Each year, college students take out billions of dollars in student loans for a total of about $1.3 trillion in outstanding debt. (An astonishing amount: one trillion is equal to 1,000 billion or 100,000 million). The median debt load for graduate students who completed their studies in 2012 was $57,000, but one out of four owed more than $100,000 and one in 10 owed more than $153,000.

Sixty-six percent of undergrads grabbing their bachelor’s degree in 2012 had student loans and their average was $25,550 (public colleges) while 77 percent of their private college counterparts left school with debt that year, with an average of $32,300. (88 percent of for-profit college grads had debt that year, an average of $39,950.)

Unlike ANY Other Loan, Student Loans Have to be Paid Back

This is what many lenders don’t want you to know: you must pay the student loan back. Unlike other types of loans – credit cards, car loans, even mortgages – you can’t declare bankruptcy in order to get out of repaying the loan.

What’s more, there are big penalties and bad financial consequences if you don’t pay the loan (you default on the loan).

In addition – did your lender tell you this? – if you default on your student loan, your school, the government (if you took out federal loans) and your lender can require that your employer garnish a portion of your salary and can do so up to 15 percent of what is called your “disposable pay” (usually the amount you receive after taxes and other required deductions – such as a health insurance premium – are subtracted).

So if your take-home pay is $600 a week, up to $90 a week (or $4,680 a year) can be removed from your paycheck and you have no recourse to stop it (unless you win what is called a garnishment hearing). Get a promotion or better job and the 15 percent garnishment continues – but now more money is removed because 15 percent of a higher salary is a larger number than it is for $600 – until you pay the debt off completely, including interest.

This can take years. Possibly decades.

Your credit also tanks if you default. Which means you may not be able to buy a car, get a credit card, purchase a home, or possibly even rent an apartment.

But there is a way you can get your federal student loans forgiven – which means you won’t have to pay them back completely (you’ll have to pay a good portion of them, however). It’s called the Public Service Loan Forgiveness Program (PSLF), and while it’s not for private loans, it can result in a big financial plus when it comes to your entire student loan burden.

People who work for a public service employer or non-profit are eligible for the PLSF after you’ve made 10 years of on-time payments each and every month (120 payments). If so, the balance remaining on your federal loans may be forgiven (as in, you never have to send another payment for that loan after completing 120 on-time payments!).

The PSLF has some details you’ll need to work out and navigate around, which is where New Start Advisors can come in. As a matter of fact, you may qualify for loan forgiveness even if you don’t work for a public service employer or non-profit, so if you’d like to learn more about how the program works and if your employment qualifies you for the program, contact New Start Advisors today.

Call for help reducing your student loan debt.