White House Offers New Relief to Student Loan Borrowers

White House Offers New Relief to Student Loan Borrowers



The White House said about 1.6 million borrowers could be affected. The Obama plan also allows borrowers with direct loans from the government to consolidate them at an interest rate of up to a half percentage point less.



This could affect 5.8 million borrowers, according to the White House. Currently the total outstanding student debt is $11 trillion, more than the nation's total credit card debt.



Federally guaranteed student loans have made borrowing for college easy, which has had two serious consequences: first,



students are graduating with unprecedented debt. 56 percent of bachelor's degree recipients at public schools graduated with debt averaging about $22,000. Second, colleges and universities are continuing to raise tuition.



The average in-state tuition and fees at a four-year public college rose an additional $631 this fall, or about 8 percent. In today's tough economy, many graduates are unable to find jobs,



consequently the national student loan default rate for the 2009 budget year rose to 8.8 percent. In order to guarantee repayment of federal loans,


Congress made changes to the normal consumer protections. Student loans are not discharged in bankruptcy except under the most extreme circumstances. Your tax refund, and even your paycheck, can be garnished without a court order.

The government can also take some federal benefit payments (including Social Security retirement benefits and Social Security disability benefits, but not Supplemental Security Income) as reimbursement for student loans.


 The government cannot take any amount that would leave you with benefits less than $9,000 per year or $750 per month. And, it cannot take more than 15% of your total benefit.


 If you are struggling to pay student loans, speak with an experienced bankruptcy attorney and investigate options to restructure your finances.


In a chapter 13 bankruptcy, we are able to structure student loan debt into affordable monthly payments.


After discharging unsecured monthly bills like credit cards and medical bills in a chapter 7 bankruptcy, many people are able to make monthly payments under one of the available student loan repayment programs.


Anyone who is having trouble paying their student loan debt should at least talk to an experienced attorney and use the law to your advantage. Legal disclaimer: Disclaimer:



This answer does not constitute legal advice. I am admitted in the State of Illinois only and make no attempt to opine on matters of law that are not relevant to Illinois.


This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here.


Consult an attorney in your locale before you act on any of this advice.


You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.


 ABOUT THE AUTHOR: Charles E. Glanzer Charles Glanzer is one of the founding partners of Glanzer & Associates, P.C. Charlie has been licensed to practice law in Illinois since 1992, and has worked for some of Chicago's largest bankruptcy firms.


Charlie focuses his practice on representing clients in Chapter 7 and Chapter 13 bankruptcy cases. Charlie represents his clients with a high level of sensitivity and professionalism,



and has discharged millions of dollars of debt for his clients. Charlie's commitment to helping people in financial distress not only involves relieving his clients of their financial burden, but also counseling them about life after bankruptcy and rebuilding their credit.