When the housing bubble burst, the nation’s economy went into a tailspin. While we are still slowly recovering from the affects of the housing crisis, another financial crisis may be brewing. A new survey and report published by the National Association of Consumer Bankruptcy Attorneys (NACBA) looks at the possibility of student loan debt crisis.
The survey included responses from 860 bankruptcy attorneys and the results are actually quite startling.
- 48 percent of those attorneys surveyed have seen a significant increase in potential clients with student loan debt over the past three to four years
- 23 percent of those surveyed have seen their student loan related case loads increase by 50 to more than 100 percent
- 95 percent of the attorneys said that only a few of their clients will have their student loan debt discharged due to undue hardship
Essentially, bankruptcy attorneys are seeing more clients with student loan debt and the vast majority of these clients will still be responsible for their student loan debt after bankruptcy. For those that have the bulk of their debt tied up in student loans, bankruptcy will offer little to no financial relief.
The news gets worse, though, student loan debt is up over the past few years as well. Perhaps part of the rise in student loan debt can be attributed to unemployed adults returning to school to boost their skill sets in hope of getting another job. Another reason could be that the economic recession ate through the savings parents had set aside for their children’s college costs.
Regardless of what is causing the average student loan debt to rise, it is. The cost of a college education is out of reach for so many families unless they choose to take out a student loan and so that is exactly what these families do, take out student loans. But if the times get tough, the student loans will still need to be repaid.
If you are attending college in the fall or sending your high school senior off to university, heed the data presented in this report and really take the time to decide if a student loan is a viable option for you or your loved one.
Download the entire report now, The Student Loan “Debt Bomb”: America’s Next Mortgage-Style Economic Crisis? (PDF)