More and More People with Student Loan Debt Filing for Bankruptcy

According to a survey released by the National Association of Consumer Bankruptcy Attorneys yesterday, bankruptcy attorneys are seeing an uptick in the amount of cases involving student loan debt.

Roughly fifty percent of bankruptcy lawyers surveyed reported an increase in clients with debilitating student loan debt.

The average 2010 college graduates had an average of just over $25, 000 in loan debt. That's up five percent from 2009 graduates, who had an average of $24,000 in debt.

Student loans can be a burden to pay off, especially in an economy wherein it's exceedingly difficult for young graduates to find employment. Additionally, student loan debt cannot be discharged in a bankruptcy filing.

"Student loan debt is a real problem because it is very easy to acquire and extremely difficult to get rid of," says MN Bankruptcy Attorney, Max Zawojski. "Profit and non-profit schools alike have financial aid departments who facilitate this borrowing with little to no counseling on the ramifications of assuming this kind of debt. Furthermore, students are allowed to assume this debt with no regard to the earning potential or even employment possibility, of their chosen degree field. Do we really expect 18 year-olds coming out of high school to possess the foresight and financial sophistication to understand what they are getting themselves into?"

"The solution is simple: allow the discharge of student loan debt. BAPCPA made it more difficult to qualify for Chapter 7 anyway. The risk of abuse is minimal. If need be, place an arbitrary time requirement of 8 or 10 years post-graduation. If someone is still earning less than median income 10 years after graduating, then they are not realizing any pecuniary gain from their education and should be released from the obligation to pay for it. It's time to bring some accountability to the student loan system."

Related Sources:

LATimes.com