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Student loan exactions, Part 2: a proposal for repayment changes

On Behalf of | Apr 4, 2014 | Chapter 7 Bankruptcy

Our immediately preceding post (please see our March 28 entry) discussed a topic that we know is a concern for many Florida residents and other people across the country.

Namely, that is student loan debt, an onus for millions of Americans who necessarily piled up loan obligations while pursuing education following their high school years.

That debt — exorbitant for many people, sometimes at six-figure levels — straps individuals and families across the country who simply cannot deal with the mortgage-like monthly exactions placed upon them that extend for years and sometimes decades. Some people lose their homes because of the staggering student loan obligations they face. Others need to radically modify their living circumstances. Some file for bankruptcy.

As we noted in our prior post, a group of organizations have banded together to author a proposal for revamping the traditional repayment system for student debt. They believe that material modifications are urgently needed to simplify the existing scheme and to increase borrowers’ participation through new and improved alternatives. Following are some of the central suggestions put forward in the proposal.

  • Income-based repayment rather than a set monthly figure
  • Eventual forgiveness of any remaining balance after a stated period
  • Automatic deductions through paychecks

Options are currently on the table addressing the payment rate that is most fair and viable. One plan suggests that borrowers kick in 18 percent of what they earn above a $25,000 yearly threshold. Another would require a 10 percent payment commencing after a borrower’s salary hits $10,000 in a year.

Although the details may seem a bit tricky, states a recent Bloomberg article discussing the scheme, a writer of that publication notes that the proposal is “far simpler than the current situation.”

High student debt levels can result in tremendous financial challenges for many borrowers, especially when they are coupled with other types of debt, such as medical bills and credit card obligations.

When debt levels seem insurmountable, many people find that candid consultation with a proven bankruptcy attorney with a demonstrated record of helping clients implement debt relief solutions can help them turn the corner on their problems.

Source: Bloomberg Businessweek, “A proposal to radically simplify student loan payments,” Karen Weise, March 24, 2014


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