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Is Student Loan Debt Crushing Your Dreams?


The emphasis our culture places on higher education and the ever rising cost of the same, has resulted in a generation of young people living with a crippling debt burden exacerbated by the most anemic job market our country has faced since 1945.

Many of you opted for a college education because you were told how much more you could earn over your lifetime compared to others with no degree. What you may not have been told, is those increased earnings, if they materialized at all, could be swallowed up by principal and interest payments on your college loans.

Sadly, many of you have had to put your future on hold as you struggle to unburden yourself  from this monstrous debt.

What are my options?

Unlike most debt, relief in the bankruptcy courts from student loan obligations is extremely difficult. Less difficult than an outright discharge in Chapter 7, is repayment under Chapter 13. The majority of student loan debtors will not exercise either of these options for many reasons; social stigma, lower credit scores and the obstacle bankruptcy creates in obtaining future student loans, to cite a few of them.


So what other options exist? Student loan consolidation can be a source of relief to many. Generally speaking, all federal student loans can be consolidated. The plethora of student loan types makes any detailed “how to” discussion impossible in the space of this article.

Instead we will offer some general information intended to give one a sense of what to expect.

First, don’t expect a reduction in interest rate. In fact, your rate will be 1/8 of 1 percent higher than the weighted average rate. Consolidations use a weighted average of existing rates. In most cases waivers of late fees, reversals of penalty rates and other concessions are available. These concessions can save you big bucks and make the student loan consolidation worthwhile for that reason alone. Another obvious advantage of student loan consolidation is convenience; one payment, once per month, to one lender is a blessing. Standard term of repayment is ten years. You can find longer terms but sticking to ten years will save you a great deal of interest expense.

Who can help?

Student loan consolidations are available from the U.S. Department of Education’s Federal Direct Consolidation program. You can, however, consolidate with any lender. As with any business transaction, negotiate the best possible terms and comparison shop. Many lenders have carved out a niche in the student loan consolidation market. So, finding a lender should not be difficult.

If you are unemployed or faced with an illness that has reduced or eliminated your income, there is help in the form of forbearance or deferment. These must be regarded as options of last resort. Why? The interest clock continues to tick. The payment of interest charges are delayed or, but not forgiven. In truly desperate circumstance, it may behoove you to swallow your pride and consider a Chapter 13 bankruptcy. The catch-22 with Chapter 13 is that you must demonstrate a source of repayment to the court. With unemployment being what it is today, that is not always possible.

Income-Based Repayment

If you have federal student loans, you can explore the Income-Based Repayment option.

This option allows you to tailor your monthly payments based on your income. The term is 25 years, but if you maintain your agreement, forgiveness of any debt remaining at the end of the term is possible. It is worth considering.

Get Forgiven

If you work in the public service sector or for a nonprofit organization, you may qualify for the Public Service Loan Forgiveness (PSLF) program. This works along the same lines, but permits forgiveness after only 10 years, assuming you’ve dotted all the i’s and crossed all the t’s. This is a government program, so you should expect nothing less.

I would like to hear some of our reader’s views on the nation’s student loan crisis (in my view it is a crisis). Do you have any experiences or information that might be helpful to those struggling with this problem? If so, please share your thoughts … you could change a life!

(Editors Note (Derek): I can think of other options that are even simpler. How about you?)

Dominique Brown is a financial planner, landord, personal finance blogger and video blogger. He is the owner of where he talks about everything from being a new father to his worst financial mistakes. He has been featured on The Huffington Post and H&R Block. You can find him either on Twitter, Facebook, Youtube or Instagram.



My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. My loans are about to come due and they are going to be crippling if I don’t find a way to pay them effectively.

    • You could try a hardship deferment, then the next step would be to limit expenses and make more money. When are they due?

  2. Great post as always! I am one of those people who are going to try everything in my power to make sure my kids do not have to take out student loan debt. That said, I had $45k after college. While that is a lot of money, after 6 years of school it was only 8k a year; I had scholarship for the other 32k a year. How could I say no to that? I also went to a specialized college for music…not the same as a state school. While I still have a bit to pay off, my college afforded me a career where I make well into 6 figures. I still tell my students to take loans if it is close!

    • I would gladly trade the six figure salary for 45k in loans any day. What do you do for a living? I noticed you said you went to a specialize college.. I’m curious on what you do now.

    • I’m curious on what the student loans APR is on that 80k. For example, my student loans are only 20k, but the APR is 3%. It’s very hard for me to pull the trigger on paying off a 3% loan, especially once you factor in inflation.

  3. As a parent, I am really trying my best to prepare for my kids’ studies. It is not easy supporting ones self while studying because I have experienced it myself. I had debts, but it didn’t stop me from fulfilling my dreams because there are still a lot of options other than relying on student loans.

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