Student loan debt plagues many even with payments paused

On Behalf of | Aug 19, 2021 | personal bankruptcy |

Many Illinois residents are confronted with overwhelming student loan debt. This was a problem before the ongoing situation with medical expenses, lost jobs and an inability to pay their mortgages, rent and everyday expenses. It will still be a problem after life returns to relative normalcy. Even though bankruptcy is only an option for student loans in specific circumstances, there may still be other strategies to consider.

Student loan pause until 2022 gives debtors some breathing room

To address the student loan challenge, the government has intervened several times. Even with the most recent pause on payments and interest until Jan. 31, 2022, it is important for debtors to think about their options. The current pause was set to conclude at the end of September. The Department of Education emphasized that it will not extend it beyond the new date at the end of January.

The goal was to give debtors a window to pay for necessities while not paying their student loans. In addition, $1.5 billion was approved for borrower defense. These steps are being taken as legislators are still deciding how far to go with student loan forgiveness. Bankruptcy could be a strategy for some and there are other avenues to explore to combat debt.

Bankruptcy and other ways to address debt can help

The pause now has an end date that the government asserts is final. That might help many debtors, but they will still owe a significant sum for their student loans. Although bankruptcy is not often used for student loans, there are alternatives like Income-Based Replacement (I.B.R.) and pay as you earn (P.A.Y.E.). For advice, it is wise to act as soon as possible while the pause is in place. Having guidance from those experienced in debt relief may be beneficial.