We’ve all heard the saying that the best offense is good defense.  The same goes with student loans.  The best offense is to be defensive in applying for student loans.  Historically, students and parents borrowed money for a majority of college expenses. However, over the last two years, more parents and students are become more prudent in their choices regarding college to alleviate many of the problems with student loans.

According to an article in the Austin American Statesman, “A National Association for College Admission Counseling survey released this month showed 71 percent of high schools reported that more of their students are forgoing their “dream schools” than in previous years.”  More students are opting to stay at home (or closer to home) and attending cheaper, public universities for undergraduate studies.

Karen Copetas, the admissions director of Western Washington University, stated they have experienced a 28.5 percent increase in transfers, with many students citing money as a motivating factor.  Other parents are using reward programs like www.upromise.com to save up for future expenses.  Essentially, trying to avoid or reduce the amount of the initial debt is the best way to avoid issues going forward.

If you were not as proactive in keeping the debt down and are now struggling with the making payments, then you are not alone.  According to Anya Kamenetz, “only one in five student borrowers make all of their monthly payments on time in the first three years of repayment.”  Regardless of your situation, the same advice still applies:  be proactive.  Ignoring student loans will only cause more problems.  Most student loans will not be discharged in bankruptcy.  The rules are extremely difficult to qualify.  Only cases of extreme hardship will be granted discharge, and only after a showing of prior efforts to repay, among other factors.  When you hit a situation, like a job loss, which affects your ability to pay your student loans, visit your lender’s web site as a first start.  Many times they will post the options associated with your loan(s).  It is a good way to educate yourself on your choices before you talk to a live person.  The next step is to call and talk to a live person from your lending entity.  Let them know what your situation is and begin reviewing the options available to you.  You may be able to resolve some of your issues by simply talking with your lender.

If you do eventually get into a situation where student loans and other debts are crippling your financial health, contact a bankruptcy attorney to review other options.  Even though student loans are not easily dischargeable, you still need to disclose them to your bankruptcy attorney, as well as any other financial issues.  You may still be able to incorporate repayment of your student loans in your eventual repayment plan in bankruptcy.  Not sharing information with your attorney will only cause unexpected headaches and prevent him or her from effectively advising you on all of your options.  Bankruptcy can eliminate your other debts making it likely that you can then pay your student loans.

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