How to Understand the Issues of Student Loans and get Involved in Changing the System

President Obama is considering a student loan lender bail out. Wouldn't it be nice if every now and then government considered the needs of the people and not big business? Relief for borrowers, who are mostly middle and lower middle class in income, would be a novel ideal for a change.

Difficulty: Easy

Instructions

1. Know the facts about student loans:
   
   If you have a student loan you cannot repay loan companies can garnish your wages up to 15% of your income, sue you, take your income tax return, prevent you from getting license renewal on professional license and even take social security payments! Student loans are not, as of this writing, eligible for discharge through bankruptcy. Even if you lose your job, become disabled, or have some other catastrophe problem, private student loans won't be forgiven and you have little recourse. Check out Robert Applebaums site and join that discussion: http://www.facebook.com/pages/Robert-Applebaum/54158215949?v=wall&viewas=512890602
   You're considered in default if you're greater than 270 days late on payment of your student loan. For private student loans you have very little recourse, and what few options you do have are at the mercy of the loan company. You may be able to receive a "forbearance" which is paying the interest only for a period of time, but it will increase the overall amount you'll pay. In my case the forbearance we received when my husband lost his job resulted in my 450.00 student loan payment going up to 550.00 dollars a month for 20 years. The "forbearance" allowed us to pay 350 for a year which was just interest and tacked the principal to the back end of the loan. Overall, it's probably best to try to avoid such forbearance.

2. Tips for federal loans, try this:
   If you have federal loans you have a few more options.. It's possible to get deferment which will postpone your payment for a time. You have to show financial hardship, disability, or inability to get a job to qualify. If you work in a service are such as teaching or social work, it may be possible to obtain "loan forgiveness of part of your loan. Again you must apply for this.
   
   To research these possibilities check out: http://www.ed.gov/offices/OSFAP/DCS/index.html

3. Try these tips:
   If you've taken loans for your child, check into the parent student loan interest deduction on your taxes. This deduction can decrease your tax burden and help you pay your debt.
   Consider making one extra payment a year. It's amazing how much just this small amount can make in a dent in your principal and save interest over the life of you loan. Check with your loan company and be sure they allow early repayment.
   Consider joining the grass roots movement to obtain relief for borrowers. Call you senator and congressperson and make a statement. Make government for the people work for the people for a change.

[wrywatcher]

on 8/23/2009 This is true. I know some people misuse thier student loans. The loan I took out was to put my 14 year old in residential care. Insurance would not cover it, a whole other soap box I could go on about forever, and he was in dire need, life and death stuff,...sooo we took the loan, and we'll pay it back until we are very old most likely!! But while our goverment is bailing out business, for which our taxes will pay, I'll take a little of that too.

[cygnetbrown]

on 8/23/2009 I agree that we have an unequal system when it comes to this bailout. I also believe that we should all learn from the housing crisis that loans can be very costly and that we should consider how we're going to repay the loan before we take out the money. When going through school, we need to learn to be frugal and consider what everything costs. I went through one year of school recently and I ended up with $0 in student loans while a lot of my class mates had over $10,000 in debt.