With student loan debt growing consistently on a national scale, experts are concerned that this trend could have an adverse effect on economic growth, as this new generation of borrowers compensates by cutting back on other areas of spending. In other words, when faced with excessive educational debt, consumers tend to use their credit cards less, put off purchasing vehicles and homes, and even delay contributing to savings accounts for their children’s future education. According to experts, this means that the explosion of student loan debt will sap economic growth in the United States, where consumer spending accounts for 70% of gross domestic product. As more and more consumers find themselves struggling to pay off student loan debt and other forms of debt, filing for bankruptcy is becoming a viable option for many people. Contact our experienced lawyers at Oklahoma Legal Center today to discuss the process of filing for bankruptcy protection in Oklahoma.
Educational Debt on the Rise in the U.S.
There are 39 million consumers faced with a total of $966 billion in educational debt in the United States, and the Federal Reserve Bank of New York reports that that alarming sum has tripled just since 2004. Student loan debt was the only type of consumer borrowing that grew through the Great Recession, and in 2010 surpassed credit card debt, car loans and home equity credit to become the biggest source of indebtedness, behind only mortgages. While graduates struggle to pay their monthly student loan bills, experts are concerned about the effect this trend could have on economic growth as a whole. “Consumers with large student debt burdens may spend less and are more likely to have difficulty securing a mortgage,” reported the U.S. Treasury’s office of Financial Research in its 2012 report. “These factors could significantly depress demand for mortgage credit and dampen consumption.”
Fewer Graduates Can Afford Home Ownership
A decrease in other areas of spending besides educational debt is evident in data provided by the Federal Reserve Bank of New York. From 2005 to 2012, non-student debt declined for borrowers between the ages of 25 and 30 by about one-third. The drop was particularly marked among borrowers with $100,000 or more in student loans – their other debts declined from an average of $50,000 to just over $20,000. Plus, despite housing becoming more affordable and interest rates hitting record lows, only about 7% of the most indebted young borrowers took out new mortgages in 2012, compared to nearly 17% in 2005. Unfortunately, as a financial adviser at Neighborhood Trust Financial Partners notes, home ownership increasingly appears to be out of reach for many young consumers with educational debt.
Contact Our Experienced Attorneys for Legal Help
The rising cost of education plays a major role in the significant student loan debt young borrowers in the United States are now facing. In fact, nearly 13% of graduates in the U.S. owe more than $50,000, and 3.7% have student loan balances over $100,000 – an increase from 1.7% in 2005. Unfortunately, for many consumers, looming student loan payments can put a significant burden on them and their family, especially if these bills prevent them from paying down other types of debt. If you are facing overwhelming debt and you are considering filing for bankruptcy protection in Oklahoma, contact our reputable attorneys at Oklahoma Legal Center to discuss your legal options. You may qualify for Chapter 7 or Chapter 13 bankruptcy, which can help you discharge your debt or organize it into a manageable repayment plan to be paid back over time.