Government loans are probably the most popular form of student debt, at least as far as education goes. Nearly 73% of recent graduates with such debt owed money on government-backed student loans. Graduate students who employed both private and government student loans were typically the highest indebted, owed six times more than those who just borrowed from one source, and almost twice as much as students borrowing only one. Private loans tend to offer better deals in fixed interest rates, while government-backed loans tend to be more flexible when it comes to rates and how much debt can be accumulated in a given time period. It’s important for students to remember this, since getting enough government-backed debt to finish college may not be easy to do.
Many graduates are also saddled with credit card debt that wasn’t incurred in full by a traditional college education. These students need student loan debt help, and there is actually a dedicated type of debt relief available to them through government intervention. This is called student loan forgiveness. Private student loan debt forgiveness is usually not offered, and even if it is, it usually doesn’t cover a borrower’s federal debt. A bank or lender must forgive a student’s unsecured debt, not include it as part of their loan agreement.
The most accessible form of student debt help is available from the United States Department of Education. They have a website where graduates can apply to receive federal student aid based on need. The website will also provide detailed information about filing federal income tax forms properly, as well as other useful information, such as financial aid applications for single mothers and Pell grant eligibility. Graduate school can feel like a marathon, and using student debt help from the right sources can make finishing the process much easier.
Another option is to file a consumer proposal. A consumer proposal is simply a formal request for assistance from the government. Student loans may be the only form of student debt that a graduate may owe for a period of seven years. Because of this, the government often grants low interest rates to graduates who propose to pay off their student loans in this amount of time. Each individual case is different, but applying for a consumer proposal should generally result in a higher interest rate than an individual bankruptcy filing.
One reason why many individuals attempt to declare bankruptcy after completing graduate school is because of high interest rates on student loans. Bankruptcy filings generally last for a minimum of seven years. This means that during that period, a debtor is not responsible for paying any past due student loans. After seven years, however, creditors are still obligated to bill the individual for any past due expenses. Students are especially vulnerable to being billed after they graduate, because they do not have steady employment and their chances of not being able to find work in seven years are very high. If an individual is unable to establish new employment after declaring bankruptcy, they could be stuck with enormous student loan debt that they cannot repay.
With the increased number of students struggling to pay off their student debt after graduation, there are some special options available to them. The most popular one is the “guaranteed student loan refinance option.” There is actually a lot of confusing information concerning this section of the Bankruptcy Code. The bottom line is that it is not a loan, and does not include taxes or interest that is not paid. This section is intended to provide tax relief to married couples, or couples who have children in college, or individuals who use a child as a dependents on another person’s tax return.
A section that few people are familiar with is the part about how an individual filing for bankruptcy would automatically be discharged from all debts upon discharge. This was a popular provision in previous bankruptcy legislation that helped protect people from becoming financially devastated by their choice of bankruptcy. It provided an incentive to people to stay out of debt, rather than choose bankruptcy as their solution. However, this provision has been weakened in recent years, due to the rising trend of people using bankruptcy to simply get out of paying anything. This would provide no protection to the lender if you simply declared bankruptcy.
One provision in particular has also been weakened in recent years, which allows the court to suspend payments for up to seven years in certain circumstances. This means that if an individual can not afford to make their monthly payment when it is due, they can simply refuse to pay it. This provides student debt help for the millions of families across the country that rely on their student loans to fund the education of their children.