Jacksonville Bankruptcy Lawyer Blog
One of the worst things I see happening to the youth of America is caused by their pursuit of education. From kindergarten through high school every student is instilled with the mantra, “Go to College” or the classic, “If I could go back in time I’d study harder.” Not to say that higher education is inherently bad, obviously, I chose to take that path myself. No, it’s not the education that causes a problem, it’s the loans taken out to pay for that education that’s a problem.
These loans wouldn’t be a problem if the income from the jobs that followed the loans was sufficient to pay the debts. The problem graduates are facing is that those jobs either don’t pay enough to make the monthly loan payments or the jobs don’t exist at all.
Fortunately, for those with federal loans there are programs like Income Based Repayment. Income Based Repayment or IBR, allows graduates in the private sector to pay a monthly payment based on a percentage of their gross income. After 25 years of payments, the remaining debt is discharged. Some people feel that this is unfair because those people signed into those debts with knowledge of the interest rates. There is truth in that, however most, if not all of those students did not anticipate the economic collapse of 2007.
Student loans are one of the only unsecured debts that remains almost always exempt from discharge. You can file bankruptcy again and again but the student loans will remain and if the loans are private (i.e. not government), there are few if any alternative repayment plans. Some people I’ve encountered owe $2,000 per month, which is more than they make. They can’t discharge the debt in bankruptcy and they can’t modify the loan terms. Their only alternative is to let the loan garnish their wages. In Florida, the maximum wage garnishment is 25% as long as the debtor makes less than a threshold amount. Couple that with degrees that offer no jobs and the student is basically a lifelong slave to the loan company, sometimes owing interest rates higher than they could ever pay.
Legislatures have discussed remedies for the issue, but no bills have passed Congress to address the issue. Hopefully, students will soon realize that some degrees are actually traps rather than paths to success or our legislature will be contending with an ever-growing population of lower class with little to no hope to pay their debts.