privacy) who refinanced his student loans through SoFi. Aaron agreed to share his experience with me, and he even let me review his loan contract with SoFi. As a student loan attorney, this was an exciting opportunity for me to get an inside look at a new type of student loan.Read More

Four “Secrets” About Income Based Repayment

| Articles Income-Based Repayment Income-Driven Repayment Pay-As-You-Earn Student Loans 101

Income-driven repayment plans such as Income-Based Repayment (IBR) and Pay As You Earn (PAYE) offer millions of federal student loan borrowers the opportunity to have a uniquely tailored monthly payment based on their income and family size. The programs also offer forgiveness of any remaining loan balance at the end of their respective repayment terms (20 or 25 years, depending on the program). Although far from perfect, for many borrowers these programs are the only thing standing between them and default, as “regular” repayment plans based on the loan balance would be unaffordable.

Income-driven repayment plans can be complicated to navigate, however, and not everyone knows some of the features that can provide even more relief. Here’s a short list of the most glaringly lesser-known programmatic features of income-driven repayment:Read More

Student Loan Benefits for Military Service Members

| Articles Income-Driven Repayment Loan Forgiveness Student Loans 101

There was a time when serving in the military could essentially guarantee a young American a free college education. Not anymore. Today, many people who serve in our armed forces are also student loan borrowers. Luckily, there are some important student loan benefits and programs that are specifically geared towards military service members, although too few people are aware of them:Read More

Adam S. Minsky is Lead Presenter at Student Loan Webinar

| Articles Default Income-Driven Repayment Site & Practice News Student Loans 101

I am thrilled to be the lead presenter tomorrow at the National Consumer Law Center’s webinar, “Federal Student Loan Repayment Options and Default Resolution.”

Tune in on Wednesday, June 24 at 2:00pm for an overview of options available to borrowers to repay their federal student loans and get out of default. The webinar is FREE and open to the public.

BREAKING: Expanded “Pay As You Earn” Program Details Released

| Articles Current Events Income-Based Repayment Income-Driven Repayment Loan Forgiveness Pay-As-You-Earn Policy & Reform

Last year, the President announced that he intended to expand access to the “Pay As You Earn” (PAYE) plan, an income-driven repayment plan that is significantly better than the widely-available Income-Based Repayment (IBR) plan, but is presently restricted to only the newest federal student loan borrowers. That means that most federal student loan borrowers currently in repayment cannot select the PAYE plan.

For months, the U.S. Dept. of Education has been engaged in what we call “negotiated rulemaking,” working with key stakeholders to flesh out the details of the expanded program and draft proposed regulations. Here are some key components of the program from the negotiating rulemaking committee:Read More

7 Signs of a Predatory “Student Loan Relief” Company

| Articles Current Events Income-Based Repayment Income-Driven Repayment Loan Forgiveness Pay-As-You-Earn

I was recently interviewed by MarketWatch about the rise in student loan “relief” and “assistance” companies that purport to help student borrowers manage their debts, but often turn out to be predatory.

The problem, as the article points out, is that the rapid increase in student debt burdens, combined with the dearth of resources to assist borrowers, has resulted in an explosion of various companies promising (sometimes falsely) to help student loan borrowers manage, or even eliminate, their debts.

Many of these operations have recently gotten into big trouble because of their predatory nature. State attorneys general have been filing suit against some of the companies that have been essentially functioning as high-priced student loan document processing mills, blindly performing routine tasks such as federal loan consolidation and repayment plan selection, without providing any relevant counseling or competent advice, and often messing up. Other companies, such as GL Advisor, have been cited for poor customer service and actively defrauding their clients and investors. Still other companies are simply scammers: shell corporations set up to take as much money from student loan borrowers as possible, while providing minimum (if any) real services.

All that said, there are also legitimate people out there providing real, valuable assistance to borrowers.

So how can you tell the difference between a student loan assistance firm that may be legitimate, and one that may be predatory? Here are a few things to look for:Read More