- Student loans are not dischargeable in bankruptcy. It does not matter whether you complete your degree program, find gainful employment after graduation, lose your job, or become disabled. The student loans must be repaid. Very few people are able to claim “undue hardship” in bankruptcy and get their student loans discharged. Of those who successfully had student loans discharged, it was due to very extreme circumstances, limiting the borrower’s ability and hope of ever repaying the loans.
- Repayment on federal Stafford loans starts six months after graduation or when the student drops below half-time enrollment. Will you have a job that pays enough money to make your monthly loan payments affordable? You may be eligible for a hardship deferral or forbearance. Unless you are still enrolled in school at least half-time, you are responsible for the interest that accrues during the deferral (for unsubsidized Stafford loans) or forbearance period.
- Massive student loan debt hampers your ability to do other important things in life like buying a home, funding a retirement account, start a business, or getting married and starting a family.
- Anyone who co-signs on a student loan is equally responsible for repayment of the loan. So, whenever the original borrower dies or defaults on a student loan, the lender can pursue the co-signer for repayment of the loan.
- Avoid private student loans like the plague. The repayment terms are often more stringent compared to the repayment terms of federal student loans. Like government backed student loans, private student loans are not dischargeable in bankruptcy. The interest rates and other fees are higher for private student loans than with federally backed student loans. At the present, private student loan lenders are not required to disclose all of their fees upfront.
Words of Caution For Anyone Thinking About Going to College
What Happens When you default on a student loan? Some of the Consequences of Student Loan Default
Is Going to College a Good Idea in a Bad Economy?
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