The Secret Solution When You Can’t Repay Your Student Loan Debt

The Secret Solution When You Can’t Repay Your Student Loan Debt

Yes, you really can rehabilitate a student loan. Let’s define our terms. Rehabilitate means work with your lender, Federal or Private, to arrange a repayment plan that allows you to sleep at night and live a normal life.  And no, you do not have to work in Public Service, become disabled or die in order to completely cancel or fully discharge your student loan. The mysterious solution that you and millions of your fellow borrowers are praying for actually does exist. It is simply known by the initials: IBR.

In my book, Drop Debt, Surviving Credit Card Hell Without Bankruptcy, my focus is on unsecured credit card debt. It is generally believed by nearly all debt relief experts that student loans cannot be included in any kind of debt settlement solution.

As the nation’s depressed job market lingers far beyond forecasts by analysts and government officials, long overdue new thinking is being applied to the student loan dilemma. The result is increasing attention on and use of the little known solution of Income Based Repayment (IBR) plans.

Student loan providers focus on two options; deferment and forbearance. However, those “recommended” options don’t provide the relief that most borrowers are hoping for. There are programs created specifically for student loan borrowers that can reduce monthly payment tied to an income based calculation.

Some borrowers qualify for a “deferment” if their student loan has such provisions. So, start by taking a look at your contract and the fine print. A deferment is allowed if you are not more than 270 days in arrears or six months behind for an unemployment deferment. Assuming that you qualify, the deferment is exactly that, deferring the payments to a later date when the economy and your income improve. You will have to document some economic hardship that demonstrates you are unable to pay.

With a forbearance, even though your payments may be reduced or suspended, the debt remains and interest keeps running on the balance you owe. So, the debt you can’t pay now gets even bigger to insure that your really won’t be able to pay it later! I am sure that there is some sound accounting principle behind this plan, but the accountants who create the math for these situations are completely out of touch with what is happening to people of a personal level.

You may also qualify for a forbearance if you are unable to pay off the loan within the maximum repayment term (usually 10 years), or if your monthly payments total more than 20% of your monthly income. Income? You would think there would be solution at the head of the list that is based on your income. Right? That’s where Income Based Repayment plan comes in. IBR is the secret plan you have been hoping for.

Fledgling operations like and are emerging in response to a growing chorus of borrower agony over the burden of paying off an education that never paid off in an income producing job. According to the student loan expert, Tim Daniels, who is the advocate behind, “Anyone who cannot pay their student loan can make a phone call today and stop the loan payments today while their finances are evaluated. Too many people just chafe under their debt burden and don’t read a book, a blog or take action. That is a huge mistake. If you qualify for an IBR your payments go to zero – yes, zero – for a year and there are no fees or interest or any other costs expanding the debt.” That is a significant difference and a huge advantage over the deferment and forbearance plans.

One of my KABC radio listeners Faye J. in Southern California heard Tim Daniels interviewed by me on “Drop Debt with Harvey Warren”.   Here is what she gratefully reported to me in her own words…

“I was very skeptical about Tim Daniels and your claims about federally funded student loan qualifying for an Income Based Repayment plan. Over the years, I have called both Sallie Mae and Nelnet, the companies who hold my student loans, and expressed my inability to make the payments. The only options I was ever given were a deferment or a forbearance. Never once did they mention that an Income Based Repayment plan was an option for me.

I was so skeptical about your claims I even went on both companies’ website to seek out this IBR. It was not clearly identifiable and the only way I found it on the Nelnet site was I had to literally type in the words “Income Based Repayment” in the website’s search box. Then to my amazement, there it was. Not only was it there, but Nelnet had a video to explain it. I was shocked.

I called both companies. I was on hold longer than it took for both of them to prequalify me for the IBR by asking a few simple income and household questions. Within 5 minutes each company was eager to send out a package for me to complete to get the ball rolling on my new Income Based Repayment Plan.”

Like any loan adjustment, you have to qualify. Many borrowers are able work through the application process themselves with the help of sites like But, like modifying a mortgage, the paperwork demand is intricate and heavy. If you find the task of applying for an IBR daunting, do not give up. Tim Daniels and his staff at the Student Help Network offer a reasonable fee-based service to assist you with the application. If you, or your family and friends, are facing challenges on your student loans, you now know how to start fixing the problem by knowing what to ask for. And please, pass it on and pay it forward. Share this information with anyone and everyone you know who could use this help. Most importantly, take all the time you usually spend worrying about your loan and redirect that energy into getting a better job. The best way to solve a debt problem, according to every financial planner I know, is to use that great education to get a better job, make more money and simply outrun it. Good luck.