The country’s current student loan crisis is an economic bind that affects Americans all across the country as well as right here in Florida. As the nation’s collective student debt now eclipses $1 trillion, many both amongst the general public and deep inside Washington are calling for federal measures to be taken that would restructure certain economic rulings to better help those who owe for their educations.
In addition to the denial of personal bankruptcy as means of absolving student debt, one persistent impediment is the inability for those who owe student loans to the federal government to improve their repayment situations by refinancing their debt at competitive market rates.
Many economists and financial experts have noted that although the past “Great Recession” and the current moment’s lingering economic uncertainty has made bankruptcy and other debt relief practice more and more necessary for consumers, many everyday borrowers have enjoyed very favorable interest rates on the loans they have taken out, such as a home mortgage or private auto loan.
Congress, however, and not the private financial market, sets student loan interest rates, many of which now sit at or above 6 percent. This elevated rate is especially significant, given that $864 billion in student loans is currently owed to the federal government. What’s more, private lenders who could afford to offer student loans at lower rates have been (perhaps predictably) unwilling to be undercut by the government’s own determined interest rate.
Even as many press the nation’s capital for student loan forgiveness, it appears that merely allowing those who owe the government to refinance at competitive market rates would save everyday consumers billions of dollars each year in which they must keep making payments.
Working with an experienced bankruptcy and financial law attorney can open up new avenues for debt relief and an improved overall financial horizon. Even those who have sizeable debt wrapped up in student loans can likely find a way to stop collection calls and quicken their path to a debt-free future.
Source: Time, “Why Can’t People with Student Loans Refinance at Better Rates?” Dan Kadlec, Feb. 20, 2013