Mere months into 2012, the issue of student debt is appearing frequently in the media. Many people considering filing Las Vegas bankruptcy have student loans that they are having difficulty dealing with. They are dismayed to find that the bankruptcy code offers them few options, especially for private student loans. Recently, researchers at the New York Federal Reserve have investigated the size and scope of Americans’ student loan debt, which exceeded credit card debt in June of 2010, with data provided by the credit reporting agency, Equifax. Their findings are quite surprising.
(1) As of the third quarter 2011, of the 241 million Americans the data cover, 37 million have $870 billion in student loans.
(2) 39.6 percent of the loans are owed by people under 30, which translates to 40.1 percent of all people in that age range.
(3) Student debt is mainly held by younger people over all. 24 million people under 40 have $580 billion in student loan debt.
(4) The average borrower has $23,000 in student loan debt, but the median borrower has only $12,800, meaning a smaller number of Americans have a large amount of student loan debt. Surprisingly, the report didn’t inform readers of how many people with low debt levels were still in their first years of college and on their way to borrowing more money to complete their educations, were dropouts who had the debt but not the degree, or were older debtors who were close to retiring their student loans.
(5) More than 1.1 million people owe more than $100,000 in student loan debt.
(6) Only 5.4 million borrowers (14.4 percent of the total) had loans that were “past due.” This accounts for $85 billion worth of debt, which is similar to other types of debt. More than half these loans belonged to people under the age of 40.
(7) The researchers then concluded that the data were including people who were still in school and had not entered the repayment phase on their loans. Once those whose loans were in deferral of forbearance were excluded (47 percent of all borrowers) the number of borrowers whose loans were “past due” shoots up to an incredible 27 percent, accounting for 21 percent of the total number of loans.
That 27 percent past due rate is a disaster. Worse, because the loans are not dischargeable in bankruptcy, banks make more money by adding penalty fees onto the loans, forcing many debtors to pay more money that they would have had they never defaulted.
If you have onerous student loan debt, remember that bankruptcy can help. A Chapter 7 filing can discharge other debts you have, such as credit card debt or underwater second mortgage debt, which can free up income for other expenses. Sometimes a Chapter 13 repayment plan can work as well.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.