Finances, Bankruptcy and Education

With the big push these days to get an education and get a better job, you would think it would be a bit easier to do. It does not take much surfing of the ‘net before you see a banner ad about government backed plans to help men or women go back to school to further their education and/or make a new start. Yet in talking to others around me, as well as my oldest son’s own struggles with staying in school, it seems they make it sound easy, but it is not always the case.

For instance, my son went to our local credit union to check on these special student loans they offered. Come to find out the qualifications are pretty outrageous. In order for him to qualify, he must have a full time job, and be making at least $1500 a month. Really? How do they expect a full time student to also hold a full time job and make that kind of money? I find it a bit baffling myself.

Then, there is the issue of bankruptcy and student loans. Anyone who has recently filed bankruptcy can tell you, you cannot file against a student loan. Okay, that is understood and acceptable. Now, most people file bankruptcy before they have gotten too far into debt. If they have filed a chapter 7 bankruptcy, their debt is gone, and they now have a much better income to debt ratio, which usually results in more money left over each month. With more money, you can pay more bills. So, you decide to go back to school in an effort to get a better paying job so as to avoid financial issues like this in the future.

Come to find out that the bankruptcy stops you from getting approved for a student loan. At this point I scratch my head. 1) You cannot file bankruptcy for ten years usually, so any new debt is protected for at least ten years. 2) You cannot even file bankruptcy against a student loan, so they are protected from that in any instance. 3) Having just filed bankruptcy, and still being gainfully employed, there should be more funds now to pay the loan. 4) Furthering the education normally leads to a better job and more income.

So, wouldn’t it make sense to approve a student loan for people in this type of scenario? Maybe it is just me, but with the big push and government programs to help people get more financially secure, a situation like bankruptcy should not deter a student loan, since the protection is already in place, and the outcome should be better than the entrance.

Anyway, just sharing my thoughts on this since it came to my attention this week as our family had “back to school” on the brain. What do you think about this scenario?

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