Good News: Student Loans & Bankruptcy
Posted 19 Jan, 2010
It seems that, for many families, student loans have almost become a necessity when it comes to paying for college, but many parents and students are unaware of the huge responsibility involved in borrowing these loans.
Did You Know?
Colleges make it extremely easy for students to take out a student loan in this day in age. Once a student’s FAFSA proves them to be qualified, most colleges process the information for your loans through their financial aid office, so that all a student has to do is perhaps choose a lender and then click “Accept” on the school aid website.
While this ease of borrowing may be comforting, it has also lead to less rigorous studying of loan terms. Does your child usually read the full terms before signing away his or her acceptance of them? Does he or she understand the full levity of signing on for a student loan?
Many students are completely unaware that they are solely responsible for repaying their student loans, and that if they do not pay them back it will harm their credit. Some may even think their parents are responsible for the loans, but even if a parent or grandparent agrees to pay them back, the student is the only one truly held responsible for repayment.
Bankruptcy & the Supreme Court
Another little-known fact about student loans is that they are extremely difficult to escape from, even if a student goes bankrupt. Currently in order to be released from a student loan debt, a student must prove that repaying the loan would be an “undue hardship,” which the Chronicle of Higher Education reports is a term that has no fixed meaning (making each case subjective).
However, the Supreme Court is preparing to review a case involving bankruptcy and student loans. The case, United Student Aid Funds Inc. v. Espinosa, is expected not to change the difficulty of excusing student loans at bankruptcy, but it may change the standards by which “undue hardship” is judged.
Being Prepared
Though many students feel the pinch of having to repay their loans as they are just starting out in their career, bankruptcy is not a very common result of these loans. However, it is important that your student fully understands that borrowing even a consumer-friendly Stafford student loan places a new responsibility on his or her shoulders.
For more information your child may not know, read the article I wrote about what your student needs to know before borrowing student loans.
All the best,
Deborah Fox
Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.
photo: svilen100
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Related Posts
It seems that, for many families, student loans have almost become a necessity when it comes to paying for college, but many parents and students are unaware of the huge responsibility involved in borrowing these loans.
Did You Know?
Colleges make it extremely easy for students to take out a student loan in this day in age. Once a student’s FAFSA proves them to be qualified, most colleges process the information for your loans through their financial aid office, so that all a student has to do is perhaps choose a lender and then click “Accept” on the school aid website.
While this ease of borrowing may be comforting, it has also lead to less rigorous studying of loan terms. Does your child usually read the full terms before signing away his or her acceptance of them? Does he or she understand the full levity of signing on for a student loan?
Many students are completely unaware that they are solely responsible for repaying their student loans, and that if they do not pay them back it will harm their credit. Some may even think their parents are responsible for the loans, but even if a parent or grandparent agrees to pay them back, the student is the only one truly held responsible for repayment.
Bankruptcy & the Supreme Court
Another little-known fact about student loans is that they are extremely difficult to escape from, even if a student goes bankrupt. Currently in order to be released from a student loan debt, a student must prove that repaying the loan would be an “undue hardship,” which the Chronicle of Higher Education reports is a term that has no fixed meaning (making each case subjective).
However, the Supreme Court is preparing to review a case involving bankruptcy and student loans. The case, United Student Aid Funds Inc. v. Espinosa, is expected not to change the difficulty of excusing student loans at bankruptcy, but it may change the standards by which “undue hardship” is judged.
Being Prepared
Though many students feel the pinch of having to repay their loans as they are just starting out in their career, bankruptcy is not a very common result of these loans. However, it is important that your student fully understands that borrowing even a consumer-friendly Stafford student loan places a new responsibility on his or her shoulders.
For more information your child may not know, read the article I wrote about what your student needs to know before borrowing student loans.
All the best,
Deborah Fox
Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.
photo: svilen100
Subscribe in a reader
Subscribe by Email
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