One of the most important things that all potential lendees must understand is that students loans are NOT free money. They are loans that must be repaid in full, including all interest that has accrued. This is regardless of whether or not you earn your degree! If you fail out of college and end up working a menial job you will still need to pay back your loans. Payment must be completed regardless of quality of education, satisfaction with the university or ability to gain employment.
With some types of debt there are ways to default on loans, file for bankruptcy and be forgiven. This is absolutely not the case with student loans. According to Bankruptcy Code Section 523(a)(8), only under "undue hardship" would bankruptcy be granted. This of course varies per jurisdiction, however, you should know that student loans are next to impossible to be discharged. Changes to the bankruptcy code in 1998 and again in 2005 have further strengthened loan collectors abilities to collect their money. For the most part, Federal students loans can only be forgiven for total and permanent disability. Private loans, on the other hand, are rarely excused even for traumatic events.
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