Student Loan Debt: Too Much to Handle?
Is student loan debt getting too out of hand?
By Kathryn Knight Randolph
April 13, 2011
Last year, Mark Kantrowitz reported that the total amount of student loan debt had surpassed the total amount of credit card debt for the first time ever. Now, experts, including Kantrowitz, are projecting that student loan debt will surpass the $1 trillion mark this year.
The Project on Student Debt reported last year that the average student debt totals $24,000, which is the highest figure ever reported and a 6% increase from 2009, according to The Huffington Post. An article in The New York Times pointed out that student debt is now slowing life experiences for many post-graduates: “As the transition from adolescence to adulthood is being delayed, with young people taking longer to marry, buy a home and have children, large student loans can slow the process further.”
But even worse, it’s bringing about an increase in the number of defaulted loans. Defaulting occurs when payments haven’t been made to the loan for 270 – 360 days, according to FinAid. The consequences of defaulting are worse than having a loan in the first place. Students who have defaulted are required to pay collection fees, are subject to losing 15% of their income to the federal government, at risk for losing their federal and state income tax returns and much more. Additionally, they still have to pay the amount of the loan back.
So how can you get out of your loan? Unfortunately, it’s practically impossible. One way to get out of student loan payments is death, but who wants that? And if you think that declaring bankruptcy is an option, think again.
Kantrowitz says in his latest article on How to Minimize Student Debt that your chances of getting cancer or dying in a car crash are higher than getting rid of those student loans by filing for bankruptcy. Last year, according to Kantrowitz, of the 72,000 borrowers who declared bankruptcy, only 29 had their student loan debts partially or totally forgiven.
Realistically, you need to simply borrow smart and choose a school that is financially feasible. Also, start looking into income-based repayment plans and loan forgiveness options as soon as possible.
Get a handle on borrowing smart by reading Kantrowitz’s article,How to Minimize Student Loan Debt.