Much has been made of the crushing debt that is forcing many students and younger people to file for a Los Angeles bankruptcy. It’s important to note‚ though‚ that it’s not just the students who are finding themselves barely treading water: They’re parents are drowning in debt right along with them.
L.A. bankruptcy attorneys know that while Congress is debating a back-step on the student loan rate‚ which is set to double from 3.4 percent to 6.8 percent by the beginning of summer‚ now is the time many high school seniors are deciding which college to attend — and parents are deciding how they are going to pay for it.
Across the U.S.‚ student loan debt is much higher than credit card debt – nearly $870 billion‚ compared to about $7000 million‚ respectively. What’s more‚ while the average public school debt is going to level out around $12‚500‚ there are about 30 percent of students for whom that debt has ballooned to somewhere in the $25‚000 to $200‚000 range – an insurmountable amount‚ particularly considering the abysmal current employment environment.
And where new college graduates turn when they’re in over their heads? Mom and dad‚ of course. That’s one reason so many college graduates have returned back home‚ creating even more of a burden on their parents’ finances‚ at a time when parents were maybe hoping to an enjoy an empty nest.
One problem is that a college education is difficult to effectively gauge the value of. For example‚ we may know what kind of a house we can reasonably afford. We may know what kind of car we can drive or which weekend activities we can shell out a few extra bucks for. But when it comes to a college degree‚ what you’re paying for is an investment in the future. Parents want to help make their children’s dreams come true‚ and universities have done a fantastic job of selling us on the idea that an expensive degree from a top school is going to equal success. Unfortunately‚ that’s not always the case.
So what happens? Not only do new graduates end up mired in debt‚ so do their parents.
A recent column in The Baltimore Sun outlined this issue‚ and what parents need to do to avoid getting themselves trapped in a quagmire of debt‚ which may at some point require a Los Angeles bankruptcy.
The first thing you need to do is determine how much debt you and your child can reasonably afford. Figure it out on a per-month basis. Then‚ you need to decide how much your child will likely be able to cover once they graduate. This can be tricky because you don’t necessarily know exactly what the job market is going to do. But for example‚ while there may be value in a liberal arts degree‚ what kind of job is your child likely to land with this diploma?
It might be‚ as columnist Susan Reimer suggested‚ the compromise will be two years at a community college‚ followed by two years at a public university – or some combination like that.
The key is to hold firm‚ and not splurge for more of an education than you can afford.
If you are considering filing for bankruptcy‚ contact Los Angeles bankruptcy lawyers at Cal West Law to schedule your free consultation. Call (800) 568-0707.
Student loan debt traps parents‚ too‚ By Susan Reimer‚ The Baltimore Sun