The requirement of many high-paying jobs that the applicant have a college, or advanced degree has created a generation of indebted students unable to get out from under the stress of heavy debt accrued at the start of adulthood.
Recent comments from the Obama administration regarding debt forgiveness suggest the government might start allowing millions of students to get out of debt after making a certain number of on-time payments.
Bankruptcy Doesn't Always Help
One of the issues that students have experienced is the problem that student loans guaranteed by the federal government aren't usually dischargeable in bankruptcy. Only in rare circumstances will a bankruptcy allow a student to emerge from the process without student loans. Often, nothing less than total disability or death will make those student loans go away.
Students burdened with private student loans are also likely to experience difficulties in getting those loans forgiven or discharged in bankruptcy because of the gray area that surrounds private student loans, the statute-of-limitations on those loans, and what can be done in bankruptcy.
If a student's major source of debt is student loans alongside just a few thousand dollars worth of credit card debt, sometimes bankruptcy isn't the way out. However, the concept of student-debt forgiveness has emerged as a beacon for those drowning in debt.
Tuition Continues to Rise
According to an article from "The Wall Street Journal," median graduate-school debt levels are continuing to rise. Despite the attention paid to the cost of higher education from congress, the president, and various student-advocacy groups, the cost of university has been rising, unabated.
For example, the WSJ reveals that the average student in law school graduated with $76,816 of debt in 2004. By 2012, that figure had risen to a median debt of $128,125. Students getting an MA (Master of Arts) saw their average graduation debt go from $27,942 in 2004 to $43,109 in 2012.
Increase in Debt-Forgiveness Participation
Not only have student debts risen out of control, but the option to take advantage of debt-forgiveness has also skyrocketed as the Obama administration has offered opportunities for students to cancel debt after 10 or 20 years.
In late 2013, the administration announced that it wanted to expand the loan forgiveness options offered by the government. Started in 2007, the loan forgiveness program was limited to students who got student loans after 2007. However, according to an article in Newsmax:
Obama wants to open the program to all those who borrowed before 2007 as well, and make the part of the loan that is forgiven become tax exempt, as loan forgiveness is normally considered taxable income.
Some politicians and economists have come down on the other side of the issue suggesting that debt-forgiveness for student loans isn't a long-term solution to the bigger problem. One popular suggestion has revolved around interest rates and how high rates have kept students paying longer.
With lower interest rates, advocates say, students wouldn't need to rely upon debt-forgiveness or be burdened with paying student loans for their entire working life.
Debt Forgiveness May Be Inevitable
Students struggling to find employment in their chosen field often suffer at wages well below what they need to pay off loans in a reasonable manner. Under-employment, unemployment, and lack of opportunity for advancement doom students who face monthly student loan payments that rival the cost of a mortgage.
Consider the "Income-Based Repayment" and "Pay As You Earn" programs for repaying student loans. These programs allow students to make payments based upon an equation that takes a student's income and defines a payment schedule. After a few decades in these programs, a student's loans may be eligible for forgiveness.
According to the aforementioned WSJ article, these plans represent a danger to future students seeking higher education:
Government officials are trying to rein in increasingly popular federal programs that forgive some student debt, amid rising concerns over the plans' costs and the possibility they could encourage colleges to push tuition even higher.
A study cited by the WSJ suggests that the cost of the "Pay As You Earn" program could reach $14 billion a year.
Wonder What to Do About Massive Student Loans?
Would you like to know your options regarding student loan debt? Interested in seeing whether consolidation or bankruptcy might be a solution? Request a Free, No Obligation Legal Consultation today! There are no hidden fees, no obligations, no pressure and no risk in this consultation.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Suburban Legal Group PC shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.
