Student Loan Forgiveness – A Complete Guide
Bankruptcy Does NOT Equal Student Loan Forgiveness
In the overwhelming majority of cases (yours is probably no exception), student debt is debt that cannot be forgiven through bankruptcy. Please read that again if it hasn’t sunk it yet and fully absorb it, because student debt is one of the only forms of debt that is almost impossible to wipe clean through the bankruptcy process. You cannot have your student loan forgiven just by applying for bankruptcy.
Taking on student loans is one of the most serious things you will do in life, it is highly necessary, but it is also highly dangerous for many witless individuals. If you are banking on bankruptcy or student loan forgiveness to help you avoid repayment, think again.
You can start a business and run it into the ground and walk away through bankruptcy, you can walk away from your house, you can run up $50,000 in credit card debt, and, at least in theory and sometimes in practice, walk away from it with a clean slate. This is not the case with student debt. This makes student loan debt the most important debt that you will take on in your life, if you’re young you may not realize that but it is the truth of the matter, so please take heed of these warnings.
This is debt that will literally follow you to your grave. Filing Chapter 7 or Chapter 13 bankruptcy in order to get rid of student loan debts for good is almost impossible. Student loan forgiveness programs are very strict and difficult to gain access to. It would take an extreme case in order to get the debt removed, it can happen but the debility must be provable in a court of law and it must be proved beyond a shadow of a doubt that the debility will extend indefinitely into the future; this is very difficult to prove in almost every single instance.
There are three criteria necessary in which one might attempt to acquire student loan forgiveness via bankruptcy, however the odds of getting in front of judge and having them rule in your favor is extremely unlikely.
There would have to be very extreme and debilitating circumstances, and of course, if this is the case in your situation you would have to speak to an excellent attorney (we are not giving legal advice here), and even then it’s likely the debt would not be expunged. This is not to scare you, but just to impress upon you the gravity of the situation, don’t take this stuff lightly. Obtaining this student debt forgiveness is extremely difficult, if not impossible.
The criteria that need to be met for student debt forgiveness in bankruptcy are that you’re living in extreme poverty, that you have a situation in which it’s unlikely that you would be able to work in the future and begin to pay back the loans, and you must have proof that you’ve tried hard to pay back the loans over a period of time. Proof not words.
You can’t just take on this debt and walk away from it, as laws are written in such a way that bankruptcy is not usually going to cut it. You will not be able to have your student loans forgiven through bankruptcy.
Which brings us to the heart of the matter when it comes to student loan debt in this country, and that is choosing the right career and not getting sucked under by making a big mistake in your chosen career.
The reality of the situation when it comes to debt forgiveness programs is there are very few options and the options that do exist will not be for everyone, the most important thing is to take this debt seriously from the start. There are not, we repeat, not, a whole lot of options for real debt forgiveness, so the most important thing to remember is to do things right from the start.
Choosing A Career Path With Sustainability Is Of The Utmost Importance
There is a lot to consider when taking out loans for school, the first and probably most important question would be – can you fairly easily get a good job in your chosen field after graduation? Does that job pay you a salary in which you will be able to live comfortably (for you) and pay back all your loans at the same time? Can you answer these questions truthfully and fully, don’t fool yourself, take into account your lifestyle and how you want to live in the future, you’re only fooling yourself and it will backfire on you.
You absolutely must take this into account when you choose a college program. Going to college might have been about getting educated in the past, but these days the cost is just too high. Choosing the right program is all about being smart and heading into the right fields.
Gone are the days when you went to college to become a well-rounded individual, and to learn about the world; that can be done on your own time. You can read all the books you want on all the subjects that you want in your spare time, college is all about your career path. In a way, it’s a shame, but that is the reality of the world today.
This modern day distinction is about financial reality, and that is literally the easy way, the hard way is thinking that you can float through school with some general degree from an average school and there will be some great job waiting for you at the end of it. This may have been the case thirty years ago, but it is not the reality these days.
Competition is fierce and the labor market is tight and there is no sign that this is going to turn around any time soon. The days of abundant and easy jobs for all college graduates in the United States is over and it’s not coming back, no matter whom you vote for in elections or how well the US economy does in the future. So again, it’s important to take things seriously when taking on these debts, you just aren’t assured of a good job anymore with a college degree. In some cases taking on debt and going to college is a horrible risk and not a good idea, but we will come to that in a minute. One option is to choose a major or career that will help you become eligible for student loan forgiveness.
It’s extremely important to pick a school and a college degree program for the pay off and for the career and not necessarily for the education. Educate yourself on your own time, and you’ll be a whole lot happier and more financially sound at the end of the day. You have plenty of time in your spare time to educate yourself broadly, treat college like a job and you’ll happy as a clam down the road.
You have to make college pay off financially, especially when you’re taking on a lot of debt. If you have someone else paying the bills and you’re not going to have debts at the end of your college career then this doesn’t apply to you, however, how many people does that really include these days?
With the skyrocketing costs of college educations the majority of us have to take out loans and some of us have to take out a very large amount of loans to make it through. The costs aren’t going down anytime soon either; in fact education is one of the fastest growing costs anywhere on the planet. This is why student loan forgiveness was created in the first place.
College is an investment in your financial future. And it is a down payment that will usually pay off huge. Most of us have heard some of the numbers and they are simply staggering. The further along we go in our education the more money we will, in general, make and the more money we will have for our retirement. Yes, you should be thinking that long term when thinking about taking on student loan debts, if you don’t you could be very sorry.
The average college graduate will have roughly one million dollars more in assets at retirement than the average high school graduate. So a $100,000 investment in loans pays off at a 10 to 1 ROI, not bad, you won’t find a return on investment this good many other places, however, you need to be smart about it.
In case you’re wondering the interest alone on one million dollars would probably be somewhere in the neighborhood of $60,000 or more per year, at a conservative estimate. Can most people live on $60,000 a year? Sure they can. And they wouldn’t even be eating into the principle at all. Can the average high school graduate say that? In general, no, they cannot. In fact, the average person at age 55 has roughly $70,000 in assets, this is the average across the entire economic landscape, most people at that age will have virtually nothing saved from retirement. Again, don’t be scared to the point of not taking out loans, if you plan correctly everything will turn out great.
Investing in your education is extremely important, but you have to be practical and you have to do it right. Consider occupations that qualify for student loan forgiveness.
The biggest problem is that many college students are delusional about their job prospects of their career path when they chose a college and a degree program. How many high paying jobs do you think there are in the film industry or the fashion industry? That is correct, these are generally pipe dreams that don’t pay off. The point here it to only invest your dollars in things that are likely to pay off. Following your dreams is important, always follow your dreams, but do that on your own time.
Year after year thousands of people get suckered into dreams that will be left unfulfilled, and people need to stop falling for this. That doesn’t mean you shouldn’t follow your dreams, far from it, but it pays to be prepared and to have a Plan B as well as to know when to give up on a career path. Many won’t do this and will fall into a very bad debt problem because of it. Remember, you don’t have a lot of options when it comes to forgiveness, and you probably won’t like what you find, so it pays to be smart from the start.
Unless you’re exceptional in a niche field the odds of getting to the top of your field in certain industries is extremely difficult. And what happens when you’ve racked up $100,000 in student loan debt and you end up working at Wal-Mart? Then things start to look grim, you have to move in with family or roommates and your life can really start to be a drag. So the moral of the story is to follow you dreams, but also have a practical career path that you’re moving towards at the same time. Don’t fall for the “I’m going to beat the odds and make it” trap without a Plan B.
When things start to look grim many will start looking into student loan debt forgiveness programs. And as was stated earlier, yes, they do exist, however many will not like what they find. We will cover this in much great detail a little later. It is an important part of the picture for students, but the main point is that forgiveness can be difficult and you very well may not like your options.
Changing Career Paths And Taking On More Debt In Order To Get Into A Stable Field
In addition, and this may apply to you, if you went down the wrong road and tried to enter into a career in which there aren’t a lot of jobs or they aren’t paying very well, it might prove a good idea to change careers and even take on more student loan debt, as long as you’re very confident that upon graduation you can secure a much higher paying job. In some cases more debt is a great bet, in other situations more debt is a disaster, it’s all about the probable pay off at the end.
Student loan debt is deferred while you are in school, so some cases this is going to be a good move for you. Remember, it’s never to late to start over, and also remember to start moving into a career that is stable. Staring over and going into a field like the medical field could very well save you from dire financial straits, always go where the jobs are. You can always start a business on the side which involves your passion; if you’re extremely talented then it will take off for you. Again, it’s about having a real Plan B, your parents or mentors or friends keep telling you that, and well, it’s true, and it pays to pay attention to people with real world life experience.
Let’s take this opportunity to call out a few job sectors that have a good future in store for them, we safely name virtually anything the medical field as well as many careers in technology. On the other hand careers in graphic design may be on shaky ground because of an increase in overseas outsourcing. Besides these, make sure to check out careers that allow for you to enter into student debt forgiveness programs.
Why do medical and tech have such a bright future? For medical jobs it’s the simply fact of a demographic switch that is going on right now, at the population aged we need more and more people to take care of the older people. This demographic shift is just starting to happen and the numbers show that it will continue to rise over time. So, anything from a pharmacy technician, to a EMT or nursing home care position, are all very safe bets. Within the medical field there are many different jobs, and almost everyone will find something appealing, so always base your career path on solid ground.
Other career paths that we have mentioned which suck a lot of people in but tend to not produce would be careers in the entertainment industry, getting a plum job in the entertainment industry is like playing football in the NFL, it just isn’t going to happen for most people, and yet each year there people wracking up enormous debt at film school and at fashion schools.
The best advice for these individuals is, if you’re a genius at your craft, go off and start your own thing in your spare time and just go for it, forget about dumping $10,000’s of dollars into schooling. Now this really only applies to those that need to borrow the money, of course there will be those whose parents have pay the bills, for them, it’s really not an issue. Others may go to college knowing that they will eventually have their student loans forgiven if they enter into specific jobs or programs.
So please, even if you are in debt and looking for ways to obtain debt forgiveness right now, consider going back to school and changing directions, it may be the best move that you will make in your career and in your financial life. There are ways to debt forgiveness, but they are truly not for everyone.
Therefore, if you’re considering going back to school, it pays to plan your career path by the numbers and that means going where the jobs are and where the jobs will be in the future. If you chose a career path with decreasing jobs or one that is withering away you chances of obtaining a stable career will diminish. And yet your student debt is not going away.
Is Student Debt a Good Risk?
Which brings us back to square one, and the question of taking on more student debt. The fact is the student debt is one of the biggest problems in our modern society, and no one should be taking this debt on lightly.
On the other hand, yes, we need to invest in our education in order to get ahead in the world. So it is a double-edged sword, it is extremely dangerous, but it is that very danger that will pay off in the end as well. If you have a good head on your shoulders and take your responsibilities seriously taking on a lot of student debt will usually be an incredibly fantastic investment, as was pointed out with data earlier.
It is a risk that generally pays off, there’s no doubt about that. For most, it is a healthy risk, and we should look at it this way. You can back up this gamble by identifying a possible way to acquire student loan forgiveness. Of course, that doesn’t mean that we should be wasteful with our loan money, we will come to that a little later; there are ways to cut how much we borrow as well as to save while we are in school. We should all be thinking about these things.
The professions which generally end up paying off with enormous salaries are the career paths where the student will incur the most debt; the two most obvious careers are in the legal and medical fields. There are hundreds of starving law students and resident doctors around that are just scratching by right now, but they will be multi-millionaires by the time they retire. Other choose to go into careers that pay less but allow them to have their student loans forgiven.
The average doctor will probably accrue something the neighborhood of $250,000 or more of student debt attending many years of advanced schooling. However, this is a great risk because in may cases an MD can make that in salary relatively early in their careers. So, student debt isn’t bad, it is a necessary evil in the world.
If you didn’t consider the employment picture, or for some reason you have a lot of student loan debt right now and you’re wondering, is there such thing as student loan forgiveness? The simple answer, is that yes there are options, the problem is do you want to go down that road?
Because you’re not going to simply get of easily, and shed the debt without taking actions you may not want to take.
Student Loan Forgiveness – The Reality Of The Situation
Generally, in order to achieve real student loan forgiveness one must enter into a field in which the jobs are giving back to the community at large, that generally means entering into a non-profit career, working for the government in some capacity, or going into teaching (which has specific requirements for forgiveness)
The biggest pitfall to these types of programs is the paperwork and keeping up with the paperwork, you need to read everything extremely carefully and you need to keep up with the paperwork as well, and this means down to the letter, everything must be picture perfect because the government doesn’t want to wipe this debt out, they made it as difficult as they can.
If you do not keep up with the paperwork process it is very likely that you will not have the remainder of your debt removed. And also there is a stipulation that you make 120 monthly payments (these payments do not have to be consecutive), in order to qualify for this program.
If you don’t have 120 payments or and do not work for a public service governmental agency or true non-profit organization (this comes down to how this organization is taxed) you simply will not qualify for debt forgiveness. There is no other way, unless you go into teaching.
This probably isn’t what many people wanted to hear, but this is the law. So, there really are not a whole lot of options for most people, as the debt is almost impossible to be forgiven without heading down this path as was discussed earlier when we went through the rules on bankruptcy laws.
Teacher student debts can be forgiven by teaching in specific types of schools for a period of time, we don’t mean in some easy school either, you must enter into a school in a low-income neighborhood, these are some of the most stressful and frustrating jobs that one can get.
For certain personalities these jobs are extremely rewarding, to be certain, but for a sheltered young girl who wanted to teach pre-school to work in the inner city could be a nightmare scenario, and this needs to be well thought out in advance, take stock of yourself and ask yourself the hard questions before you start down this pathway.
In these types of environment the teachers generally do not get much respect, and controlling the classroom can be a very difficult chore. In addition there are often fights, over which you won’t have much power to resolve.
A lot of people who going into teaching in these areas find that it’s basically a babysitting service with very little learning going on. Unless you are the type of person who really cares about these children and is willing to put up with a bureaucratic system that is littered with red tape, this may not be for you.
However, this is the only path for teacher student loan forgiveness, your other option is to simply pay down your debts on your debt schedule, as there is no other option.
For many it makes more sense to simply make the monthly payments and have a classroom that they can actually control, and to have parents that actually care about their child’s education and will work with the teacher.
Working in a low-income area comes with stresses that are not for everyone. You have to think about the overall quality of life that you want and weigh it against possible debt reduction. For many, they would rather just pay the debt and have a much less stressful work life, and we can’t blame them either. Again, teachers looking for student loan forgiveness need to take a good long, hard look at themselves in the mirror. If you can’t make the call yourself, talk with people that have actually done it, or ask family members and close friends for advice.
If you do find yourself unable to pay off your student loans after graduation, there are volunteer programs which you may be able to get accepted into which will pay down some of your debts. The most famous of these is probably the Peace Corps.
Joining the Peace Corps is extremely rewarding, and you can knock down a lot of that debt while also seeing other parts of the world. This is a great option of student debt forgiveness for people who crave adventure and giving back to the community. All student loan forgiveness options are generally put into place to encourage people to go into careers which give back to the community, again, this is the only way forward that the laws allow at this time, and there aren’t any changes in sight either.
Student debt can be deferred, most notably when you graduate from school you do not have to start paying down your student loans for six months. If you chose a career path where there are plenty of jobs, it should be no trouble finding a job within this time period, and you’ll likely be able to start paying off those loans and be fine. Keep in mind that this isn't the same thing as student loan forgiveness.
If however you chose wrongly, and you haven’t found a job you have several options, some of them you probably won’t like, the first of which might be moving back home and taking a lower wage job so that you can meet all of your obligations. It’s not fun, but at least you won’t be in default, you don’t ever want to be in the spot.
Another option is more school. If you continue your schooling you can often defer your student loans while you are attending school. However there is a problem here as well because you will probably have to take on even more student loans. It’s very easy to wrack up unsustainable amounts of debt in this way. So, the first rule of student debt is chose the right career path, and also to try to take out as little loans as possible. Just because you continue your education, though, doesn't make you any more likely to have your student loans forgiven.
Ways To Not Incur So Much Student Loan Debt
How might one get away with taking out fewer loans?
For undergraduate students two ideas come to mind right away, the first would be attend community college for the first two years and then transferring into a four-year university for your last two years. Community colleges are extremely affordable, and you could even take a part time job in order to pay down your costs. Working off the debts as you go to a more affordable school is the best way forward, and for the mature student who realizes how important paying down debt really is this will put them so far ahead of everyone else.
Taking part time work is a great way to start chipping away at those student loans before you graduate, you can set aside money so that when you do graduate you have a bit of a cushion. It’s all about putting you in the best possible position to succeed. Even just chipping away slowly at your debts and saving just a little bit of money is important, because student loan debts tend to be stretched out over long periods of time, and when you have debt like this the overall money that you pay into the debt with be more in the long haul.
You want to pay down this debt as fast as possible, and these are great ways to do it.
In conclusion, student loan debt is the most important debt you will have take on, however it is a necessary evil. Trying to wipe it out through tradition means such as bankruptcy is nearly impossible, however there are strict requirements for certain limited programs which can wipe out a portion of debt. Student loan forgiveness is one option you have, but there are many stipulations and requirements to be eligible.
The sad fact about these student loan forgiveness programs is they are somewhat difficult to comply with, and also force people into jobs they make not like. That is the long and short of the debt picture in America today.