The front page of CNN Money recently had a heartbreaking story about two parents that suddenly lost their 27-year-old daughter and the resulting financial hardships of being co-signors for her private student loans. The article, written by Blake Ellis covers a topic that is becoming more and more common. The parents, Steve and Danielle Mason, understandably so, immediately took in their daughter’s three children (all under the age of 10) to raise them after her unexpected death. In addition to the added financial responsibility of suddenly raising three additional children, it was not long before they began receiving calls about their daughter’s student loan debts. Their daughter Lisa had taken out $100,000 in private student loans in order to complete her nursing school education. Her parents co-signed, and as such, are responsible for those debts in the event Lisa was unable or did not pay them back. While trying to…
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It’s a topic that has been showing up over the last couple of years and appears to be gaining steam. Student Loan debt loads may be hurting the economy. As a generation graduates with higher student loan debts than any before it, economic data is starting to show these young people are having increasingly difficult times paying back their student loans or contributing to the economy through car or home purchases. Forbes- February 2012: Student Debt the Next Financial Crisis? Washington Post February 2014: Student Debt May Hurt Housing Recovery New York Times – May 2014: How Student Debt May Be Stunting the Economy Just last week, President Obama issued an executive order designed to provide help to approximately 5 million student loan borrowers. We have been seeing it for a while. As bankruptcy attorneys in Kansas City, we get phone calls from potential clients seeking information about their bankruptcy…
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President Obama has signed an Executive Order affecting approximately 5 million student loan borrowers. It primarily affects two groups of borrowers: Those with federal direct loans who borrowed before October 2007 and; Those who have not borrowed since October 2011. Payments will be capped at 10% of the borrower’s monthly income. As of the date of this writing, it is not known if this applies to a borrower’s gross pay or take-home pay. The cap is hoped to be available to these borrowers by December 2015. This new repayment cap is an addition to other repayment plans based on income, such as the Income-Based, Income-Contingent, Income-Sensitive, and Pay As You Earn repayment programs. Student loan defaults and high monthly payments continue to be growing concerns in America. While these repayment options are available for various federal loans, they are not available for private student loans. This Executive Order does not…
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