BottomLine Lawyers

Student Loan Debt Attorneys in Auburn

Drowning in Student Loans? Achieve Financial Freedom Through Bankruptcy

While you’re studying, your school might offer financial aid in the form of loans, where you borrow a certain amount of money that you will need to repay with interest. Before becoming one of the many student loan borrowers, it’s crucial that you fully understand the terms and conditions, as well as the people you’ll interact with during the repayment process. This is why it is so beneficial to be working with a student loan debt attorney in Auburn, CA. 

A student loan debt attorney can help you understand student loans, make smart choices, and manage your debt well. Student loan debt has recently become a common problem among recent graduates. Falling behind on payments or defaulting on student loans can lead to serious consequences, such as federal benefits being withheld and wage garnishment.

Quick Summary:

  • Student loans are financial aid that must be repaid with interest, unlike grants and scholarships. Fully understanding the terms and conditions, as well as the repayment process, is crucial before borrowing. There are two types of student loans: Federal and Private.
  • To apply for federal loans, you need to fill out the FAFSA form. Private loans have different application processes and are generally more expensive. It’s advisable to consult with your school’s financial aid office or a student loan debt attorney before taking out a loan.
  • Federal loans are usually repaid through a Standard Repayment Plan, but there are several alternative plans available based on income and other factors. Private loans start repayment after graduation with terms depending on the lender.
  • Federal student loans may be forgiven under certain conditions, while discharging them through bankruptcy is hard and requires proving undue hardship. This means showing that repayment would prevent maintaining a basic living standard, the situation won’t improve, and efforts to repay have been made. An Auburn student loan debt attorney can help clear your debt quickly with bankruptcy knowledge, holistic legal help, client focus, and goal dedication.

What are Student Loans?

Student loans are a form of financial assistance that help students afford higher education in the United States. Unlike grants and scholarships, which often don’t require repayment, student loans must be repaid, often with interest. 

Two Main Types of Student Loans

When it comes to financing your education, there are two main types of student loans to consider: federal and private. Each has its own set of pros and cons.

Federal Student Loans 

Federal Student Loans or also known as the William D. Ford Federal Direct Loan Program is where the United States Department of Education is your lender. This program offers various loan options to help students finance their education:

  • Direct Subsidized Loans. These loans are based on financial need. The government pays the interest while the student is in school at least half-time, during the grace period, and during deferment periods.
  • Direct Unsubsidized Loans. These loans are not based on financial need and interest starts accumulating from the moment the loan is issued. The borrower is accountable for all accrued interest.
  • Direct PLUS Loans. These loans are available to graduate or professional students and parents of dependent undergraduate students but a credit check is required.
  • Direct Consolidation Loans. These loans allow borrowers to combine multiple federal student loans into a single loan with one monthly payment.

Private Student Loans

On the other hand, Private Student Loans are ones offered by banks, credit unions and state-based or state-affiliated organizations. Unlike Federal Student Loans, interest rates and payment terms vary and often based on the borrower’s credit score and financial history. 

Private loans are more expensive and can only be used if borrowers have reached the borrowing limit for federal loans. They also cannot be repaid through income-based plans or bankruptcy.

How Do I Get Student Loans?

To get a federal student loan, you first need to fill out and submit a Free Application for Federal Student Aid (FAFSA) form. Your technical school or college will then assess your financial aid eligibility based on your FAFSA submission. The school will provide you with a financial aid offer and let you choose whether to accept a portion or the full amount.

Before receiving your loan funds, you must do these:

  1. Complete entrance counseling to understand your repayment obligations.
  2. Agree to and sign a Master Promissory Note outlining the loan terms.


The process of taking out a private loan varies depending on the lender. As mentioned earlier, private student loans generally have less flexible payment terms, stricter penalties, and higher monthly fees. Therefore, it’s advisable to consider private loans only as a last resort.

Call your education department’s financial assistance office for more additional information on the federal student loans process. It’s also good to consult with a Auburn CA student loan debt attorney even before you borrow money.

How Do I Repay My Student Loans?

Federal student loans are usually paid off through a Standard Repayment Plan that offers low interest rates. This plan allows you a maximum of 10 years to fully repay your loan  with a minimum monthly payment set at $50. 

Paying a fixed monthly rate could be challenging for fresh graduates. If you think you can’t keep up with the standard plan, you have the option to choose from six alternative repayment plans.

  • Graduated Repayment Plan. Payments start lower and increase every two years over a 10-year period (within 10 to 30 years for Consolidation Loans).
  • Extended Repayment Plan. Payments can be fixed or graduated over a period up to 25 years.
  • Income-Based Repayment. Payments can be either 10% or 15% of your discretionary income, depending on when you first received your loans. However, your payments will never exceed what you would pay under the 10-year Standard Repayment Plan.
  • Pay As You Earn Repayment. Payments can be set at 10% of your discretionary income, but it will never exceed what you would pay under the 10-year Standard Repayment Plan.
  • Income-contingent Repayment. Payments can be set at 20% of discretionary income or the amount equivalent to what would be paid under a 12-year repayment plan, adjusted based on income.
  • Income-sensitive Repayment. A repayment plan available for Federal Family Education Loan (FFEL) Program loans. Payments under this plan increase or decrease based on your annual income.


As for the repayment of private student loans, you’ll be required to start paying them off once the grace period given ends. In most cases, however, you’ll start to make monthly payments as soon as you graduate with the amount depending on how much you owe and the interest rate.

Am I Eligible to Apply for Student Loan Forgiveness?

Under specific conditions, federal student loans can be forgiven, canceled, or discharged, potentially relieving borrowers from repaying some or all of their loan amount. A student loan forgiveness program is a government initiative that offers eligible borrowers the opportunity to have their student loans forgiven. This usually requires working in a qualifying public service job, making payments under an income-driven repayment plan for a specified period, or meeting other specific criteria set by the forgiveness program.

Can Bankruptcy Get Rid of Student Loans? 

Ask any Auburn CA student loan debt attorney about bankruptcy, and you’ll most likely be given the same answer. Yes, filing for bankruptcy can erase your student loans – but it’s very difficult!

Student loans are usually not discharged through bankruptcy. They are considered non-dischargeable unless the borrower can prove undue hardship through a specific legal process called an adversary proceeding. To get rid of your student loan debt through Bankruptcy, you need to convince the court that paying the loans “will impose an undue hardship on you and your dependents”. 

How Do I Qualify for Undue Hardship?

Court rulings granting undue hardship based on student loan debt are very uncommon. To qualify for undue hardship, you must demonstrate the following:

  • Inability to Maintain Minimal Standard of Living: Paying your student loans would prevent you from maintaining even a basic standard of living based on your current income and expenses.
  • Unlikely Improvement in Financial Situation: Your financial situation is unlikely to improve significantly over the repayment period of the loans.
  • Good Faith Efforts: Evidence of making good faith efforts to repay the loans in the past. such as payment history, attempts to negotiate repayment plans, or seeking alternative repayment options.


Note that this only applies to federal student loans, as private student loans cannot be discharged by filing bankruptcy.

BottomLine Lawyers

Facing Bankruptcy or other financial matters? We can help!

Sidebar
BottomLine Lawyers Logo

Facing bankruptcy or other financial matters? We can help!

Pop-up form