The Student Debt Crisis
Student loan debt has gained a lot of attention over the last few years. As the amount of debt rises, here are some striking facts about the crisis.
Bankruptcy is not an Option for Student Borrowers
While major corporations in this nation are able to file for bankruptcy, student borrowers are not able to discharge their student loan debt in the bankruptcy process. Debts from gambling and other consumer debt such as credit card debt can be erased, but not education debt. This debt can continue to grow even when the borrower is unable to pay. And removing bankruptcy protection from student loans has only benefitted lenders. In a leaked memo, Sallie Mae, the nations leading student loan lender, listed preserving the inability to discharge education debt in bankruptcy as their second-most important goal. The Congressional Budget Office projects that the Federal Government made about $50 billion on student loans in 2013.
40 Million Americans
More than 40 million Americans hold student loan debt. Even more striking is when you put this in these terms: the population with student loan debt is actually greater than the entire populations of Canada, Poland, Australia and more than 200 other countries. And 7 million of those borrowers have defaulted on their loans. Defaulting on your loan has severe impact on your credit, which can translate to the inability to secure a higher paying job because a lot of employers now run credit checks on applicants before hiring them.
The Impact on Families
Privately held loans can be transferred to family members once the borrower is deceased. While there are movements and legislation being currently introduced that would prevent this, nothing has been finalized yet. Additionally, it has been shown that because people are putting so much money towards paying down their student loans they have held back on purchasing homes, purchasing cards, and even starting families.
Source: Huffington Post, 10 Fun Facts About the Student Debt Crisis, January 22, 2014