Student loans are some of the most common sources of debt for people in New Jersey. Young people take out these loans so that they can go to college and ultimately find a good job after graduating so that they can repay these loans. It is a brutal cycle that ultimately sets some students up to fail, especially when they have difficulties finding a job.
Repaying student loans is a stressor for many people and it often remains that way for many years because it can be a significant struggle for people to keep up with hefty payments. This can be especially true in a touch economy where good jobs may be hard to find. Recently, bills were proposed in Congress which would have eased this burden on many people by lowering interest rates. However, the fight over this money continues.
About 33 percent of college students take out subsidized loans. These loans often come with a whopping 6.8 percent interest rate, which is much higher than it used to be. The increase in these interest rates is making it difficult, if not nearly impossible, for people to keep up with the payments. Some politicians argue that these interest rates must be lowered or adjusted to actual borrowing costs so that the financial strain on borrowers eases up, however, the federal government has yet to take this type of action.
Unless and until Congress addresses these issues, people who are struggling with student loan debt may continue to be very frustrated and concerned with their financial stability.
Unlike other sources of debt, student loans often cannot be discharged in Chapter 7 bankruptcy. However, there are many people who opt to file for Chapter 13 bankruptcy in order to reorganize payments and incorporate these student loan payments into that plan. This allows people to pay off debt in a more manageable way and on a more manageable timeline.
Source: The New York Times, “The Student Loan Debate,” July 23, 2013