Submitted by Rachel R on Fri, 09/07/2018 - 8:09am
Are you borrowing too much in student loans?
Image by Ali Yahya via Unsplash
Not all debt is bad. Some debt is good because it empowers you to make changes to your life that you couldn’t if you had to pay cash for everything. That applies to a home and college education, in particular, since most cost too much to pay out of pocket in a lump sum. But if you get in over your head, the opportunity could turn into a financial crisis. When it comes to student loans, how much is too much?
If done right, student loans are some of the best debt you can accrue. It’s an investment in yourself and your future. If leveraged to gain a degree with significant earning potential, it could set you up for a bright future. But if you overborrow compared to the benefit the degree brings, you might set the stage for a troubled financial future.
Student loans are a boon because they help people go to college that might not otherwise have done so. But when you over-extend, you might set yourself up for a financial crisis that can last for decades.
Even majors with high earnings potential such as law or medicine might not be enough to combat excessive student debt. There are many doctors and lawyers overwhelmed with student loans and struggling for a solution.
There’s no hard and fast standard to say how much student loan debt is right for you. One recommended rule of thumb is don’t borrow more than you believe you’ll make as your first-year salary out of college. If your anticipated starting salary is $40,000, don’t borrow more than $40,000. Pretty simple right?
Then why do many bite off more than they can chew? According to research from Value Penguin, more than 600,000 Americans owe $150-200k in student loan debt. Another segment of almost 610,000 consumers owes $200k or more on school loans. Even with a high earning job, that level of college debt may be insurmountable.
When you can’t repay your student loans, it can lead to delinquency and then default. It will lower your credit score and could trigger garnishment of your wages, income tax refunds, or a lien on your home or vehicle. There is no statute of limitations on federal student loans, and their powers of collection are far-reaching.
If you can’t pay the loans, here are some steps to follow:
One last option to consider is investigating whether you’d qualify for bankruptcy relief of your student loans. The standard is “undue hardship” which means that if you pay your student loans, you won’t be able to maintain a reasonable standard of living for you and your dependents. Even if you don’t meet the standard for bankruptcy discharge of student loans, shedding other debt might ease your budget so that you can better afford to make payments.
To find out more, read reviews, then call +1-833-627-0115 to contact the Law Offices of John T. Orcutt to schedule a student loan bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington
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