While the media focuses on mortgage, auto and unsecured loans, there is a growing group of people who are facing another type of loan: student loans. Recent studies have shown that there is about $730 billion in outstanding student-loan debt. Of that number, only about 40 percent is being repaid on time. The remaining 60 percent is a combination of borrowers who are either deferring payments or defaulting on them. The problem of the former 60 percent is a growing concern in the market. How can this group be motivated to prioritize student loan debt? With a recessionary period still hanging over most Americans, it is a difficult time to demand consumers address their student loans.
The struggle to handle student loans
There is a catch-22 for recent graduates who got their educations for higher-paying careers. Though many targeted law or medicine as their perfect careers, now they are having a hard time finding jobs. Without finding jobs, paying back the higher cost of their education is next to impossible.
There are a growing number of consumers who are falling into this category, and the economy isn’t doing much to help. When it comes to other forms of debt, there are some outs to help ease the strain. For example, mortgage payments can be negotiated or properties sold to ease the tension. Credit card debt can be paid off or eliminated in bankruptcy. Car loans can be eliminated via a discharge in bankruptcy, negotiation or payments, or if necessary, selling off the vehicle. Then there are student loans. There really is no such thing as getting rid of student loan debts. They can’t be discharged in bankruptcy or negotiated down. The amount can’t be touched and neither can the interest rate charged to hold them. That means that consumers are never going to find a way out of paying for their student loans without some legislative changes.
Reworking the student loan
Due to issues with student loan repayment there is a growing consumer base hoping to revamp rules regarding the debt. In fact, a Facebook group that calls themselves “Forgive Student Loan Debt” is making a case for an economic stimulus plan to forgive outstanding student loan debt. There are plans of attack to help manage mortgage, credit card and unsecured loans, so they believe there should be some relief with education expenses.
They are basing their argument on the fact that education is good for society. Elevating the skill sets of mass groups can be a powerful tool for economic advancement. By allowing some negotiation option or payoff, the Facebook group hopes that consumers under heavy student loan debt would be able to focus on using their education, rather than stressing over how to pay for it. They are calling on the government to make changes that would bring a stimulus target to former students under a capped level of debt.
Will negotiating student loan debt become a reality?
Whether student loan debt will be looked at by legislators has yet to be seen. With growing numbers of defaulting and deferred student loan accounts though, there is a strong call for some changes to benefit recent graduates who are struggling. The fact that those holding mortgage, credit card and unsecured loans have government-built options and those with student loans don’t may be the best argument for change.
I recently went back to school, and got my private student loan by following this advice I found while surfing online one day: 3 Simple Steps to help you pay for College Education: 1) Use Free Money First. Students should fill out a Free Application for Federal Student Aid (FAFSA) to access need-based grants and apply for scholarships. 2) Explore Federal Loans. Federal loans offer low, fixed interest rates and flexible repayment options. 3) Fill Any Gap With Private Loans. Private student loans may be available to cover the rest of their education costs.