Student loans have been in the news lately, with more new student loan legislation pending. I thought this would be an excellent time to offer information on education financing to Indy's Child readers.

Parents have been heading back to the classroom in droves. Almost all of them have needed student loans to help foot the bill. In just 2008 alone, more than 100 schools around the country applied to join the federal government's Direct Loan Program, bringing the total number to 1500. Twice that number of schools is using the Federal Family Education Loan Program, the one using private loans. As a certified consumer bankruptcy specialist here in Indiana, I very often find clients listing student loans among their biggest debts.

It's very important to realize that the uncertain economic times we're going through now actually present a good opportunity when it comes to getting financial help for education and job training.

All the layoffs and industry shifts are making it necessary for great numbers of people to brush up their skills and perhaps train for entirely new careers. For that very reason, many more programs are being geared specifically towards working adults and towards parents. Job retraining and educational assistance play a big part in the federal and state government stimulus plans. Programs for working adults are being offered by traditional colleges and universities, community colleges, online universities, and institutions offering a combination of online and classroom courses.

Before you even think about borrowing for education, though, keep these rules in mind: Don't borrow more than you absolutely need, and don't borrow any sooner than you absolutely must. For you as a parent, I'd guess, this is not going to be your very first experience with borrowing money, and you may even have credit issues that will need to be considered as you apply to finance your education.

If you plan to attend college at least half time, begin by applying for federal loans, using the FAFSA (Free Application For Federal Student Aid). If you qualify for a subsidized Stafford Loan, that will be your best bet, with interest rates lower than on most other loans. In addition, with a subsidized Stafford Loan, the government covers interest costs while you're in school and for the six months following.

Anyone who's working to get ahead in the work environment looks promising to lenders. After all, you're expected to be earning more after you complete your educational program. The other side of that coin is that falling behind on student loan payments reduces your credit score more than any other thing except bankruptcy. Nonpayment of student loans can prevent you form getting hired for the very positions you were working to achieve.

Speaking of bankruptcy, in 2005 it was ruled that neither private nor government student loans could be dismissed through bankruptcy. (The only exception is "undue hardship, which is very difficult to prove except in cases of extreme physical disability or unusual dependents' needs.) Since 2005, various proposals to change the bankruptcy law have been defeated.

For single parents who, with work and child care can't take courses even half-time, there are at least three special loan programs to meet those needs. Sallie Mae Career Training Loans help finance the costs of technical degree programs or online programs you can pursue at your own pace. Sallie Mae also offers Career Education Loans tailored to students not working towards a degree, but who need extra training and can attend only part-time. The Chase Education One Continuing Education Loan is another choice for part time students.

If you plan to study in a "high need field" (nursing and education are two examples), you may qualify for special loan forgiveness programs that allow you to exchange work for loan repayment. Be sure to check with your employer to see if there is a tuition repayment or reimbursement plan available through the company.

Be very careful when choosing a repayment plan. There are four basic options:

• Standard equal installments (ten years).
• Long term equal installments plan (12 to 30 years)
• Graduated repayment, starting low and increasing over time.
• Income-based repayment (available only for direct government loans or guaranteed loans, with payments tied to your actual income.)

Student loans are definitely in the news these days. U.S. students borrow more than $85 billion a year, double the number of a decade earlier. But, with the current credit crunch, defaults on student loans are on the rise, causing more than 65 private companies to back out of the student loan market altogether. The companies that remain are "pickier" and their loans have become more expensive. Sallie Mae itself reported that defaults were up 10% this year, and that it was experiencing financial losses.

Legislators have responded by giving the U.S. Education Department authority to buy up loans from lending company portfolio, thus raising the amount of cash those companies have to offer in new student finance packages. More liberal loan repayment terms for parents who are financing their children's education have been approved. But, despite the new measures, student loan debt remains an enormous national problem, at the very time education and re-education are such a priority for so many if the country's workforce needs are to be satisfied and if parents themselves are going to be able to find - and keep - well-paying jobs.

Because of the current economic climate and the current government administration's intentions to create jobs and get people back to work in those jobs, this is an ideal time for you to get started learning more about what's available to help you GET BACK IN SCHOOL!

As I urge in all my articles and in my Indiana bankruptcy blog, it's really important to get legal representation as early as possible when finances are starting to go wrong. That's even more so with student loan debt. While I can't change the law on student loans, I can often help people deal with student loan authorities at a time when trouble seems to be coming from every direction.