For years, it's been nearly impossible for many student loan borrowers
to say good-bye to their college debt. But members of the Trump administration
recently said they plan to review the high standards for discharging student
loans in bankruptcy. According to an
article by MarketWatch.com, the Department of Education wants public input on
what constitutes hardship for borrowers. Revisiting the government's
notoriously strict approach to student loan bankruptcy cases is good news
for borrowers who could not obtain employment or complete a degree program.
Congress never defined "undue hardship," which is the criteria
for making federal student loan debt disappear. So, what can you do if
you are struggling with student loan debt?
Make an effort to pay the debt
Don't give up on paying back your student loan debt just because you
hope to declare bankruptcy and clear the debt. It shows good faith to
make as much of a payment as you can toward your student loan debt while
struggling to maintain a minimum standard of living.
Avoid taking out new debt
It's also smart to stop taking out credit cards, more student loans
and car loans when you already have trouble making payments. If you have
to finish a degree program, make every effort to pay your way through
with several side job. Talk to family members about tapping a Roth IRA
or making gifts toward a tuition payment.
According to a
piece by usatoday.com, college loan debt is at an all-time high with 1.4 trillion
dollar owed. Many graduates have a student loan outstanding balance that
is higher than their annual salary of about $34,000. The outstanding balance
is up 62 percent in the last decade. Moreover, 11 percent of student loans
are now in default, according to the Department of Education. If you haven't
made payments on our student loans for more than 270 days, talk to a bankruptcy
attorney. Even if you can't discharge your student loans, it's
time to come up with a plan to knock out credit card and other debt. While
bankruptcy is a last resort, most people welcome policy changes regarding
student loans and bankruptcy. The Consumer Financial Protection Bureau
reports that "public service loan forgiveness" is the fourth
most common student loan complaint followed by billing statements, borrower
communications and IDR Plan enrollment.
At the Law Offices of James C. Shields, we help people with all their bankruptcy
questions. For more information how new policy changes could affect student
loan debt, please