Why Student Debt is Unique (And What You Can Do About It)
It’s no secret that debt from student loans is becoming an increasingly grave problem here in the United States. According to the latest studies, there are over 43 million people in the US alone who owe money on student loans. That’s nearly 20% of the entire adult population! These loans are not insignificant, either: the mean monthly payment for a former student between the ages of 20 and 30 is $203 per month. The average monthly payment for this demographic is even larger, coming in at $351. And the grand sum of all these loans? a whopping 1.26 trillion dollars in debt.
Anyone who has taken out a student loan should know a few important facts about this debt, and what makes it unique. First of all, there is one benefit to student debt: it can, with a few exceptions, be deferred as long as you are still in school. This has led to a growing number of students pursuing postgraduate degrees in order to delay their loan payments while bettering their job prospects. Unfortunately, it has also proved to be an incomplete solution to the problem of student debt, as evidenced by the swelling student debt numbers mentioned in the paragraph above.
The other key characteristic that makes student loans unique is not nearly as student-friendly: under normal circumstances, student loans cannot be discharged in bankruptcy. The justification for this is simple enough: an education cannot be repossessed in the way that most tangible investments (i.e. houses and cars) can, and therefore lenders claim they are entitled to charge much higher rates, and even government-funded loans are exempt from bankruptcy discharge, barring cases of extreme and unusual hardship.
The bottom line; if you find yourself deep in student debt, don’t count on bankruptcy to grant you solvency the way you could with other types of debt. Instead, you will need a unique and aggressive approach to regain your financial independency.
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