Student loans are the bane of many debtors’ existence. Accrued before most debtors reached their 25th birthday, student loans can be like that youthful mistake that you just keep paying for well into adulthood. While the premise of the student loan system is good, giving low-income and moderate income students the opportunity to attend college, the aftermath of so many student loans giving to so many students who are now struggling to repay them is a tragedy. But what can we do?
Below are a few thoughts on what former students and governmental leaders can do to lift the heavy burden of student loans:
- Student loan debtors who want to pay off their debt sooner rather than later should not skip payments if at all possible and avoid forbearance programs. While the ability to defer payments and enter forbearance can be helpful in times of financial crisis, doing so can take on interest that eventually will capitalize and become part of the student loan’s balance. In other words you could see your balance grow during forbearance essentially erasing years of hard work repaying your loan.
- Never default on you student loans. Student loan debtors who default on their student loans find that these creditors have extraordinary power to seize their tax refunds, garnish their wages and even seize their bank accounts. It is better to go into forbearance if you have no other choice.
- Legislators need to make it easier for debtors to discharge their student loan debt in bankruptcy. Right now, debtors can discharge credit card debt but not student loans which is essentially unfair. We are not saying that debtors who just graduated from college should be allowed to discharge their student loan in bankruptcy; but if someone has been paying their student loans back for over 10 years, we should at least consider giving them a bankruptcy discharge if they need it.