According to recent data from Experian, 40 million Americans have at least one outstanding student loan. The average amount of debt is $29,000.00, which is an all time high. A common question for many borrowers is “how will my student loans be affected if I get married?”
San Diego, CA, January 28, 2015 – Representative John K. Delaney (MD-6) has filed legislation in Congress spotlighting the omnipresent financial crisis with student loan debt. Unlike mortgage, credit card and auto loan debt, the current law does not allow for student loan debt to be discharged. The Discharge Student Loans in Bankruptcy Act (H.R. 449) would most likely render student loans dischargeable under bankruptcy.
“Student loan debt is dragging down economic growth, keeping the American Dream out of reach for many and is a monthly strain for millions,” Congressman Delaney said in a recent statement. “While student loan debt is a complex problem that will require many solutions—increased support for grant programs, efforts to increase affordability, improved consumer education—we also need to reform our laws to help those with the absolute greatest need. Right now, there is effectively a huge student loan loophole in bankruptcy law that’s hurting real people."
As the cost of college tuition continues to rise, the student loan debt burden on students and their families also continues to rise. Student loan debt affects not only recent graduates but also every age generation, even senior citizens. This legislation would truly help people struggling with this issue.
"Bankruptcy has long been an option of last resort for individuals facing an irresolvable level of debt; bankruptcy isn’t easy or enjoyable, but it’s a necessary part of our financial system," Delaney continued. "It doesn’t make sense for students with heavy debt burdens to be worse than someone with credit card, auto loan debt or mortgage debt. Every member of Congress from every state in the country has constituents who are struggling severely because of student loan debt. At the very least we should have some basic fairness in the law.”
Today, 71% of students graduating from 4 year colleges have student loan debt. According to The Project on Student Debt, the average student loan debt for a college graduate is $29,400. However, student loan debt is not only a problem for recent graduates.
In recent years, there has been a sharp increase in the number of older Americans who have student loan debt from financing their own education or the education of their children. As of 2013, people over the age of 65 had $18.2 billion in outstanding student loan debt.
If you have student loans and are approaching retirement, it is important to know that your social security benefits can be garnished by 15% for defaulted federal loans. In 2013, more than 155,000 social security recipients had their benefits garnished due to student loan debt, as discussed by US News & World Report.
If you have federal student loans in default, there are programs available to rehabilitate your loans, get them out of default, and into an affordable repayment plan. Our office can help you figure out the best way to tackle your student loan debt and protect your future social security benefits. Contact us to schedule a no-cost consultation to find out how we can assist you.
If all you want is an affordable payment plan, ask about income-based payment. This bases the month-to-month repayment on a percentage of your discretionary earnings, which is the quantity by which your adjusted gross income surpasses 150% of the poverty line. This is an affordable amount for most borrowers, since it is based on your earnings, not the amount you owe, and usually is less than 10% of gross earnings. If your income is less than 150% of the poverty line, your month-to-month payment is zero under earnings-based payment. To get income-based repayment, you may require to rehabilitate your loans first. This may mean spending a higher monthly payment for 9 months before being able to switch to income-based payment.