Student Debt

Thu, Aug 30, 2012

Bankruptcy, Debt Mitigation

Student loan debt is getting a lot of play in the news lately. It is something that many consider unavoidable if they want to get a good-paying job. But those that graduate with crushing debt amounts are having a harder time paying it off these days, leaving America wondering if all that student debt is more of an unnecessary burden.

Florida’s schools recently had a tuition hike, with the University of Florida showing that a year of school will cost undergrad students about $16,000 on average (this accounts for things like housing as well as tuition). Community college students at schools like The State College of Florida are paying around $3000 (assuming that students live at home). If strictly comparing tuition costs, the state universities will cost about twice as much as the local state colleges. That seems reasonable when you consider that the cost of an Ivy League college is running about $50,000 a year or more according to CNN. It is obvious that choice of school will affect the end result of student debt.

SmithLaw thought we would briefly examine some of the different ways to pay for college and their long-term impact on debt.

Grants: There are many types of grants available to students that meet certain requirements. The best part about grants is that they usually do not need to be paid back. But, make sure you understand any type of grant you get—just ask some students in Jacksonville.

Scholarships: Offered by a myriad of institutions and groups. Scholarships come with all kinds of rules and regulations—check those details out carefully before accepting. Some might require certain majors, certain GPAs, etc. and you do not want to be on the hook for the money they give you if you do not meet their requirements later.

Loans: Offered by the government, as well as by private institutions. They must be paid back, but are easier to get than grants and scholarships.


The bottom line

We have seen that grants and scholarships often do not need to be paid back if you follow the rules. However, loans do. And what does that mean for your future? It means you need to be sure you will be able to pay back those loans.

Many are using loans for schooling that will lead to high-paying professions and they feel confident they will be able to pay them back. However, today’s economy has caused this type of assurance to fall flat for thousands of students. Many experts have opinions on how much you should feel comfortable borrowing. It all depends on current and future projections of income.

If you do find yourself over you head in loan debt, you might think you can just file bankruptcy and it will all go away. Not true. It is very hard to get away from student loan debt. Student loans can cause long-term issues–recently the government even started garnishing social security money due to seniors who owe student loan debt for themselves or loans they co-signed. So, bankruptcy might be able to discharge other debt and leave you more money to pay for student loans—but you will more than likely have to pay back that student loan.

U.S. News has some great resources for those getting ready to invest in college. There you will find tips on scholarships, loans, and money-saving tips. Florida has an Office of Student Financial Assistance, which can help students find many different types of loans and grants.

SmithLaw sees the hardships that excess debt can bring to families. Make sure you consider the consequences of borrowing too much in any debt you take on, and especially for student loan debt since most is not dischargeable even in bankruptcy.

Image: Some rights reserved by Philip Taylor PT (


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