Do Student Loans Contribute to Foreclosure Crisis? What We’ve Seen from Homeowners in San Jose and Sunnyvale, CA

Foreclosures caused by student loan debt?USA Today reported yesterday (“Nobel winner: Cut student loan rates” ) on one of the proposals that has been put forth by Senator Elizabeth Warren (Bank on Students Loan Fairness Act)  to deal with what some have termed the next subprime mortgage bubble- student loan debt.

Right now, student loan interest rates on Government-subsidized Stafford loans will increase in July 2013 from 3.4% to 6.8% unless Congress acts.

Senator Warren’s proposal would instead have the interest rate tied to the Federal Reserve’s discount rate, which is currently .75%.   In presenting her proposal, Warren explained that this would mean student borrowers would pay the same interest rates that large banks pay when they borrow money from the Federal Reserve.

Is student loan debt the next subprime bubble?  It could be, especially if the rates are allowed to increase to 6.8%.   Here at ForeclosureHelp, we work with homeowners who are having trouble paying their mortgages in San Jose and Sunnyvale, California.    Based off a few recent cases of homeowners we’ve worked with, we can say that student loan debt is a very real problem for homeowners.

It could be the single person, who is already struggling with their mortgages, perhaps had their student loans in deferment, but can no longer defer the loans and must start paying them.   This extra expense, which could range from anywhere from $200 to $1,000 more a month, has to come from somewhere.

Or, it could be the parents who co-signed on student loans because they wanted their kids to go to college, but are now struggling to pay these loans in addition to other expenses like the mortgage, food, gas, etc.

Student loan debt, unlike credit card debt, can’t be eliminated through bankruptcy except in some limited cases (see the Nolo resource page below).   While there are options like deferment, it seems like a more concrete, lasting change will be necessary.   The status quo- with students trapped  by overwhelming amounts of student debt, has translated to fewer first time homebuyers, a “drag” on the economy, and is also part of the reason that the housing sector continues to limp along.  In fact, Forbes (Student Loan Problems: One Third Of Millennials Regret Going To College) cited a recent study of millenials in which 1/3 said they regret having gone to college and would have been better off working instead.

So, here at ForeclosureHelp, we are very interested to see how Congress addresses the student loan debt crisis because we know it has very real implications for homeowners here in San Jose and Sunnyvale, or for recent graduates would like to be homeowners at some point, but have a large overhand of debt that will prevent that from happening for another 10-15 years.  When the Consumer Financial Protection Bureau asked Americans for their ideas on dealing with the crisis, they heard from almost 30,000 people- demonstrating that this is a very real problem for too many Americans.

A few resources that may be helpful:

Top 10 Student Loan Tips for Recent Graduates

Mapping Your Future: Manage your student loan debt

NOLO.com: “Student Loan Debt in Bankruptcy”

Consumer Financial Protection Bureau: Helping borrowers find ways to stay afloat A path forward to spur affordable repayment options

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Foreclosure Help is a coalition program funded by the city of San Jose through a HUD Community Development Block Grant and the city of Sunnyvale, and we can directly assist homeowners  and tenants in San Jose and Sunnyvale who are facing foreclosure.   However, we are unable to assist homeowners/former homeowners in other cities and states.  If you need housing counseling, we suggest using the interactive map on HUD’s website.

ForeclosureHelp partners include the Housing Trust Silicon Valley (lead agency), the Fair Housing Law Project at the Law Foundation of Silicon Valley, SurePath Financial Solutions, Project Sentinel, Asian Inc, Neighborhood Housing Services of Silicon Valley, and the Santa Clara County Association of Realtors.

If you are a homeowner living in San Jose or Sunnyvale and are struggling with your mortgage, please contact ForeclosureHelpSCC, a program funded by the City of San Jose through a HUD Community Development Block Grant and the City of Sunnyvale at (408)-293-6000 or visit us: www.foreclosurehelpscc.org

Our housing counselors can help you evaluate your options, learn more about federal and state programs that may help you with your mortgage issues, and will help you create a plan forward.

Please note: All content included in the ForeclosureHelpSCC blog is provided for information only and should NOT be considered legal or tax advice. If you have any questions, please feel free to contact us on our hotline: (408)-293-6000, or visit our website: www.foreclosurehelpscc.org or send us an email: help@foreclosurehelpscc.org.

Si usted es dueño de una casa en San José o en Sunnyvale y están luchando con su hipoteca, por favor póngase en contacto con ForeclosureHelpSCC, un programa financiado por la ciudad de San José y la ciudad de Sunnyvale, al (408) -293- 6000, o visite nuestro sitio: www.foreclosurehelpscc.org.Nuestros consejeros puede ayudarle a evaluar sus opciones, aprender más acerca de los programas federales y estatales que pueden ayudarle con sus problemas de hipoteca, y le ayudará a crear un plan para seguir.

Por favor, tenga en cuenta: Todos los contenidos incluidos en el blog ForeclosureHelpSCC se proporciona únicamente a título informativo y no debe ser considerada como consejo legal o fiscal. Si usted tiene alguna pregunta, por favor no dude en contactarnos a nuestra línea directa: (408) -293-6000, o visite nuestro sitio:www.foreclosurehelpscc.org o envíenos un correo electrónico: help@foreclosurehelpscc.org.

Nếu bạn là một sinh hoạt chủ sở hữu nhà ở San Jose hoặc Sunnyvale và đang đấu tranh với nợ nhà, xin vui lòng liên ForeclosureHelpSCC, một chương trình được tài trợ bởi thành phố San Jose và thành phố của Sunnyvale ở (408) -293-6000 hoặc truy cập trang web của chúng tôi: www.foreclosurehelpscc.org.

Nhân viên tư vấn của chúng tôi đã được HUD chấp thuận có thể giúp bạn đánh giá các lựa chọn của bạn, tìm hiểu thêm về các chương trình của liên bang và tiểu bang có thể giúp bạn với các vấn đề thế chấp của bạn, và sẽ giúp bạn tạo ra một kế hoạch phía trước.Xin lưu ý: Tất cả các nội dung trên Blog ForeclosureHelpSCC được cung cấp thông tin duy nhất và không nên coi là hợp pháp hoặc tư vấn thuế. Nếu bạn có bất cứ câu hỏi , xin vui lòng liên hệ với chúng tôi qua đường dây nóng: (408) -293-6000, hoặc truy cập vào trang của chúng tôi: http://www.foreclosurehelpscc.org hoặc gửi email cho chúng tôi:help@foreclosurehelpscc.org.

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FAIR HOUSING AND ANTI-DISCRIMINATION POLICY

It is the policy of ForeclosureHelp not to discriminate against any person because of that person’s race, color, religious creed, sex (gender), sexual orientation, marital status, national origin, ancestry, familial status (households with children under the age of 18), source of income, disability, medical condition or age. Color or “ethnic group identification” means the possession of the racial, cultural or linguistic characteristics common to a racial, cultural or ethnic group, or the country or ethnic group from which a person or his or her forebears originated. As required by law, we agree to take the affirmative steps needed to further fair housing.

ForeclosureHelp will consider any and all requests for reasonable accommodation in the application of its rules, policies, practices, and services, and in the use of its physical structures, in accordance with the requirements of state and federal laws. You can ask ForeclosureHelp to consider any reasonable accommodation you may have. Please consult with the Program Manager (408-293-6000 or via email: help@foreclosurehelpscc.org) to request this accommodation.

2 thoughts on “Do Student Loans Contribute to Foreclosure Crisis? What We’ve Seen from Homeowners in San Jose and Sunnyvale, CA

  1. Pingback: Homeowners Say Customer Service is Still a Problem when They Contact Their Bank or Servicer | ForeclosureHelpSCC

  2. Pingback: HAMP Program Is Extended Until 2015: What does this mean for homeowners in San Jose and Sunnyvale California? | ForeclosureHelpSCC

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