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Student Loans and Bankruptcy - Observations

student with debt issues

Student loans are ballooning. At four-year colleges and universities, more than two thirds of students have them. An average amount as of 2008 is over $23,000. Almost all students who go to private universities have student loans.

These statistics are made worse when you realize that they are just for federal student loan debt and do not count private student loans.

Student loans can be very rewarding by helping increased salaries and with the securing of jobs. They can also be a real problem. The problem is illustrated when a job cannot be secured or pay cannot be achieved at a high enough rate to pay the student loan back. What then?

Further, student loans are often coupled with credit card debt. In fact, Sallie Mae studies indicate approximately 1/3 of students charged tuition on credit cards.

Student loans are not to be taken lightly. As with most things involving the federal government, the government has excellent powers of enforcement to make sure they get what they want. Federal student loan collection powers include the following:

- Wage garnishment, even absent a judgment;
- Taking tax refunds including earned income tax credits;
- Taking federal benefits, including Social Security; and
- Refusing any new education loans.

In case the federal government does not catch your attention with the above listed means, realize that its collectors can charge collection fees. Further, no statute of limitations limits the time the government has to collect on these loans. Can anyone say, "Till death do us part?"

What should I do about student loans? Should I take them out or avoid them? Is bankruptcy an option to get out of my student loans? That is, can I declare bankruptcy on my student loans?

I am starting a series of blogs and articles to help you understand what options exist if you have already taken on student loans and now find yourself saddled by them. For those who are trying to make decisions on student loans, I hope you find this information helpful as you proceed to make wise decisions.

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