Student loans are one of the only options for many college hopefuls in today’s economy. While they can be the golden ticket to a higher education, they are often also a ticket to higher debt burdens. The average college student will owe $25,000 upon graduating, placing an immediate strain on any budget. To make matters worse, student loan debts are not easily discharged through traditional debt relief sources, like bankruptcy.
Texas bankruptcy courts could certainly be backlogged if the current laws allowed for student loan debts to be eligible for bankruptcy. Since a 2005 change in bankruptcy laws, many people have been placed in financial hardship over their student loan debt payments. In rare cases, a borrower may be able to have their debts included in a Chapter 13 bankruptcy case, but this is far from the standard.
So what can be done? First, many student loan lenders can offer deferment agreements for certain situations. A deferment places the debt payments in temporary suspension, allowing for the debtor to have up to one year free from the payment requirement. Deferments can be obtained for circumstances like returning to school, starting a family, starting a business or medical illness.
Also, many lenders are willing to negotiate debts directly. However, it is often required that the debtor be able to show financial hardship and undue stress as a result of the payment requirement. Further, lenders are more willing to help debtors who have made good faith efforts towards repaying their debts and make contact about their financial needs before defaulting for several months.