According to the Huffington Post, student loan default rates have reached their highest levels in nearly two decades. The publication declared recently that one in 10 borrowers has entered default on their federal student loans within his or her first two years of repayment—the highest rate since 1995.
The HuffPost cited statistics from the Department of Education to make its claim. “The growing number of students who have defaulted on their federal student loans is troubling,” Education Secretary Arne Duncan said, according to the HuffPost. Duncan pledged that the department would work with students and lenders to make sure that “student debt is affordable.”
Nationally, student loan debt has reached more than $1 trillion, a higher number than is owed in credit card debt. This summer, the Consumer Financial Protection Bureau found that more than 7 million people were in default on federal or private loans, meaning they were more than 90 days late on a payment.
On top of the high default number, it has been reported that more than $90 billion has not been paid because borrowers are in forbearance, meaning their payments have been suspended, as interest continues to accrue. According to the HuffPost, the average borrower with federal student loans now has more than $26,000 in debt, a nearly 43 percent increase from 2007.
The student loan bubble in the United States has reached crisis levels. Greed by lenders, outrageous tuition increases by universities and questionable legislation, has created unbelievable financial distress for students entering the work force and family members.
We have urged legislators to loosen federal laws, allowing borrowers with student loan payments to discharge portions of their debt through bankruptcy. Currently, it is very hard to discharge student loan debt through bankruptcy. However, it should be noted that Chapter 7 and Chapter 13 bankruptcy filings remain an alternative for people grappling with credit card bills and other forms of debts, on top of high student loan payments.
If you are under pressure financially because of student loans, you can contact our Washington DC and Maryland bankruptcy lawyer now for a free consultation. Our attorney can work with you to eliminate or consolidate your debt and restore your financial freedom.
Law Firm of Kevin D. Judd
Judd’s Judgment: According to CBS News, tuition at public universities has increased 5.4 percent each year since 2001-02.