Can You Consolidate Defaulted Student Loans?
One bit of misinformation that keeps people from getting out of a difficult situation is that they are told they cannot consolidate a student loan if it has defaulted. It is true that this is frequently the case, but if you are in serious default, are getting your wages garnished or have received a letter of garnishment you more than likely are not going to be able to qualify for any of the income-based repayment programs. The majority of the time though defaulted Federal student loans can still be consolidated and you will still be eligible for one of the Income-Based Repayment Plans.
Income Based Repayment Plans
Income-driven repayment plans are designed to make your Phoenix Student Loans Providers more manageable by reducing your monthly payment amount. If you need to make lower monthly payments, one of the three following income-driven plans may be right for you:
* Income-Based Repayment Plan (IBR Plan)
* Pay As You Earn Repayment Plan (Pay As You Earn Plan)
* Income-Contingent Repayment Plan (ICR Plan)
IBR and Pay As You Earn Plans
Each of these plans has an eligibility requirement you must meet to qualify for the plan. In order for you to qualify, the payment that you would be required to make under the IBR or Pay As You Earn plan (based on your income and family size) must be less than what you would pay under the Standard Repayment Plan with a 10-year repayment period.If your calculated IBR or Pay As You Earn plan payment amount (based on your income and family size) is more than what you would have to pay under the 10-year Standard Repayment Plan, you would not benefit from having your monthly payment amount based on your income, so you do not qualify.Generally, you will meet this requirement if your Paying Back Student Loans Phoenix is higher than your annual discretionary income or represents a significant portion of your annual income.