FindLaw KnowledgeBasePublished: 2013-04-26
Back in the good old days, people used to believe that a college degree would translate into a good job after graduation. As a result, parents would often work hard to help their children pay for college in the hopes that they would be setting their children up for a better life.
Unfortunately, times have changed. Not only is it more difficult to find employment after graduating from college, but graduates and their parents are finding themselves burdened with large amounts of student debt in order to pay for the education.
While households throughout the nation have struggled with declining income, college tuition costs continue to rise. Although many political debates focus on how the students and recent graduates will deal with this debt, it is important to note that parents are the largest single source of college funding.
At times, parents are funding these educational opportunities to their own financial detriment. Some take from savings, stop putting into retirement accounts or take out pricey private loans to fund the soaring cost of tuition.
Soaring Cost of Tuition and Need for Loans Leads to Increased Bankruptcy Filings for Parents
Parents aren’t the only ones getting worried. Legal experts are also expressing concern as parents shift to depend more and more on loans to provide their children with a college education. Bankruptcy attorneys have noted a jump in bankruptcy filings within this group due in part to the financial burden connected to repaying student loans.
The National Association of Consumer Bankruptcy Attorneys released a statement calling attention to this problem. Professionals within this group, some of the same that warned of the impending mortgage crisis before it developed, now point to student loans leading to the next economic crisis.
According to the National Association of Consumer Bankruptcy Attorneys, parents taking out loans to help fund their children’s college education jumped 75 percent since 2005. This results in a debt of about $50,000 for a typical 10-year loan. For parents already struggling to make ends meet, this extra burden may result in financial collapse.
Student Loans and Bankruptcy
Those attempting to balance their financial obligations who find themselves coming up short may consider filing for bankruptcy. Bankruptcy is designed to offer those struggling with debt an opportunity to start over by discharging, or no longer requiring repayment, on certain types of debt.
Discharging student loans in bankruptcy can be more difficult than other types of loans, like home mortgage payments or credit cards, but there are exceptions that can apply in some situations. If you are struggling with financial obligations including student loans, contact an experienced bankruptcy lawyer to discuss your legal options.