Readers of our Mesa Bankruptcy Law Blog may remember an earlier post about the push to discharge student loans in personal bankruptcy. Now we are learning that more and more college graduates are electing to delay getting married or having children due to their piling debt. Many do not have the finances to support a family, with much of their wages going to repay their college loans.
With more students falling behind on their payments or taking out student loans, student loan debt is on the rise and it surpassed $1 trillion in 2011. Private borrowers are reportedly falling behind on payments at twice the rate of that before the recession.
Unfortunately, students in their early 20s or late teens are making difficult decisions that may have financial implications on the rest of their life, as filing for bankruptcy does not discharge student debt.
Part of the problem may stem from the fact that all students are not given adequate loan counseling and they therefore do not have a clear grasp of what they are taking on. Online counseling does not require a lot of attention, and some students surely zip through this process. Colleges that hold one-on-one counseling reportedly find that their students make more prudent decisions.
When overwhelming loans catch up to students, they may elect to defer their payments during hard times but then they could face steep forbearance and interest rates that increase their balances. The only way student loans can be discharged through bankruptcy is through showing undue hardship, a test that courts apply very stringently.
College graduates who are struggling with student loan or other debt may want to consult an experienced personal bankruptcy attorney to discuss what options are available to them. These students should not be afraid to take steps to ease their financial burdens.
Source: Deseret News, "To pay off loans, Grads put off marriage, children," Biaze Billock, April 18, 2012