Five Facts to Know About Student Loans Before You Borrow

American students and graduates now owe an estimated $1 trillion in student loan debt. On average, recent graduates leave school with $22,900 in outstanding loans. With tuition costs rising, this number is likely only to increase.

Before you or a family member borrows money for school, be sure to know these basic facts about student loans.

• Student loans are not dischargeable through bankruptcy. Only in very rare cases can bankruptcy discharge student loan debt. To discharge the loans, you must prove that excluding the loans from bankruptcy would impose an extreme undue hardship. Generally, this standard is only met in the case of total and permanent disability.
• Different types of repayment plans are available. For federal loans, different repayment plans are available based on your income, type of loan and financial hardship.
• Special provisions apply to military veterans and service members. Active-duty service members are eligible for lower interest rates and loan forgiveness programs. The Post-9/11 GI Bill provides benefits to service members and veterans returning to school.
• Federal loans usually offer lower interest rates and more flexible repayment options compared to private loans. Although introductory rates on private loans may be lower, the rates usually rise. Federal loans offer a fixed rate and income-based repayment options.
• Some loans require a credit check. Most private loans and federal PLUS loans require a credit check, while other federal loans do not.

Taking out loans for school is a major financial decision. You should compare loans and consider your potential future income before borrowing. If you already borrowed student loans and feel overwhelmed by your debt, you still have options. An experienced Pennsylvania debt relief attorney can offer you advice on your financial situation.

By Harold Shepley | Published July 2, 2013 | Posted in Debt, Student Loans | Tagged credit check requirement, know about student loans, lower interest rate, not dischargeable through bankruptcy, repayment plans | Leave a comment