For years, high school students have been told they must advance their education by getting a college degree, while everyone from stay-at-home moms to seniors have been told about the benefits of going back to school to achieve promotions or a return to work. While higher education certainly does have its benefits, it can also come with a hefty price tag. Across the country, countless individuals are working to meet their current financial demands while also paying back student loans and await the looming restart of student loan payment on January 31st.
President Biden and his administration have been working hard to provide some semblance of debt relief for those with a student loan; however, there are still quite a few people who aren’t receiving any help at all. In spite of the more than $11 billion in student loan cancellations that the Biden administration has offered, it still hasn’t been enough to help everyone. Keep reading to discover who managed to truly see their debt erased under Biden and who can expect to keep paying – and what can be done about this debt.
Students Who Were Defrauded by Their Schools Won Big
Understandably, if you take out student loans and go through the hard work of enrolling in classes and studying, you at least expect to see some reward for your effort. For some students, their dreams were cut short when their schools were closed before they could earn their degree, while others were outright cheated by their school’s misconduct or poor management. Thanks to the Borrower Defense to Repayment plan, those who were defrauded through their school can have their federal student loan debt completely wiped away. This covers trade schools along with traditional colleges. The Closed School Discharge Program also helps those who saw their school close to do away with their debt load.
Those with a Job in Public Service May not Owe for their Education
If someone has a job in public service, they may find that their student debt is significantly reduced or totally erased through the Public Service Loan Forgiveness program. This program is set to start in October of 2022 and will help around half a million students to earn extra time to pay off their debts, while completely doing away with the debts of other public service workers.
Disabled Student Loan Borrowers Can Get Help
If you were disabled after earning your degree and can’t gain meaningful employment now, then the Total and Permanent Disability discharge program may be able to help. This program offers $5.8 billion worth of discharges for those who have been deemed disabled and are receiving Social Security Disability benefits.
Not Everyone Was Helped
It’s no surprise not every student was provided help with the new moves by the Biden administration. While there is hope that more aid will be coming in the future, these are the people currently dealing with their debt load with no help insight:
Parents Who Chose a Parent PLUS Loan
Some parents took out federal loans to help get their kids through college, but quickly discovered that the Parent PLUS loans happen to come with some of the highest interest rates. Despite drowning many individuals with debts and forcing numerous families to put off retirement plans to pay off student loan debt, they have received no aid so far.
Former Students who Have Low-Income
While those who struggle with low income probably foresaw getting a higher education as a chance for a better life, student loans may have actually worsened their financial situation. The COVID federal student loan payment pause has helped, but it is set to come to an end on January 31st and those who are struggling financially are wondering what to do next. Unfortunately, no particular government aid has been set in place to help low-income individuals.
Those Who Opted for a Private Student Loan
The president only has the ability to make changes to federal student loans, so he is unable to do anything to help those who took out a private student loan. And, apart from an act of Congress, it appears private student borrowers have no real hope in sight from federal aid.
Is More Aid Coming Soon?
While the government continues to offer some hope of expanded aid for those with student loans, the harsh reality remains that many individuals are without help and overwhelmed with mounting bills. Thankfully, there are options! Bankruptcy is one way that individuals can do away with or reduce debt, making it possible to get out of financial strains.
How Can Bankruptcy Help?
Private student loans are one category where debt relief aid is not available, but they’re sometimes able to be discharged in bankruptcy. While student loans are one type of loan that bankruptcy can’t typically help with, if your loan was for more than simply paying for specific school expenses, then you might be able to categorize it as an unsecured loan and have it erased. Additionally, typically graduates in order to pay their monthly student loan payments have to take on debt in other areas of their life – like credit cards – and those debts can also be discharged in bankruptcy.
What Makes it an Unsecured Loan?
Student loans are put specifically in place to cover tuition, fees, some living expenses such as rent and transportation, books, school supplies, and some personal expenses. If you used any of your money for things not included in this list – like a spring break vacation, wedding, or internship subsidy – then you likely made your student loan an unsecured debt that can be affected by bankruptcy.
How Bankruptcy Works
A Chapter 13 bankruptcy would work to finance your debts into more manageable payments and ultimately wipes away all unsecured debts once the set repayment time has passed. Meanwhile, a Chapter 7 bankruptcy would do away with all your unsecured loans including those private loans used for education after liquidating some of your more expensive possessions.
Hope for Everyone
Not everyone is lucky enough to have a student loan that can fall in the category of unsecured debt; however, bankruptcy still offers hope! Through a bankruptcy, you can expect to lower all your bills and payments, going so far as to erase them completely through a Chapter 7. Once your other debts are eliminated or put into more manageable payments, you can start working to chip away at your student loans, putting the money you earn toward actually paying off what you owe.
Is Bankruptcy Right for You?
Choosing to file for bankruptcy is a big decision and a bankruptcy lawyer will be able to best advise you. Our team of expert bankruptcy attorneys will be happy to look at your case and help you decide if bankruptcy can do away with your student loan debts. While the government may not help you to get out of financial troubles, you can take control and start working to get rid of the debt that feels so overwhelming.