When someone becomes a parent, everything changes, and it can have a major impact on finances. Parents will have to examine their spending habits to ensure that they can provide for their children and still make ends meet.
During this recession, many people lost a significant amount of their savings. Families that set aside money for their child’s education may have lost their savings. And while the economy is showing signs of a rebound, those savings can take a considerable amount of time to rebuild. Those with college-bound children may need to resort to student loans to pay for education; loans that cannot be discharged if an individual needs to file for bankruptcy.
In Florida, student loan debt is beginning to increase. Whether it is because of a loss of a family’s savings, or because of a drop in home equity, more and more are borrowing to pay for school. Nationwide, student loan debt has recently surpassed $1 trillion, according to a report prepared by the Project on Student Debt.
Those who are considering borrowing to pay for education should discuss their options with a financial professional before signing up for loans. Understanding the consequences of the student loan debt can help to address some of the potential questions or concerns that borrowers may have.
For instance, many people are not aware that student loans remain after a bankruptcy is filed. These loans cannot be discharged unless an individual can show a significant financial hardship, which is an almost impossible situation to demonstrate.
However, individuals who have high student loan repayments may consider filing for bankruptcy as a way to address the other debt issues that may be present. Lessening these other debts could free up more money to pay back the student loan, which can help a person’s overall financial situation.
Source: Orlando Sentinel “Rising student-loan debt: What can families do?” Richard Burnett, July 7, 2012.