Debt Consolidation Components
You can include the following types of debt in our Debt Management Program:
Debt consolidation programs are usually just a big loan that pays off other smaller loans. They can be very beneficial to borrowers, but these programs also have their pitfalls.
When to Use Debt Consolidation Programs
Debt consolidation programs are good for a few situations. If you are paying several different loans off, your life may be easier if you consolidate everything into one loan. You’ll only get one monthly statement and make one payment.
Also, you’ll find that your monthly debt payments decrease if you use a debt consolidation program that stretches your payments out over a longer period of time. This means that you’ll pay out less each month and you can free up some cash.
A tempting (and sometimes successful) strategy is to use a debt consolidation program to manage various high-rate revolving debts. As an example, you might have numerous credit card balances with high interest rates. With a debt consolidation program, you might be able to get a handle on that debt and lower the interest rate (APR) that you’re paying. In general, credit cards have higher rates and secured loans (such as home equity loans) have lower rates.
Things to Remember About Debt Consolidation Programs
Using debt consolidation programs can help you or hurt you. You should be very aware that all these programs do is shift your debt – a debt consolidation program does not eliminate your debt. You owe the money and will have to pay it back sooner or later.
One pitfall of a debt consolidation program is that you may feel like you have less outstanding debt. For example, you’ll notice that your credit cards once again have generous amounts of available credit. If you use this credit you’ll only dig yourself into a deeper hole.
You should also be aware that you may end up paying more total interest if you use a debt consolidation loan. If you stretch out your payments over a longer period of time, it is possible that your total interest cost will be higher. Of course, it may be worth it to you if you can more easily manage your cash flow today.
Finally, remember what you’re risking by using one of these programs. Often, you’ll use a home equity loan or a home equity line of credit to consolidate your debt. The consequences of falling off the payment schedule can include the loss of your home in some cases. Credit card companies can’t take your home. However, if you pledge your home as collateral in a debt consolidation program then your house is fair game for a foreclosure.
How to Find the Best Debt Consolidation Programs
There are a variety of choices, and you should shop around to find one that fits your needs. If you need some ideas on where to start, try this plan:
Soil Consolidation Analysis
We present a typical problem in soil consolidation analysis, in which we compute the distribution of excess pore pressure and the displacement under the applied load for a simple three-layered soil model.
The above animation shows the dissipation of excess pore pressure and the (magnified) displacements of the soil skeleton. In the middle layer (sand), the permeability is high, so the pore pressure is constant. In the upper and lower layers (clay), the permeability is low, so the pore pressure is non-uniform and signficant time is needed for the pore pressure to dissipate. The soil model is shown below in greater detail.
The load is applied instantaneously and is held constant for a period of 295 days.
We use the porous medium formulation of ADINA in the analysis. In this formulation, the soil skeleton is assumed to be fully saturated with water. The unknowns are the displacements and the pore pressure. The water flows through the soil skeleton in accordance with Darcy's law.
The permeabilities of each layer are specified. The surface is modeled with a drained boundary condition (zero pore pressure) and the bottom of the model is modeled with an undrained boundary condition (no pore fluid flow through the boundary).
The soil skeleton is modeled with linear elastic material models. (Other geotechnical material models, such as the Mohr-Coulomb, Cam-clay or Drucker-Prager models, can also be used.)
Although this problem is most efficiently solved with plane strain 2-D elements, we use 3-D elements as a demonstration. 27-node elements are used, with pore pressures defined only at the corner nodes. The analysis is quasi-static and linear.
For many individuals with mounting debt, unfortunately the best way to get out of the red is to declare personal bankruptcy. But does this strategy actually offer relief from your student loan debt?
The average college student loan debt is over $19,000.
Fixed cost payments usually consist of mortgage, car, insurance, utilities, and in this case student loan payments. Then there’s also the added burden of about $10,000 in credit card debt—on average—per American household.
Add all of these financial debts together and given the right combination of debt load in contrast to income it’s not hard to imagine exactly how your financial situation could be pushed over the edge, into bankruptcy territory.
It would be nice to just wipe the slate clean concerning all of your debt, including student loans, wouldn’t it?
The truth is, declaring bankruptcy is not a solution to paying off your student loans. Why? In only rare circumstances are student loan debts cancelled, or discharged, due to bankruptcy. A bankruptcy court must decide that your financial situation would bring about undue hardship if you were to continue to be held responsible for your student loans. Guess what? This is not a common ruling. In order for this to happen you’d likely have to prove a long-term physical disability that would exclude you from being able to ever find full-time work.
Student Loans are rarely forgiven since they are guaranteed government funds dispersed with low interest to all kinds of people with no credit history. You don't expect the IRS to forgive you on all taxes that are owed, so expect the same treatment with your student loan.
Most student loan debt is secured debt borrowed from the federal government that cannot be erased. Unsecured student loan debt from private and non-profit organizations is also not erased by bankruptcy.
**Is there is a difference between filing a Chapter 13 and Chapter 7 bankruptcy when it comes to trying to get your student loans discharged? No. Doesn’t matter which type of bankruptcy for which you file, your student loan debt is likely to remain intact.
There is one way you may be able to take care of your student loan debt. In some cases a bankruptcy court may decide to discharge your unsecured debt in order to get your student loans paid off, first.
How this works:
Student Loan debt is often put into a separate category by the bankruptcy court to give it priority. Debt that receives the lowest priority in payback is usually credit card debt. For example, the court may decide, in a Chapter 13 bankruptcy, which is a reorganization of your debt, to allocate most of your monthly payments to your student loans and away from unsecured debt such as credit card debt.
Remember, declaring bankruptcy is a serious financial decision. If you are having problems principally with student loan repayment you should first contact your lender. Explore other options, first, such as student loan forbearance, loan deferment, and loan consolidation programs that are designed specifically for borrowers with student loan repayment problems. But make sure you manage repayment problems before you default on a loan; at that point your financial problems will be compounded.
Student loan lenders provide a variety of repayment programs that offer you assistance with various financial circumstances. The ultimate goal: to make sure you have flexible choices when it comes to student loan repayment. No one benefits when you default on loans.
Delay or postpone student loan payments under certain circumstances in one of two ways: loan deferment or forbearance.
During forbearance you are responsible for paying the loan interest that accrues during the period of delay. Forbearance may also allow you to make smaller loan payments for a certain period of time, as well. During deferment the interest on any subsidized loans is not accrued.
Popular reasons to pursue forbearance include:
Remember: Lenders are quite willing to work with you if you are having financial difficulties making student loan payments. There are a couple of other options besides loan forbearance: you might also evaluate your eligibility for loan consolidation or loan deferment, or change the type of loan repayment plan you initially chose.
**Tip: Federal school loan laws have changed since June 1, 1993, many that involved student loan repayment options. Always contact your lender or student aid officer for the most up to date information.
Besides general economic hardship, student loan forbearance on your federal Stafford Loans may be mandatory in a few situations. Always contact the program or lender directly, ask for appropriate forms and fill them out completely.
Under the federal loan program you have plenty of options for loan deferment or forbearance, but what about private student loans? Most private and non-profit organizations provide forbearance options if you qualify. Lenders differ widely, so expect a variation of criteria for private loan forbearance. Allow yourself plenty of time for applications to be processed and remember: until you’ve been approved you must still make regularly scheduled loan payments.
If you are a parent and are paying on a PLUS Loan while a child is in college and you experience a financial problem with loan repayment you may be able to apply for a loan forbearance. Check with your lender for details.
As you can see forbearance rules are more subjective than those for deferment. The best advice is to go directly to your lender and ask about your eligibility for loan forbearance. Always pursue alternative repayment plans and avoid loan default at all costs.Ever wish your student loans would be cancelled? Loan forgiveness may come in one of two forms: dire economic hardship or for grads in various fields of study.
The most popular and common loan forgiveness programs are aimed at a select group of college graduates—teachers, nurses, and law students—that may choose to work in high need areas, such as a low income school, a medically underserved healthcare facility, or as a public interest attorney working with disadvantaged individuals.
How loan forgiveness for professionals works:
Loan forgiveness programs for teachers, nurses and lawyers typically feature full or partial loan repayment or forgiveness of federal student loans in exchange for a certain number of years service in a facility or professional capacity like one of those mentioned above.
By far the most popular and widespread loan forgiveness programs are those that seek teachers. Student teachers, are you willing to work in one of these situations?
Believe it or not a wide range of sources administer loan forgiveness programs or loan repayment programs for teachers. Here are a couple examples:
Check out our resource page on Loans for Teachers and find out much more about teacher loan forgiveness and repayment.
The national nursing shortage fuels the drive for well-trained nurses. Again the federal government, as well as specific state governments, has developed appealing nursing loan forgiveness and repayment programs. RNs, LPNs, nurses with advanced degrees, and especially nurse faculty are all in high demand.
Visit our resource page on Nursing Loans for more information on nursing specific loan forgiveness and repayment. Don’t leave money on the table.
Public interest lawyers make little money to speak of. But this field of work is critical for assisting disadvantaged individuals. Loan forgiveness programs for young lawyers lag far behind the programs for nurses and teachers.
Law students, your best strategy: find out if your law school sponsors any loan forgiveness or loan repayment programs for new attorneys.
In rare situations a bankruptcy court may rule that your financial situation is dire enough to expunge your outstanding student loans, including federal student loans and private loans. The fact is your student loans are an obligation regardless of bankruptcy, which makes this such an unusual occurrence.
The Nursing Student Loan (NSL) program is available if you are a U.S. citizen, U.S. national, or permanent resident who is enrolled at least half-time as an undergraduate or a graduate student in a nursing degree program. You may be awarded up to $2,500 per academic year, depending on your need. This annual limit increases to $4,000 during your final two years of the nursing program. The aggregate NSL maximum is $13,000. The interest rate is 5 percent. Interest does not accrue during periods of deferment. For consideration, you must report parental data on the FAFSA, even if you have independent student status.
Each and every time you accept an NSL, you will be mailed a paper promissory note and loan disclosure form that you are required to complete and return to Student Financial Collections before loan funds can be disbursed to you.
You are also required to attend an exit interview when you:
