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The www.FedPrimeRate.com Personal Finance Blog and Magazine

Sunday, May 22, 2005

Just When I Thought My Student Loan Debt Horror Story Was Bad...

Student Loan Debt Horror Story
A couple, trying to do their best to put their child through college, co-signed for a $40,000 student loan. Now that financial hard times have forced them into bankruptcy, they find themselves begging the collection agency that is trying to collect on the student loan debt to give them easier payment terms. The collection agency's response: Can't help you! Now they owe an additional $30,000 in interest and fees. Talk about being kicked while you're down. 

Most debt can't stick with you forever, but a change in United States Federal Law back in 1998 made it impossible for student loan debt to be erased in bankruptcy court. So if you need another reason why you should consolidate your student loan(s) now while the interest rates are still low, here it is: if you end up in financial dire straits and not able to make payments on your student loan(s), the collection agencies can come after you forever. They can, and they will too.

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