Plan for college early to avoid debt

Choosing a college is perhaps one of the most difficult decisions for both Arizona parents and teenagers. Teenagers are touring their favorite colleges, looking at the campus, clubs, and courses available, whereas parents are trying to figure out how they can finance their children's dreams.

Ensuring that a college education is financed properly is of utmost importance in these difficult economic times. Without planning, college debt could leave Arizona residents struggling with their own college bills or their children's. If residents find themselves overwhelmed with debt, Chapter 7 bankruptcy relief may be the answer.

According to experts, parents can employ a few strategies to manage their finances and benefit them in the long run. It is important to start saving early and aim to save a third of college costs over the course of the child's life. Parents should aim to borrow no more than one-third of the cost of college. Students should try not to take on more than the federal student loan limits.

According to statistics, not enough parents are aware of the consequences of taking on more debt than they can handle. When a parent co-signs the loan for their children, parents may not be aware of the responsibility they are taking on. An increasing number of elderly people have found themselves struggling with not only their own medical debt and credit call bills, but also loan repayments for their loved ones.

Though they have the option to apply for Chapter 7 bankruptcy to wipe out most of their debts, college debt is only discharged if they can show financial discharge, which is difficult, but not impossible. Families should look at not only the personal value of the diploma earned, but also the financial value. Students should graduate from college with an education, not staggering debt.

If Arizona residents do find themselves in overwhelming debt, there are legal professionals who can help decide what to do next. There are various bankruptcy options that are available and appropriate for one's unique situation.

Source: NPR, "Debt and the modern parent of college kids," April 10, 2013