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Why The Student Loan Bubble Is Much Worse Than It Looks
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It's the new housing crisis
When the housing bubble burst, the focus shifted to the student loans and rates went higher. They also changed the terms of payback plans. Students starting out today are paying so much more, borrowing much more, higher interest rates, and student loans are allowed to capitalize interest, so you pay interest on top of interest and the amount "owed" grows exponentially. You cannot go bankrupt, you cannot have payments lowered or put in forebearance without interest continuing to accrue. Even if you are unemployed and homeless the interest continues to grow. The only way out of debt is to be totally and permanently disabled, and even then it is a "conditional release" for three years before they finally forgive the debt. And I am not sure, but I believe the final loan forgiveness is taxable and adversely affects your credit rating. <I hope not.>
But of course, things might swirl away by then.
Blessings,
Astreia
I AM no expert
I AM no expert on this kind of thing but yes, "forgiven debt" is sometimes taxable and as far as I know, this sort of thing always affects your credit rating. In fact, that is a fear tactic commonly employed to keep people on the hook - by making it sound like a negative hit to your credit rating is the worst thing that could ever happen.
namaste