Sixty-five percent of college students are finding themselves deeply in debt by the time they graduate with a four year degree. More graduate students pursuing higher education degrees are also finding themselves having to borrow money to pay for tuition and education expenses. Graduates are drowning in $50,000 or more of student loan debt, and finding the job market is less than fruitful for some industries. Limited job availability, lower than expected incomes and, what seems like, endless student loan payments are wreaking havoc on today’s young professionals. Despite the credit card debt reaching an all-time high for college students, student loan debt is becoming one of the largest source of debt among Americans under 25.
What Has Changed
Student loan debt was once treated like any other type of consumer debt, which would allow it to be absolved through bankruptcy. Over the years, changes have been made to the bankruptcy laws. Student loan debts can no longer be requested for a discharge through bankruptcy, without an undue hardship. To prove an undue hardship, you must provide the court with evidence your financial situation is likely to continue and that you cannot maintain a minimum standard of living sufficient to repay the loans. Many graduates are unable to qualify for these hardships ,if they are physically able to work, and are forced to repay their student loans at increasingly higher rates and default fees.
What Can We Do About It?
People with large amounts of student loan debt are advised to seek a reputable credit counseling service. The U.S. Trustee Program has a list of all approved credit counseling services in the United States. Find out all of your options for loan repayment or debt consolidation. It may be beneficial to contact a bankruptcy attorney to determine if any of your student loan debt can be resolved through Chapter 13 Bankruptcy. You avoid making any major purchases or taking on any more lines of credit until your student loan debt is manageable. Typically, graduates are anxious to buy a new car or take out a mortgage when they land their first paying position. Saving money and spending all your extra income to reduce your student loan payments is a smart strategy to ensure your financial future is not bound by massive amounts of student loan debt.