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Student loans are the backbone of our education financing system. As our economy continues its decline, the need for a highly-skilled workforce has never been greater. Student Loans Are the backbone of our education financing system. Unfortunately, students often leave college with burdensome debt. Student loans are one of the most popular methods used to help pay for college, but sorting out the different types and how they are different can be confusing. Some types of student loans include Stafford loans, Perkins loans, and Plus loans.

Student loans are good debt when they fund a non-transferable asset (education) that strongly correlates with higher pay and even higher life expectancy. Student loans are considered good debt under many circumstances because they usually have low interest rates and they represent an investment in your ability to make more money. Since a college educated person is likely to make more money than someone without a college education, most credit agencies see your student loans as good debt. Student loans are expected to be repaid from your income after graduation. Therefore loans should be viewed as an investment in the education that makes future income possible.

Federal student loans, like the Perkins and the Stafford, are no cosigner student loans, for example. Federal student loans only cover the cost of attending a specified college or university. The rule is that one cannot receive more on a student loan if that amount goes above the university’s cost of attendance. Federal guidelines require that work-study employers pay at least the prevailing minimum wage. The other advantage of the work study award is that the college will attempt to place the student in a job that pertains to their academic major.

Debtors often ask the question whether student loan debt is dischargeable in bankruptcy. Student loans can be consolidated with your other bills in a Chapter 13 court-ordered repayment plan. Debtors with property such as a home or car may get a lower rate through a secured loan using their property as collateral . Then the total interest and the total cash flow paid towards the debt is lower allowing the debt to be paid off sooner, incurring less interest.

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