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Will debt ceiling deal lead more people to seek help with debt?

Created: On August 30, 2011 @ 2:46 pm In

Will the government’s agreement on the debt ceiling result in more people struggling with student loan debt? While the deal keeps the Pell Grant program intact, loans subsidized by the government will take a hit in July 2012. That could result in students struggling to keep up with interest, ratcheting up their total debt.

Currently, subsidized loans don’t require payments on interest until after students leave school. But the government’s debt ceiling deal would require graduate students to begin paying interest on student loans while they are still in school. If they don’t make payments on interest it would accumulate, which could lead to more people struggling to afford student loan payments after graduating.

Get help with debt

There are some options for dealing with mounting student loan debt. Student loan debt consolidation could allow you to combine several loans into one monthly payment and interest rate. Federal student loans should be consolidated separately from private loans. When you consolidate debt that could you to avoid defaulting on loans and allow you to maintain your credit.

Debt counseling combined with a debt reduction plan also could help you manage student loans. A debt counseling firm can help you go through all your debts and set up a budget to handle everything. Look for a reputable debt counselor who gives you detailed information about all fees, policies and procedures. Never pay upfront fees before receiving services.

Bankruptcy won’t help

Some consumers mistakenly believe that if they file for bankruptcy that they’re student loan woes will end. Unfortunately, it is highly unlikely that your student loans would be discharged if you were to file for bankruptcy. Only if you were able to prove that student loans were an “undue hardship” on your financially would you qualify to have them discharged. However, the loans could be discharged if you were disabled.

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