It used to be that being a college graduate almost guaranteed a spot in the middle class — if not higher — for most Florida residents. However, now with the high cost of college tuition and the slow job market, many college graduates are finding themselves out of work and behind on student loans, a financial situation that can be quite discouraging for those who are trying to start their adult lives.
The U.S. Department of Education recently released data comparing delinquent student loan payments. According to the department, 11 percent were delinquent on their student loans in the third quarter of 2012. Comparing this to 2003 when only 6 percent were delinquent in the third quarter of the year really highlights just how bad the student loan debt issue has become.
At this point, student loan debt has reached $1 trillion. This makes student loan debt the second highest consumer debt, right behind mortgage debt. This debt also ends up affecting many aspects of a person’s life. For example, while many used to graduate, start working and buy their first home, many are now finding themselves extremely stressed and living back with their parents.
Of course this begs the question of just what can be done. While going to college is expensive — with the cost of tuition only rising — having a college degree still gives a competitive edge when it comes to finding a job.
This means that for many, the risk of not being able to pay back student loans is still worth it and most do not even think about what to do until after graduation.
Part of the issue with student loan debt is that unlike other types of debt — like that from credit cards — student loans are rarely dischargeable in bankruptcy. However, this does not mean that bankruptcy can still not be a valuable tool.
For example, let’s say a graduate has tens of thousands of dollars in debt. And, while some of this debt is due to student loans, other debts are tied to credit cards. If the debt from the credit cards is discharged through bankruptcy, this would free up limited resources that could then go toward student loans.
Of course though, this is only one type of example. What works for one person may not work for another. This is why those with debt are encouraged to reach out and speak to an attorney who has experience handling debt relief cases in Florida in order to learn more.
Source: Bloomberg, “Overdue Student Loans Reach Record as U.S. Graduates Seek Jobs”, John Hechinger, May 22, 2013