If you are like me, you probably have a decent amount of student loans that are now due or will be coming due shortly. When I was growing up, I remember hearing about how I needed to get a good education if I wanted to get a well-paying job and make a decent living. Coming from a lower-middle class family (and that’s probably being generous), I knew that the only way I could get that education and go on to live the American dream was to finance my education. What I probably didn’t consider was how much that education was going to ultimately cost me. Granted, I believe my education is valuable to an extent, but will it be worth the $130,000 I had to take out in student loans and will be paying on with interest over the next 25-30 years? Only time will tell. But what if it’s not? That’s the question, I believe potential college students need to carefully consider before deciding to further their education.
Student loan lenders (unlike most other lenders short of government agencies) are given great protection by our government (don’t believe me see this article where a court determined that paying back loans were not an undue hardship for a blind diabetic who was making $811 a month in social security); therefore, if all that education fails to deliver on that promise of a bright future, there is little if anything you can do about it. Let’s look at a comparison. Five years ago you bought a $200,000 house. Now, thanks to the decline in the housing market, that house is worth significantly less than what you currently owe on it. For one reason or another, you are unable to make your current monthly payments, and you default on the loan. Now late fees and attorney’s fees are adding on and that balance is getting larger by the minute. Sounds like a pretty bad scenario, and it is, but the government offers the everyday Joe a way out of this mess. Ultimately, if you end up with more house than you can afford, then you can allow the lender to foreclose on the property and file for bankruptcy to wipe out any deficiency that may remain after the sale of the property. But what assistance is there if you get “more” education than you can afford? In short, there isn’t any. Unlike the liability on your home, car, credit cards, and medical bills, the liability on your student loans cannot be discharged in bankruptcy. Not only that, but let’s say something unforeseeable happens, you become disabled, and can no longer work. You are collecting disability which is probably significantly less than what you are used to living on. You would probably expect sympathy and understanding. What do you get? You get your student loan lenders attaching your social security check and taking up to 15% of what little money you do have. This is a remedy that is not afforded to any other lender. So what makes student loans so special? Can it really be that your education is more valuable than your house or car or health? It seems illogical that we would not receive any protection against huge student loan bills particularly when you consider the fact that you got the education to make a better life for yourself and that education can’t even provide you with a job to cover the minimum payment on the money you borrowed to get it.
Now comes the small light at the end of the tunnel. There are programs out there aimed to assist people with paying back their student loans. One such program is the Income Based Repayment (IBR) option which determines the amount of your payment based off of your income. IBR is intended to help you maintain a reasonable standard of living while allowing you to pay off your loans at an affordable rate. The best part about the program; if you do not manage to pay off your loans in a 25 (I believe they may have reduced this to 20 for new grads) year period, then they are forgiven. Additionally, in some extreme circumstances an argument can be made for an undue hardship discharge in bankruptcy that would allow your student loans to be discharged with the rest of your debt. If you are having a difficult time meeting your student loan obligations, contact the Law Office of Suzanne Szymoniak today to discuss your potential options.