Each and every year across the world, students are encouraged and actually convinced to take on loans specifically designed for students so as to enable them complete their education smoothly without any difficulties. Needy students are mostly the ones to take up the loans, but also some of the able students take them so as to have some extra money on top of what their parents give them. Students are advised and convinced to embark on the loans with promises that they will be offered huge jobs with huge salaries immediately they finish school and graduate. However, upon graduation, the reality is very different from the promises. Most of the students are left t with huge amounts of debt and with minimal means and ability of repaying the loans. These debts end up lasting for years.
This is a very complex situation. Moreover, these loans are not discharged by the law of bankruptcy. However, there is an exemption to this rule .If an individual can prove that during the bankruptcy, the debt generated by the loan of the student will create a burden which is not necessary to the student (debtor) and the student will not at any time be able to repay the loan, mainly because of disability or factors past the control of the debtor, then such a loan is often discharged by bankruptcy.In a situation whereby, the borrower (student) finds it right to consult with a bankruptcy attorney, then they should go ahead. If the attorney promises the borrower that he or she can actually prepare suitable proceedings which can grant a relief then the borrower should take up the deal. It is however important to note that such proceedings are very difficult to win and only excellent attorneys succeed. So if the attorney tells you that the relief is not likely to be granted, one should always trust them, since they have got the experience and knowledge.
There is a new law which became operative in 2009 in the month of July. It is known as The College Cost Reduction Access Act and it is sort of a new way of getting relief. It contains certain clauses which attempt to enhance and improve the borrower’s ability to clear the after-education debt. It contains two plans. One is based on the borrower’s financial ability to repay the loan, while the other is based on the choice of career.
The one based on the income provides for different ways of repaying the loan and clearing the debt. It entails reducing the loan repayments so that the can be affordable to the students in their process of repayment. Note that the loan debt is still there and the interest still accrues but the rate of repayment is minimized thus making it student friendly and less painful to the students. This encourages loan repayments.
To qualify for this plan, the borrower requires to justify at least a hardship in finances. The rate of loan repayment is calculated at 15% of the discretionary income of an individual.
In this plan, there is forgiveness of the loan after either 10 years or 20 years dependent on the career of an individual.The second plan, gives room for borrowers to choose and opt for careers which are in the government and non-governmental fields while the loan still exists. The debt will be cut directly from their salaries and will be completed in a reasonable period of time.