The economic downturn has cast light on a growing crisis that many have been predicting for years. Looming student loan debt may be the next big bust in the economy. The amount of total student loan debt held by debtors in this country has surpassed credit card debt and auto loans.
Debtors are not limited to young people. The number of elderly Americans retiring with student loan debt is on the rise. Reports from Equifax, a credit-reporting agency, show that individuals 50 and older have $135 billion in student loan debt and those 60 and older have $36 billion. This spring, many college seniors graduate with debt. At graduation ceremonies across the country, the number of audience members with their own student loan debt is also on the rise.
The traditional attitude is that education is essential to obtain a good paying job. This belief has led many adults back to school to earn GEDs, bachelor's, and advanced degrees. Job loss has even pushed some in their late 40s and 50s to go back to school. Grandparents are taking out loans to help grandchildren pay for the ever-increasing cost of obtaining an education.
With the possibility of interest rates on federal subsidized student loans doubling if lawmakers do not take action, many in the Ann Arbor area are concerned about their ability to repay these loans. Debtors struggling with high debt levels may be able to seek relief in bankruptcy court. Discharging student loan debt is more difficult than discharging consumer debt in bankruptcy, but the process can provide relief from other debts to free up money towards repayment of these loans. A provision in current bankruptcy laws allow student loans to be discharged if the debtor can show that repayment of the loans would be an "undue hardship."
Individuals struggling with high debt levels, including student loans, should seek the advice of an experienced bankruptcy attorney to discuss options for getting their financial affairs in order.
Source: The Washington Post, "Student loans saddle both kinds of seniors: graduates and grandparents," Michelle Singletary, 4/09/12.