Florida experienced an increase of 23.5% in bankruptcies between June of last year and the same time this year. That’s the second highest increase the country (with Rhode Island in first place).
If you’re among the Floridians facing serious and mounting debt, you know that it can affect the whole family. So can filing for bankruptcy to get out from under the weight of that debt. If you’re considering bankruptcy and have a child in college, you’re likely worried about how filing for bankruptcy will affect them – particularly if they have a student loan.
FAFSA loans are in the student’s name
The good news is that if your college student has a loan through the Free Application for Federal Student Aid (FAFSA) program, your bankruptcy (just like your underwhelming credit score) should have no effect on their loan. That’s because the loan is solely in their name.
If your child isn’t college age just yet, it’s important to know that your bankruptcy shouldn’t hinder their ability to get a FAFSA loan in their name. They will have to report their parents’ income and other financial information accurately on the application.
Since you know the struggles involved in having significant debt, it’s smart to encourage your current or future college student to be realistic about the cost of college and to look for scholarship and grant opportunities as a means of getting financial aid they don’t have to repay. The crisis of young people graduating from college with a mountain of college debt is real.
If you’re considering bankruptcy, it’s important to learn more about the process and to weigh the pros and cons carefully for your family. Having experienced legal guidance can help.
