Massachusetts Students Graduating with Debt Not Dischargeable in Personal Bankruptcy – Ideas for Dealing with Student Loans

While we can assist our personal bankruptcy clients in discharging much of their consumer debt, there are some debts that are not dischargeable. Among those are student loans guaranteed by the federal government. There are numerous programs that can help.

Graduating students should be aware of the following: first, graduate school results in a deferral and usually qualifies you for a more selective job. Second, work in a public service qualifies for deferral. Ten years of public service results in full loan forgiveness, with certain restrictions. Third, working in an underserved area can qualify you for forgiveness. Fourth, working in a national service organization such as AmeriCorp and Vista qualifies you for up to $5,350 in “awards.” The Peace Corps also allows for a 70% cancellation of the federal Perkins loans.
 
Finally, graduating students with a high debt to income ratio can ask to have their debt payments reduced. Payments under this program will cease after 25 years; there is a proposal by the current Administration to reduce this to 20 years!