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Why it's nearly impossible to discharge student loan debt

By now, most Pittsburgh residents have heard the scary statistics about student loan debt, and the threat it poses not just to the government, but to the people who are indebted to their student loan lenders. The total amount of student loan debt in the United States is roughly $1 trillion, which makes it the highest source of debt in the country.

The problem with student loan debt though is two-fold. First, incredibly high tuition rates have made these loans very expensive, and that locks up the funds of many borrowers when it comes time to pay the lenders back. In other words, they can't spend money in other areas because so much of their paycheck goes towards their student loans. That can leave borrowers in a very tight spot with other bills and expenses.

The other problem is that these loans are extremely difficult to discharge through bankruptcy. In fact, they're almost impossible to discharge in bankruptcy. On an annual basis, fewer than 1,000 people file for bankruptcy in an attempt to discharge student loan debt. The U.S. Department of Education backs these loans and, thus secures that debt -- and with their lawyers, they do everything in their power to ensure student loan debt must be paid back in full.

There are particularly egregious examples of this behavior. For example, lawyers asked a woman who tried to discharge $300,000 in student loan debt if she "planned" to have five kids (insinuating she could have better placed her funds, i.e. paying back the loan, if she had fewer kids). In another case, a man's attempt to discharge more than $100,000 in student debt was attacked because he was paying for medications. In another, lawyers questions a woman's career, saying she could get a better job to help pay off the debt.

In other words, there is no line they are unwilling to cross to make you pay your student debt.

So there are two things to learn from this. One, be smart about the loans you take out for your education. And two, if you do fall into serious debt as a result of student loans, a bankruptcy filing could help clear out other debts you have (such as credit card debt) to make it a little easier to pay off your student debt.

Source: Wall Street Journal, "5 Things Student Loan Lawyers Ask Borrowers Who File for Bankruptcy," Katy Stech, Jan. 6, 2014

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