Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Why Paying off Your Student Loan Debt Early Could be a Mistake

The average college student who graduated in 2016 had approximately $37,172 in student loan debt.  While experts offer differing opinions on exactly which types of debts are considered good and bad, everyone agrees that debt on something that will end up making you money in the long run is essentially “good debt.”

A 2013 study based on Labor Department statistics showed that Americans holding a four-year college degree made 98% more per hour on average than those without a degree. Student loans are typically a low interest debt, as opposed to credit card debt which is typically the most expensive kind of debt.

The interest rate for undergraduate federal student loans disbursed in 2017 was 4.45%; the rate for federal graduate student loans was 6%. Compare that to the average credit card APR of 15.59%.

The Department of Education allows student borrowers to choose from up to eight different repayment plan options, several of which are designed for those with low income levels. If one repayment plan does not work, you can switch to another.

Private student loan debt is different and comes with a higher interest rate.  Private student loan lenders offer what is called “financial hardship forbearance,” which means you can suspend your payments due to financial hardship but the interest continues to accrue and is added to the balance.

Paying your student loan debt consistently overtime can lead to debt forgiveness.  Certain federal student loan repayment plans can result in automatic debt forgiveness. If you choose the Income-Based Repayment Plan, the Income-Contingent Repayment Plan, or either of the Pay As You Earn Repayment Plans, any balance you owe on your federal loans after 25 years will be automatically forgiven.  Student loan debt interest is also tax deductible, something you will see in your refund after filing your personal taxes.

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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at