In a recent post and many times in the past we have discussed the problem of student debt and the way that it impacts other types of borrowing and debt. When recent graduates emerge from college, an associate’s degree program, or graduate school with high amounts of debt, it is essential that they find work in order to start paying down that debt on time. Unfortunately, the lagging economy is making it more difficult for graduates to find jobs that make their investment in higher education profitable from the start.
This problem has become more and more prevalent in recent years, and a new report indicates that more students are facing past due loans than ever before. According to statistics from the Department of Education, about 11 percent of student loans were at least 90s days past due during the last quarter of 2012. Compare that with better financial times in 2003 when only six percent were 90s day past due, and it is clear that student debt has become increasingly unmanageable for many recent grads.
Student loans are not currently dischargeable in a Chapter 7 or Chapter 13 bankruptcy filing, but many advocates are seeing the current crisis and calling for reforms in that area. Still, recent graduates who are unable to meet all of their financial obligations could seek a discharge or modification of other types of debt, such as credit card debt or a mortgage. Utilizing the bankruptcy process can help get young adults back on their feet to start out their futures with fewer burdens and more opportunity.
Source: Bloomberg, “Overdue Student Loans Reach Record as U.S. Graduates Seek Jobs” John Hechinger, May 22, 2013