Student loan debt prevents a lot of millennials in their 20s and 30s from buying a home or starting a family. As the average student loan debt exceeds $40,000 in the United States, a growing number of lawmakers plan to empower borrowers and make bankruptcy a possible alternative. Students overwhelmed with debt affects the entire economy as people who would typically buy cars, homes or consume products for their children feel stunted. According to the Wall Street Journal, the nation's student loan debt doubled to $1.3 trillion since the Great Recession.
Unveiling the 'Bill of Rights'
The White House unveiled a "Student Aid Bill of Rights" intended to help borrowers navigate the often confusing world of student loans. As part of the push to free students from undue burden, the White House officials say they will study allowing student loans as part of a bankruptcy filing.
Examining student debt in California
According to statistics cited by The Wall Street Journal, there are 4,156,000 student loan borrowers in California. Their outstanding debt totals $112.3 billion, which translates to an average debt per borrower of $27,014. In the District of Columbia (Washington D.C.), the average debt per borrower is $40,885.
Helping those who fall behind
The Wall Street Journal also reported on who is most likely to default on student loans, pointing out that defaults are most common among those with low balances. Experts suspect the reason is that those with lower balances drop out of college. A growing number of college students drop out because they can't afford the rising cost of tuition. They are left without a diploma and without good job prospects that will help them to repay their student loans. Allowing for student loan borrowers to include their loans in bankruptcy would likely help those who truly need the help the most. People with student loans above $100,000 were least likely to default, according to the research by the Federal Reserve Bank of New York.
At the Law Offices of James C. Shields, we specialize in bankruptcy, estate planning and probate. We can help you figure out how to deal with debt that has gone to collections. For more information about the student loan crisis and whether bankruptcy is an option for you, please contact us.