In the past few years, the rate of defaults for federal loans has increased at an alarming rate. According to the Department of Education, those recent graduates who began repayments in 2009, 8.8 percent had already defaulted on their federal loans.
That compares to 7 percent in 2008. Currently, 36 million Americans have outstanding federal loans. Wonder how many of those millions are feeling distressed or suicidal, or how many have attempted suicide because of all that debt hanging over their heads.
Getting depressed over an increased debt load is normal, experts say. Typically the situation is temporary and as the debt lightens, so does the depression. This 2022 Update proves that Student Loans Kills.
There are those, however, who don’t see a way out of their financial mess and become so despondent they contemplate or attempt suicide.
When the bills pile up, the mortgage rate adjusts, the credit card balance grows, or you are laid off, things can feel down-right unbearable.
“Financial stress can negatively — even severely — impact things outside of the wallet: your health, your job and your relationships,” says David Alecock, a vice president at InCharge Institute, the financial education arm of InCharge Solutions, a nonprofit credit counseling service.
Suicide is the dark side of the student lending crisis and, despite all the media attention to the issue of student loans, it’s been severely under-reported.
More people are being forced into untenable financial circumstances as outstanding student loan debt has surpassed $1 trillion. And people simply aren’t able to pay all the money they owe.
Is Suicide the Answer?
Suicide is never the answer because there are countless people who love and depend on you. Your mom and dad. Your brothers and sisters. Maybe your children.
I know that today you think you’re going to do them all a service by taking away a “burden”, but I promise you, you being gone will be a 1000x burden and will cause more pain and sorrow that you could even imagine.
No amount of money is worth your life. You can live with student loan debt and smile with student loan debt. You can play with your children with student loan debt. Ending your life is not the answer.
There are countless ways to deal with your student loan debt, and there are countless people that can help you navigate the confusing and frustrating world that is student loan debt. But that’s gone if you take your life.
And you think you’re possibly making it easier on your family financially. Well, I’m here to tell you it doesn’t. Here’s why:
Your family is NEVER on the hook for your Federal student loans, only you are – so you’re not a burden to them financially
However, if you have a cosigner on your student loans, like 90% of private loans today, if you die, your cosigner (typically a parent) will still have to pay the debt.
So, in situation #1, with Federal loans, you’re not a burden. It might seem tough for you today, but you’re not impacting anyone else.
In situation #2, if you die and have private student loans, your parents could still owe the debt. And with you gone, how are they going to pay it? You’re really leaving them with a burden that didn’t exist before.
5 Ways Out of Your Student Loan Debt Besides Suicide
To prove to you and any friends you have who might be struggling with their student debt, there are a bazillion alternatives besides harming yourself.
Don’t kill yourself over debt. It’s important to realize that so many strategies exist that remove the pressure of a huge debt load.
Option 1: Move to Another Country to Avoid Student Debt
Have you ever heard of the Foreign Earned Income Exclusion (FEIE)? I have a bunch of clients who use it legitimately to pay as little as $0 a month on their student loans.
Those loans are not in default, delinquent, or otherwise late. You have to qualify, but it’s not that difficult to take advantage of.
In fact, these clients are on track to have their loans forgiven after 20-25 years of low payments assuming they live abroad for the entire period. At the end of the repayment, they will owe taxes on the forgiven amount, but that’s easy to plan for.
Many expats make the mistake of using alternative income documentation instead of tax returns in the case of living overseas. You can show a 0 taxable income if you qualify to get those 0-dollar payments.
Want to move to New Zealand or Australia to practice veterinary medicine while starting a life together with your Aussie husband? Many readers do something like this, and the student debt is no longer a burden.
Option 2: Drastically Slash Your Housing and Car Expenses
One of the biggest reasons for stress among professionals is living paycheck to paycheck. You probably got a big boost in your pay at some point in your journey, and that can create “sudden wealth syndrome.”
You deserve that new car so you can dump the clunker from school. You’re tired of living with roommates, and you want to buy a house like a normal adult. I get the desire, but it could be one of the biggest culprits weighing down your happiness.
Whenever I see someone in financial distress, 99 times out of 100 a house or car is involved (and I’ve made plans for over 1000 people, so this is a real sample size).
If you’re living paycheck to paycheck, try to get to a point where you owe less than your car is worth and take it to a place like CarMax and trade it in for a 2007 Toyota or something reliable but cheap. You could slash your monthly payment in half and give yourself more cushion.
If you’re renting by yourself, listen out for opportunities to room with cool people from work. If you have a big house with rooms but not a lot of people, rent out a room. Perhaps you have in-laws or parents close by and your mortgage stresses you, reduce the number of households and have family move in with you.
Tackling your house and car expenses by living one rung down on the economic ladder compared to your income could save a low five-figure number right away. That would do a lot to ease the stress on your budget.
Option 3: Use Student Loan Forgiveness to Avoid the Full Weight of Your Debt
Many borrowers who reach out to me suffering from depression have paid extra on their loans only to watch the balance stay the same or even grow. Instead of doing that, what about paying your loans back on the Pay As You Earn program (PAYE) for 20 years?
The payments never go higher than 10% of your discretionary income (lower than 10% of your actual income), and you pay income tax on the forgiven amount at the end of the repayment.
In reality, the IRS might use the insolvency rule to prevent any taxes from coming out of your pocket at the end. I wouldn’t plan on that, but it’s something that might happen nonetheless.
You can also use forgiveness programs like Public Service Loan Forgiveness to pay zero taxes on the forgiven balance after making payments for 10 years.
Students and depression are not a good mix because borrowers feel a sense of guilt for not being able to pay back their debt. You shouldn’t. You were taken advantage of by a predatory student lending system where everyone from the government to your College Dean conspired to charge ridiculous tuition for your degree.
Furthermore, the economic risk of that degree was probably drastically understated, with BS clichés like “there’s never been a better time for dentists, pharmacists, physicians, lawyers, and so on.
Option 4: Use Forbearance Until Your Mental Health is Better
Yes, student loan forbearance and deferment are a lousy way to handle your student loans for an extended period. Guess what though, if you’re dead then nobody cares about how bad your finances are. They miss you and wish you were still here.
That’s why if you’re really struggling and not doing well with your mental health, just call your loan servicer and request a forbearance. The payments will stop, you’ll buy yourself time to get help by seeking therapy, counseling, or other resources, and then you can restart payments when you’re ready.
Income-based repayment can be useful as well instead of forbearance, and it’s usually much preferable. That said, if you’re freaking out because of your payments, just call and stop them. I have readers who haven’t made a payment on their loans in over 10 years and are in default.
They’re still very much alive and doing just fine. I would never recommend not making payments, but wrecking your finances is way better than wrecking your life if you have to choose.
Option 5: Work Less so You Can Enjoy Life More
I had a conversation with a veterinarian recently who owed about $500,000 of student debt. I asked her what her ideal life looked like, and she suggested it would involve working about 3 or 4 days a week.
She was a good saver, and she spent around $40,000 per year of her $90,000 pre-tax income. She could pay about 500 a month to her student loans and 800 a month into an investment account for the tax bomb and be fine when it comes to her student loans.
With a couple of tweaks to her budget, she was able to afford a part-time lifestyle right now during the best years of her life.
Is she lazy? No, way she worked crazy hard to get to where she’s at. What we did was help her to enjoy life more to get ahead of burnout before it happened. She can always go back to work full time, and she’s not hurting herself.
One of the great parts about having the ability to earn a six-figure income is being able to slash those hours and still make more than the typical household income.
If you’re going for forgiveness, you don’t need to worry about how much you work. All you need to do is figure out your monthly amount that needs to go into an account for the future tax consequences and to make your required minimum monthly payment. If you make less money, that payment goes down!
Hence, if student debt stresses you out, consider reducing your workload to prevent burnout and try out a forgiveness strategy. Many borrowers with six figures of student loan debt don’t need to work full time. Realize that you’ve got more options than that.
1. Are There Legal Ways to Run Away from Students’ Loan Debt?
Enroll in income-driven repayment; Pursue a career in public service; Apply for disability discharge; Serve your country; File for bankruptcy.
2. Is It Possible to Get out Of My Student Debt if I File for Bankruptcy?
Student debt has a few unique characteristics. One of the most important distinctions is that student debt is more difficult to discharge in bankruptcy than other forms of debt. Indeed, while it’s true that it’s harder to get rid of student debt than other kinds of consumer debt, it’s not impossible.
3. What Is Loan Forgiveness and How Can I Qualify?
The Public Service Loan Forgiveness program forgives the remaining balance on your loans for debtors in a handful of fields after 120 on-time payments (about 10 years). All types of jobs can qualify for the program, as long as you work for a government organization or a non-for-profit with tax-deductible status from the IRS.
4. Who Pays Off the Rest of My Loan if It’s Forgiven?
If you are able to get your student loans discharged or forgiven, then someone is ultimately on the hook for the money you borrowed. In the case of a private loan, this will be the financial institution that originated the loan, but in the case of public loans then the check ultimately winds up being picked up by taxpayers
Getting depressed over an increased debt load is normal Student Loans debt Kills as seen in this 2020 update, but some people just can’t seem to dig their way out and become so despondent they contemplate or attempt suicide.
While suicide may sound like the easy route when you are sinking under thousands of dollars of debt, its effects are permanent and will monumentally affect those who care about you. If you are feeling hopeless, remember that it is possible for things to get better. Don’t wait until you hit rock bottom to begin seeking resources.
If you feel overwhelmed by debt, please, talk to someone today. Student Loans Kills, but it’s better now than later, follow this 2020 update. There are lots of available resources for you to take advantage of.
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