During the last 10 years, we have witnessed a constant spike in the cost of education. Ever rising education costs have forced students to take huge debts in order to pay their college fees. In a recent report tabled by the Federal Reserve Bank of New York, it was stated that soaring figures of student debts have contributed in a major way to the increased US Household Debt.
With high interest rates and short deadlines, debt saddled students and fresh college graduates are desperate to try anything that can save them from the clutches of their creditors.
For most of the fresh graduates, Student Debt Forgiveness is like a dream come true. But beware, not everyone is eligible for Student Debt Forgiveness and even those who are eligible need to pay proper attention as the window of opportunity often closes fast.
Student Debt Forgiveness:
The prospect of Student Debt Forgiveness can be realized in one of the two ways. The first is by joining a public service department and the second is by opting for an income based contingent payment plan. It must be noted that irrespective of the option you choose, it will take a long period of time to completely repay the entire debt.
Both of the above mentioned options have their own limitations, eligibility criteria and requirements and none of them is either easy or quick. But still desperate graduates have taken up these options in hopes of getting rid of their debts. According to a report presented by the Department of Education, there are currently more than 2 million Americans who have enrolled under income based repayment plans. One reason for such a huge no of people opting for these options is that it presents a two pronged chance- the possibility of low monthly premiums and the chance of debt forgiveness in the future.
Drawbacks of Student Debt Forgiveness:
We have seen cases where people have misused the provisions of the Mortgage Forgiveness and Debt Relief Act. In the past, there have been many cases where people took more debt than they can actually afford to repay. Since the Mortgage Forgiveness and Debt Relief Act allowed for Debt Forgiveness, they were never actually worried about repaying their debts. Some people have started to exploit the similar provisions of Student Debt Forgiveness. If this practice of mindless borrowing is allowed to continue then it can affect the credit industry in a negative manner.
There are other ways too in which Student Debt Forgiveness can be misused. For example, colleges might start charging exorbitantly in order to collect as much money as possible. Even though this would benefit the college and won’t harm the students if the debt is forgiven, but it will certainly have a negative impact on the creditor’s business.
But the above mentioned points must not imply that the practice of Student Debt Forgiveness can be discontinued. What must be done is that Student Debt Forgiveness must be regulated and loans must be awarded according to the course and college taken up by the student.
Paul is an associate at National Debt Relief, a BBB accredited business that has helped thousands of Americans resolve credit card debt problems. Consumers can take advantage of a free debt counseling session to discover their options for debt relief with no obligation.