Borrowing money remains a significant part of most students’ plans for paying for college. According to Pew Research Center, 60% of all graduates in 2008 had borrowed money for school, compared with 52% in 1996. Considering this trend, it’s likely that taking out a loan will be part of the discussion when planning for college.

But students considering loans need to be aware that taking out a loan is serious business.

In reality, it is extremely difficult to escape the liability of a student loan, even if the borrower files for bankruptcy.

If a student borrows too much money and finds in a few years after graduation that he or she is not able to pay the bills, a standard bankruptcy filing will not discharge the debt. The borrower would have to demonstrate “undue hardship,” which is very difficult to prove. Borrowers would have to prove that they cannot pay the loan currently or in the future. Short of having a disability that prevents them from working, this is a difficult case to make.

Prior to 2005, this provision of the bankruptcy law only applied to government-guaranteed student loans. But in that year, Congress passed an amendment making the bankruptcy rules the same for private loans as well.

Before signing up to borrow, students and parents need to consider how much of a debt burden they may be able to handle after graduation and whether they have thoroughly explored savings options such as a 529 savings plan.

A 529 savings plan may help families build up funds for college, and reduce the amount they borrow. There are many benefits, including tax breaks, for using a 529 plan.