It’s a story that is all-too-common in today’s financial climate. Students head off to college with big aspirations, taking on massive student debt they believe they will be able to pay off with the jobs they get with their degrees. Once they graduate, however, they find that they job market is slow at best, forcing them to get jobs that barely cover the cost of living, much less student loans. What’s worse, filing for bankruptcy is rarely an option for student debt relief. As such, more than 25,000 Pennsylvania graduates have defaulted on their student loans.
It is not totally the system’s fault, however. When students graduate, they are given six months to find a job and begin saving money before the bills come in. Some graduates forget to start paying their debt when the time comes, or ignore it altogether. In fact, about one out of every seven graduates won’t or can’t pay back their loans, and after nine months, those loans go into default.
When graduates default, the federal banks take action against them. This means wage garnishment, withholding tax returns and other methods, which can be devastating on ex-students who are already facing tough financial challenges. And Pennsylvania graduates are hit especially hard; the state has some of the most expensive tuitions in the nation. As such, Pennsylvania is eighth in the nation for the most defaulted student loans.
While filing for bankruptcy to eliminate student debt is rare, it does happen. Further, there are other actions one can take to find debt relief. An experienced bankruptcy attorney may be able to provide more information and counsel.
Source: The Daily Item, “Banking on their future: 26,000 ex-students in Pennsylvania now in default,” John Finnerty, August 24, 2015