Bankruptcy and Student Loans

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.

Should I fill out a FAFSA?

The best place to start for most students looking for ways to supplement their college tuition is the Free Application for Federal Student Aid. I need to highlight that this is a FREE service provided by our Federal government. There is currently an organization that will gladly help you fill out your free application for approximately 79.99 dollars. This organization uses the URL: www.fafsa.com. Do not waste your money with this group, as our government has done a very decent job with the application process and there is no need to pay anyone.

The FAFSA takes around an hour to fill out and will require you to input data concerning your family size, assets, number of children in college and income from the previous year. This data is plugged into a formula and the Expected Family Contribution or EFC is computed. This is the dollar amount that the Federal Government determines is manageable for your family to pay for your college tuition. Each year you attend college you will need to re-submit your FASFA with the corresponding year's tax records. This will help determine a new EFC which can be higher or lower as income and family situations change.

To begin a FAFSA application please visit the following website:
http://www.fafsa.ed.gov/

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How do I pay for College?

If you are reading this post, it probably means that you have made one of the most important decisions of your life; obtaining a college degree. College graduates make on average over a million dollars more over a life time than those with only a high school diploma. The college experience will be the best four years of your life, and I hope that you appreciate the time that you spend there more than I did. The time will fly by faster that you can fathom and before you know it you will be entering the work force as a young professional.

Now that you know that you are going to attend a college or university, you are going to have to figure out how you are going to pay for it. Some of you may be incredibly fortunate and have a trust fund in your name or parents who can afford to pay for your tuition. A majority of college students, however, need to take out at least a moderate sum to help offset the rising price of tuition.

The purpose of this site will be to explore the various way to supplement the cost of a college diploma. There are many factors to be considered when borrowing money, and I hope to provide advice so that you will make well informed decisions.