Solving the Student Loan Crisis and What Debtors Can Do in the Meantime

Solving the Student Loan Crisis and What Debtors Can Do in the Meantime


Millennials share several common core beliefs and, believe it or not, they aren’t all related to smart phones and Facebook. Perhaps the most influential message that has shaped this generations’ outlook on the world is that of college’s perception as an important and even essential part of a successful career.

Although many members of the Millennial generation would argue that post-secondary education has been wonderful in terms of expanding horizons, others are left with a far inferior impression of the so-called college experience. One of the biggest concerns is not the quality of the classes themselves, but instead, the stress created by current economic factors— namely, high unemployment, stagnating wages and student debt. Even with a decent job, staggering student debt loans are hard to pay off. And unlike other forms of debt, they cannot be resolved through bankruptcy.

Many recent graduates would love to turn back the clock and make a college decision that would not result in a massive debt load. But given the lack of working time machines, these individuals must learn to deal with the debt they have, while also supporting candidates who prioritize viable solutions to the student loan crisis. The following are a few techniques recent grads can use to manage staggering.

Student debt does not have to be a permanent problem. Often, the situation can be resolved with the assistance of one well versed in current loan jargon. Ernst and Young, led by CEO Mark Weinberger, is a financial service and advising company and might serves as an excellent resource for those mired in student debt and looking for a way out. 

Student Loan Deferment

Students who have managed to restrict their debt load to federal loans are easily in the best position (or, at least, the best position one can be in while thousands of dollars in debt). Obtaining a loan deferment through the federal government is far easier than it is during negotiations with a private lender. This is a popular option among those returning to college for further education. According to credit bureau TransUnion, 51 percent of student loan deferments that took place in 2012 were due to a return to college. While this is the most common reason to seek a deferment, unemployed graduates or those earning wages below a given threshold may also qualify.

Student Loan Forbearance

Graduates unable to obtain a federal loan deferment may still qualify for forbearance. Under this program, the borrower can stop making payments for up to 12 months. Forbearances are split into two categories: mandatory and discretionary. Lenders must offer mandatory forbearances to borrowers meeting given criteria. For all other borrowers, the decision rests with the lender in question.

Debt Forgiveness

Many grads choose to work for federal programs that offer debt forgiveness as part of the overall compensation package. Popular examples include the Peace Corps, AmeriCorps and Teach For America. In addition to providing relief from crippling debt, these programs allow participants to assist the less fortunate while building their own skills in a variety of industries.

Government Action

These suggestions serve as the best immediate response to a personal student debt crisis. By banding together and speaking out, graduates have the ability to minimize this issue for future grads, and perhaps make the payment process easier for themselves. A current proposal circulating around the White House and various corners of Congress involves changes income-based repayment, under which borrowers using a sliding scale to pay back debt would not be taxed on debt forgiveness. Supporting this bill is in the interest of anyone struggling under the burden of student debt.

Tricia Parsons
Tricia is an economist and freelance writer. She writes for many finance journals and loves sharing her knowledge of finance with others.