New graduates are completing school and entering the job market with record student loan debt, according to the National Association of Consumer Bankruptcy Attorneys (NACBA). Students who graduated in 2010 averaged just over $25,000 in student loan debt.
It’s not just students who are feeling the pinch; as new grads are struggling to find jobs, often parents who have co-signed the student’s loans are being hit with loan payments that their children cannot afford to make. On top of the parent-guaranteed loans, almost 20 percent of parents of 2010 graduates had taken out an education loan in their own name to help finance their child’s education.
According to a survey of bankruptcy attorneys conducted by NACBA, student loan collectors are becoming more aggressive in collection efforts. Similar to the housing bubble and foreclosure crisis, NACBA is predicting that the “student loan debt bomb” will be the next major financial shock to U.S. consumers.
Student loans are extremely difficult to discharge in bankruptcy. According to the NACBA survey, only about 5 percent of student loan debtors who’d sought the assistance of a bankruptcy attorney were thought to even have a chance at securing a discharge of the student loan(s) through bankruptcy.
There just aren’t a lot of bankruptcy options to deal directly with discharging student loans, but a Florida bankruptcy attorney can discuss ways to make your student loan payments somewhat more affordable through the discharge of other eligible debts. An underwater home, credit card debt and medical bills can all make paying student loans more difficult and getting rid of those other debts may free up the necessary cash to pay on student loans.
Consider all your options before defaulting on your student loans. Forbearance, deferment, income-based repayment and bankruptcy are all options that, depending on your situation, may allow you to make education loan payments. While it is hoped that some type of relief will be coming for students and parents struggling with student loan debt, before the ‘student loan bomb’ goes off, there is none yet.