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5 Dangers of Student Loans- And How to Get Out of the Debt Trap

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student loan crisis

Student loans out of control?

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Roughly 25% of all adults now carry student loans as one of the 44 million Americans with college debt. With a total price tag of $1.5 million and rising by the day, it’s a looming debt disaster on a personal and national level. For those who can afford the debt, that’s a good thing, but even so, it might come at a great sacrifice of other life goals. For those who can’t pay their college loans, the consequences can be dire. Here’s why student loans are so dangerous and how you can get help.

1 – Student loans crushing borrowers and the economy

Loan limits are rising, as are college costs. College is more unaffordable now than before the invention of student loans. Now, it’s almost impossible to pay for college out of pocket. Around 70% of college students come out of school with debt. That hurts the economy because they’re not participating in the system as they normally would.

2 – Student loans are largely unsustainable

New income-based repayment plans may help consumers better afford their college debt, but even these can be crushing in some cases. Plus, forgiven debt is taxable, and that can prove burdensome. From the taxpayer side of the equation, there’s a $36 billion (and rising) shortfall between student loan payments and what should be paid. That hurts everyone.

3 – Student loans neglect better career options

The boom in student loans encouraged everyone to push for college, even when it’s not to their benefit. Many skilled trades don’t require a degree, and many degree holders sit unemployed. Student loans don’t adequately encompass career and technical education programs like welding, sheet metal work, HVAC, etc. These are all much-needed jobs in high demand that pay well.

4 – Student loans are taken out by the uninformed

Student loans are also a potential hazard because they are usually taken by students in their teens (or barely out of) with little grasp on finances or understanding of the impact of the debt they’re adopting. Students usually don’t know how much they will pay when all is said and done, and lenders make loans without regard to ability to repay, choice of major, or long-term impact on the student.

5 – Student loans are doubly hard on dropouts

What’s worse than graduating with student loans is not graduating and having student loans. More students drop out of college than graduate at some schools. At community colleges, the dropout rate is 62%, and at for-profit colleges, it’s 64%. Overall, about 55% of students graduate within six years of starting college, yet most take on student debt. Lacking a degree makes it harder to pay the debt.

What to do about unaffordable student loans

When you realize you can’t make your student loan payments, the first place to turn is your student loan servicer. They can often get you into a short-term forbearance or deferral situation. It temporarily suspends student loan payments while you try to sort your finances. That might buy you time to apply for an income-driven repayment plan that can drop your payments significantly.

In some cases, though, even that’s not a workable option. If your financial circumstances are dire and likely to remain that way, you might be eligible for bankruptcy forgiveness of your student loans. For those who can demonstrate that repaying student loans presents an undue hardship, bankruptcy discharge is possible.

Undue hardship means that you can’t provide yourself and your dependents a reasonable standard of living while servicing the debt. In addition to the bankruptcy case, your lawyer must file an Adversary Proceeding to fight back against your student loans. Courts are increasingly more lenient on undue hardship interpretation, so this can be a good time to seek relief.

To find out more, read reviews from our clients then call 1-888-234-4181. Contact the Law Offices of John T. Orcutt to schedule a free student loan bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.

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