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          Before
the repayment period starts, an exit counseling session have to be completed.
This session covers information about the terms of the loans and some repayment
plan options. It also covers the students’ obligations in regards to the
agreement to repay their loans. The repayment plans covers the loan balance,
monthly payment, years to repay and the interest added to the loan. After
graduation, or some student drop out of school they have difficulty repaying
their loans. Some of the repayment plans are Extended Repayment Plan, Income
Based Repayment Plan, Pay as You Earn, Income Contingent Repayment Plan, Income
Sensitive Repayment Plan, Standard Repayment Plan, and Graduated Repayment
Plan.
          Graduating
college does not guarantee a full time job in the industry of each graduate’s
choice for each student. A lot of borrowers have difficulty repaying their
loans because of low income entry level jobs and for others, they may have
dropped out of school so their chance of finding good paying jobs are low. Alan
Greenblatt states, “Even college graduates are struggling to find jobs
commensurate with their education levels — although unemployment is far worse
for people without college degrees and minorities”. For some those students
they end up in Default because they are not aware of the options available to
them. When students go into Default, it means they didn’t make payments on
their loans like they agreed to do. If a student missed a payment their loan
becomes Delinquent after the first day of the missed payment. All delinquencies
get reported to the three major credit bureaus after ninety days. Marcia
Clemmitt states, “unlike consumer debtors who fall into arrears, college
borrowers can have their Social Security and other federal benefits garnished —
an especially frightening prospect for older students attending college to
retrain for employment.” If borrowers are having problems paying their monthly
payments, then they should look into their options so they can avoid going into
Default. Two options to avoid Default are Deferment and Forbearance.
          Deferment
and Forbearance allows students to not pay or lower payment for a certain
period of time. With Deferment depending on the kind of loans, no payment is
required. Forbearance allows the borrower that are unable to make payment to
not pay for a certain amount of time or reduce the amount paid each month.
There are two types of Forbearance: Discretionary and Mandatory. Discretionary
Forbearance is when it is the lender’s decision to grant the Forbearance and
Mandatory is when certain circumstances make it so the lender has to grant
Forbearance to the borrower. Carmona and Thompson also state, “If you are
unable to make your monthly payment, you should contact your lender as soon as
possible. Under the federal loan programs you are allowed periods of deferment
and forbearance during which you may defer, or delay, payments on your student
loans. For example, you may defer payments during periods of unemployment and
financial hardship.” There are other options for borrower with certain
circumstances that fall under Forgiveness, Cancellation and Discharge.

          There
are about nine different circumstances that fall under Forgiveness,
Cancellation, and Discharge. They are Death Discharge, Discharge in Bankruptcy,
Closed School Discharge, Total and Permanent Disability Discharge, Unpaid
Refund Discharge, False Certification of Student Eligibility or Unauthorized
Payment Discharge, Teacher Loan Forgiveness, Public Service Loan Forgiveness,
and Perkins Loan Cancellation and Discharge.
          The Death
Discharge is in place if the borrower die, or the parent Plus loan borrower die
then the loan is discharged. The Discharge in Bankruptcy is if it can be proven
that paying back the borrower loan can cause bankruptcy. Closed School
Discharge is if the school the student is attending closes before the student
graduates. The Total and Permanent Disability Discharge is if the student
becomes permanently disabled and the information must be given to the
Department of Education. Unpaid Refund Discharge is if the borrower withdraws
from school, but the school didn’t pay the refund owed to the Department of
Education. False Certification of Student Eligibility or Unauthorized Payment
Discharge is if the school falsely signs the student’s name on the promissory note,
or if the loan was taken out under identity theft. Teacher Loan Forgiveness is
for a teacher who teaches in low budget schools, and then Subsidized and
Unsubsidized loans can be forgiven. Public Service Loan Forgiveness is for
certain public service jobs, and they make one hundred and twenty payments
towards their student loans. Perkins Loan Cancellation and Discharge is for
people in some public service occupation, some or their entire student loan can
be forgiven.

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          There
are many college graduates and drop outs that are having difficulty repaying
their student loans. Some of them don’t have full understanding of the terms
and conditions of those loans, and they don’t know the options that are
available to them. To not go into default they need to look at their repayment
plans and chose the best option. They also have the option of Deferment or
Forbearance, and also the option to see if they qualify for Forgiveness,
Cancellation, or Discharge. They are options available for borrowers instead of
going into Default.

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