This past year, for the first time, the amount of student loan debt in the United States surpassed the amount of outstanding credit card debt. More significantly, a growing percentage of this student loan debt has gone into default and student loan debtors are struggling to find solutions.
In our personal bankruptcy practice we have been observing for many years the rise of student loan debt problems. Because bankruptcy provides either no relief or incomplete relief, we have expanded our law practice to include student loan debt relief.
In the case of federally issued or federally guaranteed student loans, this means identifying an income based repayment program or a loan forgiveness program that applies. In the case of private student loans, this means revisiting bankruptcy options, as well as looking at the leverage provided by FDCPA claims.
Why Student Loan Debt has become a National Crisis
Educational loan debt problems have become a national crisis because of the unique nature of higher education costs and the current job market.
Thanks to a plethora of student loan options, almost every student – regardless of household income – can qualify for some type of student loan.
- Because student loan money is plentiful, colleges and universities face little pressure to keep tuition costs reasonable. Statistically, the cost of higher education has grown much faster than the rate of inflation.
- Currently colleges and universities have no obligation to reveal job placement and salary statistics for various majors. Thus, many graduates leave school educated about interesting but not especially practical subjects.
- Student loan debt is deferred until after graduation so most borrowers have no idea how much they will owe.
- Student loan debt is incurred by intelligent but naive borrowers (usually age 18 or 19) who have not had any experience with real life budgets or about the danger of excess debts. Unlike car loan disclosures, post-secondary schools have no obligation to reveal anything about interest rates, monthly payments or payoff amounts.
- Many students jeopardize their parents’ financial stability and retirement prospects if their parents incur or guarantee student loans.
- Loans that go into default give rise to large penalties.
- The federal bankruptcy code currently does not allow borrowers to discharge student loan debt except in rare cases (proof of “undue hardship”)
- Student loan servicing agents and bill collectors typically take an aggressive approach towards recovery of debt because most borrowers have no bankruptcy option and federal loan borrowers are subject to tax refund seizure.
- Since 2008, the job market in the United States has not had the capacity to absorb all of the new college graduates, and starting salaries often do not support student loan payments.
How Ginsberg Law can Help You
If your student loans are issued or guaranteed by the U.S. Department of Education, you have a variety of options to cure any default you may be facing and to enter into an income based repayment plan. Further, there are a variety of loan forgiveness programs that can reduce or eliminate your student loan debt if you agree to work in an underserved occupation (such as teaching or public interest work). Finally there are disability based forgiveness programs if you qualify because of a medical or mental health issue.
Unfortunately, each federal loan program has slightly different rules for eligibility and different forms and documentary requirements. We can help you find the modified repayment or forgiveness program that applies to your loan, and we can help you navigate the confusing default cure options out there.
If your student loans are privately issued, we can evaluate the collection process for possible FDCPA violations (which can give rise to damage awards) and we can look at the bankruptcy option to help you arrive at a budget that will allow for payment of your loans.
Further Research and Next Steps
If you are struggling with unmanageable student loan debt, please call us for a loan portfolio evaluation. If you have defaulted on your loan payments please do not hesitate as you are in immediate danger of wage garnishment or tax refund seizure. Please call Jonathan Ginsberg at 770-393-4985 or contact him by email using the form on this page.
Joshua Cohen Student loan law web site – Joshua is a student loan lawyer in Connecticut who instructs lawyers nationally about student loan law. I am one of his former students and a member of his private list serv group which includes over 50 lawyers nationally who share information and experiences.
Adam Minsky – Boston Student Loan lawyer – Adam is a student loan lawyer in Boston and publishes an extremely informative web site.