<p>Hi everyone. Thanks in advance for your help.</p>
<p>I had a family crisis this past year and I had to work more hours, my grades slipped...really bad. I failed my classes and due to my problems I didn't register for classes this past semester. My loan company is now sending me letters asking for repayment and I just got a letter from my university saying I owe them over $6000! I'm seriously freaking out. I only have a few hundred dollars to my name and my family members have bad credit and can't help me. What do I do? What are my options? I've heard of academic bankruptcy, does anyone know about this ? Please help me</p>
<p>Call the loan company and see if you can work out a payment plan. You will have to work out a payment plan with the college. I’ve never heard of academic bankruptcy. As a matter of fact, student loans are not dischargeable in court even if you were to declare bankruptcy. You will not be able to get your transcripts (or probably re-enroll) in college until you pay what you owe the school.</p>
<p>Your option is to work as much as you can and start repaying what you owe. You knew school would cost you money, right? When you go back to school, your loans will go on “hold”(can’t remember the right word) again until the next time you don’t take any classes. The school will want all their money before they allow you to register for any new classes. I would worry about getting finances and personal/family issues under good control. You can go back to school later, when you don’t have so much stress causing you to do badly. School is too important to screw up.</p>
<p>Academic bankrupcy has nothing to do with loans—it has to do with grades.</p>
<p>A minority of colleges will allow a student who has been out of college for a long period (at least 3 years, some places require as many as 10) and who is starting a new degree area to forfeit all previous grades and start with a clean record.</p>
<p>NOTE: this does not mean federal loan programs will not look at old credits when computing SAP. Those will. It just means the college will compute a GPA only using the new grades.</p>
<p>Do the loan repayments trigger when a person drops out? I am wondering if OP should have registered a voluntary absence with the college as opposed to not registering.</p>
<p>The loans go into repayment 6 mons after the student last attends class. The first time a student stops going to school. If the op goes back, the loans go on hold again. But, let’s say the op then finishes school and graduates. The loans will go into repayment immediately, with no 6 month “grace” period or whatever it’s called. That’s a one time only, “get a job so you can repay us” sort of adjustment period. I looked into all this when my D was considering taking a leave from school to nanny abroad for a year.</p>
<p>If these are federal student loans (let’s hope that they are!), the OP should look into income sensitive repayment (ISR), which should reduce her monthly payments to something affordable. If she can’t afford anything at all, she’d likely also qualify for forbearance or deferment until she’s in a better financial situation. Just be aware that interest will continue to accrue at its usual rates, even if you’re in ISR or forbearance, so don’t take advantage of these options for too long!</p>
<p>Call your loan servicer immediately. Ask to discuss your repayment options. You will most likely be referred to either Income Based Repayment (IBR) or Pay as You Earn (PAYE). You can learn more about repayment here: [Repay</a> your Direct Loan / Federal Stafford Loan](<a href=“Mapping Your Future: Page not found”>Mapping Your Future: Page not found). </p>
<p>I am curious about the amount you owe the school, though. When you fail all classes, your aid “can” be reversed for the semester. However, this is only the case when you do not complete the classes. Did you attend your classes until the end, and did you take your finals? If so, even if you failed, you still “earned” your financial aid. You can see the last day of classes reported for you when you log into your loan account - it would be six months before the repayment due date. Did your school list a date that is before the last day of your last semester? If this is the case, you need to contact your school’s financial aid office to discuss … Or do you owe simply because you never paid everything you owed in the first place?</p>
<p>A voluntary absence makes no difference to when loans go into repayment. They go into repayment 6 months (or 9 for Perkins) after a student graduates or is not enrolled in classes at least half time (usually 6 hours for semester schools).</p>
<p>As far as deferring repayment and income based repayment. It is possible in some cases. Subsidized direct loans can be deferred without interest for up to 3 years i the student meets certain criteria related to poverty levels. Perkins loans are eligible only if they are consolidated with direct loans. Otherwise subsidized will accrue interest even if the payments are deferred. Unsub loan interest will always accrue even if repayment is deferred. </p>
<p>VERY IMPORTANT: These income based plans and deferments are generally only available if applied for *before *the loan is in default. DON’T LET THEM GO INTO DEFAULT!!!</p>
<p>No bankruptcy forgiveness for student loans.</p>