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Is anyone knowledgeable about gov student loans that can offer advice? (US) (hexbear.net)

submitted 6 months ago by Jabril@hexbear.net to c/chat@hexbear.net

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I caught up with a friend today who revealed they have like 35k in student loans that they got years ago and kept putting off somehow, but recently received some notification about a need to start paying up. They got them pretty much immediately out of high school and still don't really understand fully how they work. All I know right now is that they are all government loans through FAFSA, about half are subsidized and the other half are not.

I've never had student loans and also don't know how they work so I'm wondering if anyone can help me figure out what options my friend has available.

Is there any way to have some or all of student loans forgiven, this person qualifies for all the low income state aid programs if that matters.
What are the consequences of not paying? Can they garnish wages for student loans or is it just a credit hit and the interest keeps accruing?
Is the best plan to just pay them as soon as possible and be debt free or is it realistic that someone can just put it off forever if they are low income and can't afford them?

If there's anything I'm missing or other information/advice that I didn't specifically ask for that you think is relevant, please let me know.

Thanks!

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[–] Chana@hexbear.net 1 points 6 months ago

I'm not particularly confident in what I'm about to say.

I believe that there is a way to defer payment. Payment was paused for some time and is now required by default, but I believe there is a way to file for an exemption and they may qualify. If so, do this ASAP and pay in the meantime to avoid a credit hit. It's okay to pay the minimum while they wait for a result.

With loans it is generally a good idea to pay off whatever is highest interest first and as fast as you can afford to because those interest charges are just awful. It is not generally possible to discharge federal student loan debt thanks to legislation pushed by Biden decades ago for his finance buddies. There are some ways to do it but they take a long time and are pretty specific circumstances, like working a particular kind of job for 20 years. It is not a good plan to just hold the debt forever and not pay it. They'll just end up paying more overall. But it is okay to pay the minimum until it is possible to pay more.

There are also debt consolidation services that can essentially refinance student loans. This has fees but can still save money. Do very careful research to ensure that anyone you use to do this is highly reputable. Note that you usually need a good credit score and proof of income to secure refinancing.

Also sorry this is happening. Student debt is an evil grift.