According to USA Today, the country’s $1 trillion student loan debt is beginning to rob the housing market of new borrowers in the form of young college graduates.
“With the number of borrowers approaching 40 million nationally, including more than 40 percent of 25-year-olds, the average balance on their [student] loans has risen to $25,000. About 6.7 million of all student borrowers, or 17 percent, are delinquent on their payments three months or more,” USA Today reported.
“These are the people you’d expect to buy big houses,” student loan expert Heather Jarvis told USA Today. “They owe a lot because they have a lot of education. They have been through professional and graduate schools, but their payments are so significant, they have trouble getting a mortgage. They have mortgage-sized loans already.”
Bankruptcy and Student Loans
For years, we have been imploring lawmakers to loosen federal laws when it comes to discharging student loans through bankruptcy. Currently, the only way you can discharge student loans through bankruptcy is by proving an extreme financial hardship, which is very difficult.
The United States is now facing a higher education bubble that is going to burst. In this economy, many college graduates are finding themselves without employment while still trying to grapple with housing payments, credit card bills and other forms of debts all on top of high student loan payments. Many of these people are honest individuals who got in over their heads financially.
With student loan debt skyrocketing, the median salary for graduates has fallen, from $30,000 in 2007 to $27,000 in 2011. For many student loan borrowers, a Chapter 7 or Chapter 13 bankruptcy can still help even though their student loan debt is nondischargeable, as you can discharge credit card debt, medical bills and unsecured personal loans.
If you have student loan debt, bankruptcy may be able to help you even if you thought it could not. Contact our Washington DC and Maryland bankruptcy lawyer to learn more about whether you should file bankruptcy to deal with your student loans.
Law Firm of Kevin D. Judd
Judd’s Judgment: On average, tuition increases about 8 percent per year at American universities.