Student Loan Debt More Problematic Than Credit Card Debt - Attorneys.com
Student loan debt burdens in the United States have topped $850 billion, according to a recent report from USA Today. This eye-popping figure even tops the amount of credit card debt in the country, which is a close second at $828 billion. Apparently, the source of USA Today’s debt burden statistics for these two classifications of debt is an individual website publisher, Mark Kantrowitz. Mr. Kantrowitz is publisher of two different scholarship services, FinAid.org and FastWeb.com.
Monthly Debt Repayment Figures for Student Loans Reach Astounding Rates
In addition to total debt figures, the USA Today report also highlighted the monthly repayment figures that student loan borrowers are now facing. For example, for a student loan amounting to $30,000, with an interest rate of 6.8 percent, the monthly payment would be $350.00 for one long decade of payments. With this particular debt burden, the borrower would need an annual income of approximately $42,000 to be able to afford to make the payments. Many college grads with student loans, lenders, bankruptcy attorneys, and credit professionals would agree that a $30,000 student loan figure is modest, however. Much more frequently, student loan debt burdens have exceeded even $100,000 with today's staggering tuition prices, high costs of living, and minimal parental contributions or savings. For a $100,000 student loan, the average monthly loan repayment would exceed $1,000.00, which amounts to a mortgage payment in some locales.
How Are Student Loans Treated in Bankruptcy?
Within the bankruptcy law context, student loan debt is only dischargeable (excused in bankruptcy by operation of law) in instances of undue hardship. That means that ordinarily, there is no relief for a bankruptcy debtor from his or her student loans unless the circumstances and situations are dire. Examples of such dire circumstances vary from jurisdiction to jurisdiction, according to the proclivities of the presiding judge. However, dire circumstances may include a significant handicap, catastrophic accident, death of spouse wage earner, debilitating illness, or a devastating house fire. In North Georgia Bankruptcy Court, what is dubbed an extreme hardship is much more limited, in that it is restricted to medical issues for debtors and student loan borrowers who are prevented entirely from gainful employment. The inability to locate employment that pays sufficiently to allow a borrower to repay the loan under its structured terms has not been found to be sufficient to qualify as an undue hardship, deserving of a discharge in bankruptcy.
Even the U.S. Supreme Court Has Weighed in on Student Loans and Bankruptcy
The issue of student loans and their treatment in bankruptcy is becoming more publicized, and thus is receiving more notice from the public and jurists alike. Even the U.S. Supreme Court has recently issued a published decision on the treatment of student loans in bankruptcy. If you have questions or concerns regarding a student loan and its treatment in bankruptcy, it is prudent to consult a consumer bankruptcy attorney to learn more.
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