I recently read a Federal Reserve study indicating that 89% of millennials do plan to purchase a home at some point in the future. However, 48% have not been able to save anything towards this goal. According to the study, the problem is student loan debt.
Interestingly, the study revealed about 23% of millennials fortunate enough to have no student loan debt could save enough for a down payment over the next five years. But when student loan debt is in the picture, that figure drops to around 12%. For millennials without a college degree, the figure drops even further to about 6%.
Student Loan Debt Seems to Exponentially Increase
According to the Federal Reserve Bank of New York, the amount of student loan debt has increased by 170% over the past ten years.
The average student loan borrower now has $34,000.00 in student loan debt.
The average monthly student loan payment in 2016 was $393.00.
This makes it difficult for many student loan borrowers to save for a down payment on a home. Some millennials say they plan to turn to family for financial assistance in obtaining financing a home.
Coping with student loan debt can be daunting; but, it is not impossible. The absolute worse thing a student borrower can do is to ignore the problem. This leads to student loan debt default and makes the problem all the harder to resolve.
If you are facing a student debt crisis, there’s no need to panic. For borrowers with federally backed student loans, there are a variety of re-payment options based upon the borrower’s ability to pay. The website of the U. S. Department of Education can be a valuable resource tool to discover repayment options.
Options for Those that Can’t Pay Their Student Loan Debt
If a student borrower temporarily has no present ability to pay, a deferment or forbearance may be a good option. If a student borrower can pay something, an income-based repayment program may be the best solution. Under certain circumstances, a student borrower may be eligible for loan forgiveness or discharge. All these options can be explored at ed.gov.
For the student borrower facing a more severe situation, it may be time to consult with a debt relief attorney. Generally, student loan debt cannot be “discharged” in bankruptcy unless a borrower can establish “undue hardship” preventing repayment of the loan.
In most instances, establishing “undue hardship” is very difficult and may be available to relatively few student borrowers. But, even if “undue hardship” cannot be established in any given case, a Chapter 7 bankruptcy may allow other debts to be eliminated to clear the way to repay student loans.
Or, perhaps a student borrower can pay most or all the outstanding student loan debt through a Chapter 13 debt consolidation plan. A student borrower should keep in mind that a Chapter 7 or Chapter 13 bankruptcy case will damage their credit rating at least in the short term. This means that a period will have to pass after the borrower emerges from a bankruptcy case before eligibility to obtain mortgage financing is restored. Still, the only path to homeownership may require a short-term setback for a long-term gain.
Contact Us Today for Student Loan Debt Help
So, if you are planning to buy a home in the future but you are currently burdened by too much student debt, explore your options, take charge, get some advice when needed, and work towards your goal. Contact one of our attorneys today to see if bankruptcy is a good option for you to explore.
Ed Woods is the Managing Attorney of several of the Bond & Botes Law Offices throughout Mississippi. He holds a Bachelor of Science from the University of Southern Mississippi, and a Juris Doctorate from Mississippi College School of Law. Ed puts his extensive knowledge of bankruptcy law to use defending consumers from debt collection lawsuits and more. Read his full bio here.