Over the last four to five years, people have been using student loans as a form of income when they can’t find a job. Why? It’s extremely easy to get one. These young people, and even some older adults, cannot find work so they turn, temporarily, to the idea of returning to school, and they take out loans. Before long, they realize school requires hard work and they return to the job force. They are then stuck with the same problems they had before PLUS the debt of student loans.
What does President-Elect Trump plan to do about student loans?
He rarely mentioned higher education or the nation's $1.3 trillion in student debt on the campaign trail, so we do not know for sure.
During the campaign, Trump proposed slightly modifying income-based repayment for federal student loans by allowing borrowers to pay 12.5 percent of discretionary income with any remaining balance forgiven after 15 years.
With so much still unknown and to be worked out during the transition over the next few months, it's too soon to tell what student loan borrowers can expect. We will stay abreast of these changes in our firm and post updates as we know more.
Will filing bankruptcy relieve my student loan debt?
These loans are not dischargeable in bankruptcy. But there are options to address that many Americans do not realize. For example, I had a client who has a doctorate. She owes $235,000 in student loans. She couldn’t find a job that would pay enough that would allow her to handle the debt on that type of student loan. We worked with her to file a chapter 13 bankruptcy 60-month plan. This allows her to pay very little money back each month, $123-$150. She’s going to be in that bankruptcy for 60 months. The student loan people cannot bother her while she is in Chapter 13.
Our strategy is that before the end of 60 months, Congress may act by changing the student loan laws. The fact is, there are more than $1 trillion in student loan debt out there. My best guess is that at least 40-50% of those loans are uncollectible. The government is going to have to act to repair the problem.
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