How to Deal with Staggering Student Loan Debt
Student loan debt is a ticking time bomb and it cannot be discharged through bankruptcy.
June 22, 2012
Graduation time is here for college students in Tennessee. While most graduates are looking optimistically towards the future, some are full of angst about joining the legion of others who are struggling to pay off student loans. Student loan debt can be crippling, but borrowers do have options to make it easier to handle.A recent report states that nearly 37 million Americans have student loan debt. The average amount owed is around $23,000, but that number is misleading because of the small percentage of borrowers who owe much larger amounts.
Given the amount of student loan debt that individuals have, it is not surprising that some borrowers get into trouble and cannot make payments. One source estimates that 5.4 million borrowers have at least one student loan account past due. Unfortunately, student loan debts generally cannot be discharged via bankruptcy.
Yet, if a borrower has other debt that he or she cannot pay, like a mortgage or credit card debt, filing bankruptcy could help in that regard. It would eliminate these types of debts, and by doing so enable the borrower to pay the student loan debt. If bankruptcy is not an option, here are other suggestions to help deal with student loan debt:
-Consolidate student loans, if possible.
-Consider alternative repayment options. Those with federal loans may be eligible for a graduated, extended or income-based repayment plan.
-Deferment or forbearance. Depending on the type of loans, lenders may be willing to either defer or forebear the loans for a certain amount of time.
-Work in the public service or at a nonprofit. Under a recent law, those who work in public service or certain nonprofits for 10 years and make 120 on-time monthly payments may be able to have the remainder of their student loan debt forgiven.
-Eliminate other debt by paying off high-interest loans first and paying credit card debt down or off completely.
-Create a budget, stick with it and start saving for retirement at an early age.
A college education is important, but it is also expensive. Student loan debt may become unmanageable, but graduates have many options that can ease the burden. Although bankruptcy may not eliminate student loan debt, it can eliminate other debts and make paying student loans more manageable. A Tennessee bankruptcy attorney can help graduates with questions about whether filing would be in their interest.
Article provided by Wages & Benham
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