I saw a disturbing commercial this evening. A bank was encouraging people to consolidate their student loans with them. The problem is that all student loans, both student loans made or backed by the Federal Government as well as student loans made by private banks are almost impossible to discharge in bankruptcy. However, private student loans, unlike their federal counterparts, have no Income Based Repayment Programs. In other words, government issued or backed student loans have limits in terms of how much of your income they can take, and for how many years they can take it before the debt is forgiven. The private student loans have no similar limitation. If you fall on hard times and cannot afford to pay, you have a big problem, with no obvious solution. I want to warn people to be very careful about walking into one of these student loan consolidation traps.
