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The Parent School Loan

By Cathy Moran

parent loans

 

Take a good look at the result of the parent loan for college.

Tied up, captive, grimacing.

That’s what my client’s situation looks like to me:

  • Mid sixties
  • Kids just graduated
  • Parents liable for $250,000 in loans

If college makes the life of the kids, it stands to ruin the lives of the parents.

What kind of educational system not only tolerates, but facilitates such madness?

Parent loan trap

This story gets worse, unfortunately.  The kids have their own student loans for which they are liable.  The kids have no legal liability for the parent loans.  And probably little capacity to pay their loans and their parents’ loans if they tried.

But because one of the parents was unemployed when the loans were taken out, the lender required the guarantee of one parent’s sibling.

Bingo!

Now the entire older generation is snagged owing a quarter of million dollars at the end of their working lives for an education provided to others.

Debt that isn’t routinely dischargeable in bankruptcy.

Debt that entitles the feds to take part of the retiree’s Social Security every month to repay.

Debt in an amount that even a younger parent isn’t likely to be able to pay off.

What are we thinking?

The system is shameful.

And there’s  shame for all involved.

Colleges for selling their product as essential, then pricing it to ruin the very families it benefits.

Students for selecting a college priced so absurdly, then asking someone else to put their financial future on the line for you.

Parents for going along with the deal.

I am profoundly offended by a system that puts parents in the crosshairs for funding college.  Say no and you seem less than supportive, hypocritical in touting college but unwilling to pay the cost.

I wonder at kids willing to expose their parents to ruin.

And I wonder at our society who has tolerated the student loan system.  And the Congress who makes it neigh on to impossible to discharge student loans.

This has got to change.

 

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Filed Under: Featured Tagged With: 2016

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

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You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

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Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

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