From the time that kids are little, parents in New Jersey and nationwide often assure them that they can be anything they want to be when they grow up. Parents then want to give their children the best shot at becoming successful in whatever field they choose. Often times, this means that a parent will co-sign on his or her child’s student loans so they can attend college.
Student loan debt has skyrocketed to over $1 trillion in the United States. The difficult economy combined with the high price of a college education has put graduates in a tough spot. Many kids earn their college degree and then have a very challenging time securing a job that will help them pay down their debt. When a primary borrower, generally the student, cannot make their student loan payments, the co-signer is tasked with the payment. Increasingly, the co-signer is a student’s parent who likely did not anticipate this added financial responsibility.
Even before the current financial crisis, the Federal Reserve Bank of New York reported that more than 2 million people over the age of 60 owe money for a private or federal student loan. This older generation is likely not taking out student loans for their own educational benefit, so it is believed that many of them are parents who now owe money for their children’s college education.
Wanting to help young students financially is a natural inclination for many parents and grandparents. However, this move has had an unfortunate consequence for many parents. With the added expenses of a child’s student loans, many older adults get buried under the unexpected financial burden. Other payments may suffer. Medical bills that are not uncommon in older generations may be piling up. It can all be too much for many families to handle.
A good discussion that people in this situation need to have is whether filing for Chapter 13 bankruptcy protection is an option for them. Unlike other common chapters of bankruptcy, Chapter 13 allows people the opportunity to address student loans in a repayment plan. Reorganizing debt in this way means that people can take control of their financial future and work to eradicate debt that cannot be eliminated in other types of bankruptcy.
Source: Forbes, “This Week in Credit Card News–Student Loan Perils, Hurricane Relief & Rising Household Debt,” Bill Hardekopf, Nov. 5, 2012
- Struggling with student loans and other sources of debt can be very stressful and challenging. For information on what can be done about these types of financial obligations, please visit our Cherry Hill Chapter 13 Bankruptcy page.