Michigan Students Increasingly Bogged Down With Student-Loan Debt
Statistics on recent Michigan college graduates show that students are increasingly defaulting on their student loans. Although graduates emerge with valuable degrees, failure to repay the loans can hinder their financial futures, especially because student loans are not dischargeable in bankruptcy.
Michigan Live reports that student debt is the second-largest type of household debt in the nation after mortgages. More than $1 trillion is owed on student loans, which is more than the amount owed in credit-card debt. In addition, the Federal Reserve Bank of New York states that, in 2010 alone, $100 billion was taken out in student loans.
With so much debt in a period of high unemployment, many recent college graduates are finding it hard to repay their loans. The “cohort default rate” is a demonstrative statistic, as it represents the number of student-loan debtors whose first loan payments were due between October 1, 2008 and September 30, 2009, and who defaulted before September 30, 2010, reported Michigan Live.
According to U.S. Department of Education data, the default rate at 26 of Michigan’s 28 community colleges increased in 2009, with an average rate of 12.1 percent. In contrast, the default rate for Michigan’s 15 public universities was 3.7. However, the Project on Student Debt states that students attending a four-year college in Michigan graduate with an average student-loan debt of just over $25,000.
Defaulting on student loans can have significant consequences, including damaging people’s credit scores and limiting their abilities to obtain car and mortgage loans. In addition, people who default on their student loans will not be able to get financial aid should they decide to return to college, said Bruce Wierda, Muskegon Community College’s director of financial aid.
Importantly, help is available to people with student-loan debt who are struggling to make ends meet. If you are finding it difficult to pay your bills, contact an experienced bankruptcy attorney to discuss legal options that may reduce your debt load and free up funds to help you repay your student loans.