Going to college can bring about a whirlwind of changes and new obligations – balancing academic deadlines, social obligations, new-found independence, and learning to live on a budget. It’s a lot to learn in a short period of time.
And it all comes at a hefty price tag for which millions of college students accrue significant debt to finance. Financing a college education is never easy, and the recession is making it even more difficult as parents and students see their budgets tighten.
So, what happens when you do everything right? You get into the right school, you find the right major, your grades are stellar, but mom or dad loses their job, or you graduate and don’t find a job? Like millions of other students, you fall behind on your student loans. The financial pressure could be enough to give you restless nights and stomach ulcers, but the Consumer Financial Protection Bureau (CFPB) says there are options.
According to the CFPB blog, more than 25% of all student loan borrowers are at least one monthly payment behind, and the number of defaulted student loans is in the millions. Graduates of public universities owe an average of 22,000, and add at least $8,000 to that for a private college education. One in eight student loan recipients have debts more than $50,000.
“The unemployment rate among young college graduates is more than twice the rate of their older counterparts,” CFPB bloggers Michael Pierce and Noah Kunin wrote. “Of those who have found work, more than a third of college graduates under age 25 have taken jobs that do not require a college degree. These young adults will feel the impact of graduating into a recession for a decade or more – it will take 10 to 15 years for their salaries to catch up to those who had the benefit of graduating into a healthy job market.”
As difficult as it may be to keep up with those payments, allowing them to fall into default can have serious consequences including penalties, damaged credit, and even going to court. While many other forms of debt can be wiped away by filing for bankruptcy, student loans are immune, and can stay with you your whole life. On the bright side, your wages cannot be garnished for student loans, and alternative payment plans for low income borrowers can be more affordable than you may have previously thought.
The CFPB and the U.S. Department of Education have teamed up to provide student loan borrowers who may have fallen behind on their loans with a number of resources: