Since former students cannot usually erase their educational debt through the bankruptcy process, any news as it relates to student debt, student debt forgiveness and student loans in general is valuable to consider. In 2017, with a Republican-controlled congress and a newly elected Republican president, some news analysts believe that there could be some changes to student loans this year.
Here are two changes that we could see in the year to come:
-- Forgiving student loans: It usually takes students about 10 years to pay back their educational debts. However, students can request an income-based payment plan that caps off their debt payments at 10 percent of their income for a period of 20 to 25 years depending on what kind of degree they received. Some speculate that the incoming government will seek to change the student loan payment plan have a cap of 12.5 percent and a time cap of 15 percent.
-- Combining student loan repayment plans: Right now, the student loan repayment plans are separated into two systems. They are Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE). PAYE is used for undergraduate school loans and REPAYE is used for graduate school loans. If theses systems are combined into one, it could provide a higher level of streamlining and simplicity to the repayment process.
It will be interesting to see what changes the coming years will bring to student loans and how we pay them back. In the meantime, however, if you are suffering under the brunt of large student loan debts, the bankruptcy process might be able to help you. Although you typically cannot resolve student debts through bankruptcy, the process could relieve the burden of your consumer debts -- like credit cards and auto loans.
Source: Forbes, "Expect These 7 Student Loan Changes In 2017," Zack Friedman, Jan. 31, 2017