Millions of American students are saddled with enormous student loan debt. Statistics show 69% of 2018 college graduates left school with an average of $29,800 in federal and private loan debt. In addition, 14% of their parents averaged nearly $35,600 in federal loans.

Forty-five million Americans owe more than $1.5 trillion in student loans. That’s half a billion more than the total credit card debt in the United States. Almost 12% of all students owing money are at least 90 days behind in their loan payments.

Filing for bankruptcy over student loan debt is challenging

Discharging student loan debt through bankruptcy is not impossible, but it is a complicated process where the person filing must prove the debt creates an “undue hardship.” A Villanova University researcher says many consider the standard burdensome and applied unevenly. After reviewing student loan bankruptcy cases, researchers found 40% of those filing were successful and those who were differed in three ways:

  • They are less likely to be employed
  • They are more likely to have a serious medical condition
  • Their incomes declined from the year before they filed for bankruptcy

Exploring other possibilities

The Villanova research concludes the most glaring statistic is that only 0.1% of those filing for bankruptcy even attempt to have their student loan debt discharged. Financial website Credit Karma says there are other options more commonly pursued for student loan debt relief:

  • Payment plan driven by income: Income-driven repayment (IDR) is offered for federal student loans and can extend the borrower’s debt for 20 to 25 years while payments are capped as a percentage of your income.
  • Deferment or forbearance: If you are going through a temporary financial crisis, you can postpone payments. Be aware that interest charges can continue to accrue in some cases.
  • Discharge due to disability: Some disabled people can get their loans discharged without having to file for bankruptcy.

Talk to bankruptcy specialists to assess your needs

Working with an experienced attorney here in Arkansas can help you identify whether filing for bankruptcy is your best option for discharging your debts. Every case is different, and your attorney’s mission is to give you the best advice possible to regain your financial freedom.