Three Changes That May Keep Some College Graduates Out Of Bankruptcy
Extended dependent healthcare coverage for unmarried children up to the age of 26. Under the health care bill, as of September 23, 2010 (if all goes as planned) many youth will have access to their parents’ healthcare coverage through college and even afterwards during a time when many college graduates struggle financially. In recent years there has been an increase in the number of college graduates filing for bankruptcy and one of the reasons for this increase was medical debt. Medical debt is not only overwhelming for mature adults but can push both mature adults and youths into bankruptcy. Allowing youth up to the age of 26 to benefit from their parents’ healthcare coverage will go a long way in reducing the number of bankruptcy filings by youth suffering under medical debt.
Credit card companies are prohibited from issuing credit cards to youth under 21 years of age unless they have a parent, guardian or spouse co-sign or they can prove they have sufficient income. Many college graduates exit college with excessive amounts of credit card debt because credit card companies have a history of giving youth credit cards with no proof that they can repay the debt. With this new law, fewer graduates will leave college with excessive debt and fewer of them will need to file bankruptcy.
Student loans are still difficult to discharge in bankruptcy; but a new income-contingent repayment plan for federal loans offers many students lower monthly payments and opportunity for loan forgiveness after 25 years. And while student loans are difficult to discharge in bankruptcy, many graduates have filed bankruptcy just so they could discharge other unsecured debt (such as credit cards) to free up enough income to pay their student loans. This new repayment plan may take off some of the pressure and we could see fewer bankruptcy filings by youths struggling to repay student loans.