These summer months are shaping up (again) to be tough times for recent college graduates. This latest round of job seekers continues to face high unemployment and mounting debt. So what happens when these poor economic conditions coincide with payment deadlines for sometimes astronomical educational loans? One word: defaults. In the end, this feeling of financial helplessness leaves many recent grads reeling, and rightfully so, in an economic climate may mean they will never be as successful or financially secure as their parents.
According to a recent article in The Huffington Post, chronicling graduates’ search for better jobs (albeit without hope for a better future), this recent post-recessionary phenomenon may signify a broader trend. “Historically, college graduates weather periods of economic recession better than their less-credentialed counterparts. But one of the starkest findings of a new study about recent graduates of four-year colleges are the strong doubts they express about being able to achieve basic tenets of the American Dream -- an affordable education, a job, a house. ‘There are several million people graduating into this very bad recession and having a difficult time. This is just one more way of saying that young people, as they go into their careers, are going to be less and less moored to the idea of upward mobility as inevitable,’ said Carl E. Van Horn, a labor economist at Rutgers University and one of the authors of the recent report, ‘Unfulfilled Expectations: Recent College Graduates Struggle in a Troubled Economy.’ The report surveyed 571 graduates from four-year colleges and universities. Half said they were working jobs that don't require a college degree.”
So what can you do if you’re a recent grad who is unemployed or underemployed, and can’t pay your student loans?
Categorize Your Educational Debt
Determine whether your student loan is federal or private. Federal student loans offer more flexible repayment programs, economic deferments, or temporary forbearances. Alternatively, private student loans can afford less flexibility and fewer repayment options; but in some cases have ready lenders willing to negotiate repayment with an economy-weary public.
File for Unemployment Deferments and Forbearances
If you are unemployed and hold a federal student loan, you can qualify for an economic deferment or forbearance. These deferments can provide recent college graduates with a temporary stay on their payments, buying precious time to get on their feet, search for steady employment, and pad their coffers for a more fruitful financial future. For those with private student loans, unemployment status can be a negotiating tool to temporarily lower loan payments.
Making Breathing Room with Bankruptcy
While bankruptcy can’t currently be used to wipe away your student loan debts, or at least not without a finding of an “undue hardship”like a sudden disability, what it can do is erase massive credit card debt and other consumer debt loads that are keeping you from repaying your student loans. Relieving these types of financial burdens early in your adult life and career can pay dividends later: allowing you to rebuild credit as you build your career and repay your educational loans earlier in the game.
If you too have been effected by the economy and are wondering how to reduce student loan debt—and stress— knowing a qualified bankruptcy attorney can be your first best step on the road to a more hopeful financial future. The bankruptcy lawyers at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-888-234-4181, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.