As College Costs Rise, More Borrowers Delay Student Loan Payments on Growing Debts
More than half of student loans in the U.S. are going unpaid due to financial hardship, according to recent data.
As of last spring, 51 percent of education loans were in deferment or forbearance - periods in which borrowers are able to temporarily delay payments during times of unemployment, underemployment or other financial difficulty.
As opposed to defaulting, deferring payments doesn't damage credit - at least not immediately, say bankruptcy attorneys.
However, as student debt grows, fewer students are able to make payments on their loans - even after they've been given a break through deferment or forbearance.
In most cases, interest continues to accrue while payment is on hold, resulting in a larger debt when it's time to begin paying.
When many college grads finally begin repaying debts, they're usually dealing with a growing set of bills related to "real world" costs like home ownership, personal loans, and the expense of raising a family.
It seems that the program intended to offer relief to borrowers may only end up making their situation worse.
Federal loans, which allow for the longest period of nonpayment - up to eight years compared to the one year offered by private loans - also have the highest rate of deferment.
And more borrowers across the board are choosing to put off repayment. Between 2007 and 2012, the amount of debt borrowers postponed paying increased by 70 percent.
Instead of delaying the inevitable - and, in many cases, only making things more difficult - borrowers may be better off seeking ways to lower their overall expenses each month.
By, say, reducing credit card debt and mortgage payments, consumers can free up more funds to budget toward repaying student debt.
While bankruptcy can't usually eliminate education loans, it can relieve the pressure of those loans by tackling many other common financial burdens - things like credit card debt, medical expenses and mortgage debt.
If your financial situation has you struggling to keep your home, Chapter 13 bankruptcy even has the power to stop foreclosure.
A college education is supposed to help you move forward, not hold you back. If your debts are holding you hostage, bankruptcy can be the most effective way to break free.
Learn more about bankruptcy's ability to provide a fresh financial start when you call DebtStoppers at 800-440-7235. Get in touch today and enjoy a complimentary personal debt consultation with one of our experienced bankruptcy lawyers.
More Blog Entries:
For Young Americans Trapped Under Crushing Credit Card Debt, Bankruptcy Can Be Saving Grace: January 17, 2013
Persistently Sluggish Economy Proves Most Painful for Members of Millennial Generation: November 13, 2012
Additional Resources:
More Students Delay Repaying Loans, by AnnaMaria Andriotis, SmartMoney