No catalogs with the term “strapping up” in it. Such as “debt-ridden” or “crashing on the rocks”. Not even in English: “debt burden”, “debt burden upon society” or “financial burden”. In other languages: Russian. Moldavanian.

In Canada: “student loans help students leaving school financially responsible for their education”. In the United States: “government student loans help graduates of public colleges and universities afford the cost of a higher education”. Just as the use of loaded words in this context doesn’t make sense, neither does the notion that students leaving school financially responsible for their education when they are already saddled with crippling debt does.

But such logic is not relevant to the situation facing borrowers leaving school today. Borrowers with large-balance debts are not taking advantage of the fact that the government now has to do something to help them. They’re not using this as an opportunity to negotiate lower payments or even reduce the amount they have to repay. They’re simply not thinking about reducing their total debt-to-income ratio at all.

The reality is that student loan debt now stands at almost double the level of large-balance borrowers. And that’s before we even consider how many large-balance borrowers are having trouble paying their student loan debts after leaving college. It’s impossible to say whether student loan debt will rise again once the economy recovers, but if it does, then we can expect a large-scale consolidation of student loan debt into refinancing of existing home mortgages.

The solution to undereducated borrowers’ financial problems isn’t a complicated one. It’s very simple. Instead of going for refinancing, why don’t they go for debt settlement? The answer to the question of “what’s the solution to a crippling debt?” shouldn’t be ignored because this is the most important one for borrowers today.

Today, the federal government has introduced five percent liability settlements as an alternative to bankruptcy. This means that borrowers who can’t repay their student loans can go for liability reduction in exchange for having to repay a part of the original amount. Of course, borrowers are aware of this offer since it has been around for the past few years. However, not many borrowers are taking advantage of it due to some of its harsh terms. Some of these terms are more harsh than the others and that’s why borrowers are having second thoughts whether to take up this deal or not.

Among the harsh terms introduced by the new deal is the payment drop off. This means that borrowers may not get back their initial payments back until they have paid at least five percent of their original amount owed. This could mean more than ten years waiting for the money borrowed. Another term is the “Lundy clause” which states that the lender will not get back any money from the borrower until he or she pays the entire amount of the debt. With these terms, it’s clear that borrowers may not find it very helpful when looking for solutions to their l ndern problems.

With all the factors pointed out, why would borrowers even consider debt consolidation? Well, for starters, not all debt is handled through a consolidation plan. Debt settlement and bankruptcy are two such methods that allow borrowers to reduce their debt without affecting their credit ratings too badly. The best part about them is that they require minimal form filling and documentation compared to the other options available. So if you’re already behind and think that your situation doesn’t improve quickly enough, it’s always better to opt for another way of getting out of debt.