Going to college is supposed to lead to a good job. That's what loan marketers and schools themselves tell prospective students. But with the U.S. unemployment rate at 8.6 percent at the end of 2011, those promises have worn thin - and left a lot of people with a lot of student loan debt that is hard to pay back.
People with student loans in Florida are not exception to this national trend.
Not surprisingly, then, one point of contention within the Occupy Movement focuses on the gap between the skyrocketing price of education and the problematic job market. Secretary of Education Arne Duncan recently told a group of college graduates "education is still the great equalizer" and remains one of the best investments an individual can make for the future.
But today's graduates enter a poor job market owing an average of $25,250. As a result, many recent graduates question Secretary Duncan's advice. Indeed, many of them are in need of experienced debt relief advice.
Prevalence of Student Debt
Students are increasingly relying on loans to attend four year colleges and universities. According to the Pew Charitable Trusts organization, over the last two decades the percentage of students taking loans has shifted from less than half to over two-thirds.
Educational loans are a form of financial aid that must be repaid - with interest. They are offered both through the government and private entities, and generally private entity loans have higher interest rates. There are options available to make repayment manageable under both forms.
Loan forgiveness programs exist that pay off the loan in exchange for military service, public service or volunteer work. But loans are cancelled only in extreme situations, including death and permanent total disability. Moreover, these options often do not apply to private loans.
Student Debt and Bankruptcy
For most people holding education loans, forgiveness and cancellation are not viable options. Unfortunately, bankruptcy usually isn't either. However, discharging other debts through bankruptcy can result in a manageable repayment plan. A realistic plan can ensure payments are made on time, which is important because late payments will negatively affect your credit.
A payment even 60 days late will begin to impact your credit score. A payment 90 days late will make it difficult to get a car loan or mortgage, and one over 270 days late results in default, which can lead to wage garnishment. Generally garnishment requires a judgment in court; however, the government does not require a judgment to garnish wages. As a result, garnishment for federally funded educational loans can happen quickly.
If you are struggling to manage your educational loans, it is important to discuss your options with an experienced bankruptcy and student loan attorney.