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Hedge fund manager says student debt may result in market crash

Many Washington, D.C., residents know what it's like to struggle with student debt. Even with a good degree and a good job, it can be difficult to pay off student loans. When jobs are scarce, or don't pay very well, it can seem almost impossible. High interest rates lead to endlessly accruing debt and college graduates can find themselves in the unenviable position of being stuck in a mire of debt.

When people default on their student loan debt, they may face a number of penalties. They may have their tax refunds withheld or their wages garnished. They may even lose federal benefits or see their professional license revoked. In some cases, they may even be sued by the Department of Education.

Unfortunately, under current federal law, it is very difficult to discharge student loan debt through personal bankruptcy, such as Chapter 7 or Chapter 13. Thankfully, there are other ways to get student loan debt under control.

Under some circumstances, borrowers can get a deferment on student loans. This option is typically used for those who can show economic hardship. Depending upon the type of loan, the borrower may be able to suspend paying off the principal while also stopping the principal debt from gathering interest.

Those who do not qualify for a deferment may be able to secure a loan forbearance. Under this type of debt relief plan, the borrower would be able to suspend payment for a certain period of time. The big disadvantage here, compared to a forbearance, is that interest continues to accrue during the suspension period.

These are just two of the more common methods of getting relief from student loans. There are other options available, depending upon the type of loan and the specific circumstances of the borrower. Attorneys with experience in debt relief and bankruptcy law can help borrowers to understand their options.

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