Help with the Hard Stuff: Managing Student Loans

Help With The Hard Stuff

“Managing Student Loans: As Serious as a Home Mortgage Obligation and Harder to Work Out”
Part 1 (of 5)

This column begins a five-part Managing Student Loans series on some things to know and think about in managing student loans.  

At this time, student loan debt is the second highest form of consumer debt behind home mortgages and is at the $1.2 trillion dollar mark. Yes, trillion.

Student loans are how many of us got to and through college and some into professional programs and practices. It was almost automatic and usually without much thought about implications and possible consequences later if you ended up not making a certain level of income. Most of us managed them well enough, and with the education and experience we gained we were able to make decent livings.

This is not necessarily the case any longer. The new normal suggests that student loan debt is at least as serious a debt obligation as a mortgage, and, at this time, harder to work out when you have difficulties. The newspapers and your talks with neighbors and friends and colleagues at work probably have shown you that working out mortgage debt problems is a very difficult process for many, with many people losing their homes and their investments in their homes.  

Students can’t have their education and experience taken from them, but current law makes it extraordinarily difficult to effectively reorganize student loan debt and at this time, student loan debt cannot be discharged in a bankruptcy except in exceptional circumstances. If the jobs don’t pay as much as they did before, or there aren’t as many jobs, or you lose your job and can’t find another, your student loan debt remains with you and likely, is growing. You can’t surrender your education in the way you can surrender your house.  

In the new normal, many people are having to choose between paying student loans and saving a down payment to buy a home, or can’t qualify for mortgage loans because of their student loan debt.  

Many aren’t forming their own household units. In 2011, two million more in the younger adults ages 18-34 lived with their parents than in 2007.

Some other possible impacts for all of, us as reported in the Consumer Financial Protection Bureau’s May 9, 2013 blog post, Student debt domino effect?, are that entrepreneurship and small-business growth is affected. Paying student loans lessens capital available for investment, and some report being denied small-business loans because of student loan debt. Student debt payments threaten retirement security (less money is saved) and career choices are affected, such as medical students abandoning caring for the elderly or for children to make more money because of the impacts of their student loans.

And that’s for those who are managing their payments. There are currently more than 7 million borrowers in default.

Next: “What are the Kinds of Loans Students (and their Co-Signers) Can Get?

Editor’s note: Look for “Managing Student Loans” every second and fourth Thursday of the month in the Los Alamos Daily Post.

Gini Nelson, JD, MA has been practicing law since 1983. She’s a member of the State Bar of New Mexico’s Law Practice Management Committee, and the State of New Mexico’s First Judicial District Court’s Access to Justice Committee. Views expressed in the column are hers and not necessarily those of these Committees. This column is providing public information through the auspices of the Los Alamos Daily Post at and is not providing legal advice. Nothing in this column is intended to be an advertisement or solicitation of business. Ms. Nelson’s law office website is at If you have questions that might be of general interest if answered in this column, please send them to ©2013 Gini Nelson Law Office

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