The big number that has everyone talking is the $1 trillion in U.S. student loan debt. But what about the smaller numbers – $150 per month, $500 per month – that are taking a big chunk out of individual budgets as well? Student loan debt has the potential to create a much bigger burden than credit card debt, leaving some graduates wondering if they’ll be able to afford that new car or even buy a home in the future. And it’s not just the students that are worried about their debt; policy experts, lenders and leaders in financial services are becoming more and more concerned about the effect of this debt on the economy, due in large part to the difficulty many college grads are experiencing in finding well-paying professional employment. If you find yourself struggling with overwhelming debt, contact our skilled bankruptcy attorneys at Oklahoma Legal Center to discuss the benefits of filing for bankruptcy in Oklahoma.
Effect of Student Loan Debt on the Economy
“Debt of this magnitude has the potential to slow down the economy significantly,” said chief executive Todd Albery of a Detroit-based credit-information website called Quizzle. “Bottom line, if you can’t work, you can’t repay your loans; if you can’t repay your loans, your credit suffers. The end result is pretty obvious.” Plus, college graduates who are struggling with student loans – as well as those who borrowed but didn’t graduate – typically can’t file for bankruptcy to relieve their debt. In order to do away with student debt in bankruptcy filing, you have to demonstrate undue hardship beyond your control.
Although senior director of Moody’s Analytics, Christian de Ritis, has observed student lending and concluded that student loans aren’t on their way to becoming another housing crisis, that kind of debt can be troublesome for borrowers who owe so much they have to delay buying a home, starting a family or building a small business. However, de Ritis warns, young people shouldn’t become so discouraged by the prospect of future debt that they give up pursuing a higher education. “To the contrary, the returns to education remain large for most students, with a significant difference in the employment and income prospects between more- and less-educated individuals,” he said.
Billions in Student Loan Debt in Default
There is about $864 billion in federal student loan debt and about $150 billion in private student loan debt, according to a report issued earlier this month by the U.S. Department of Education and the Consumer Financial Protection Bureau. Unfortunately, statistics also show that about $8.1 billion in private student loan is in default, possibly due in part to consumers being granted a forbearance, or temporary stop in payments, but still racking up interest until their overall debt explodes. According to Richard Cordray, director of the Consumer Financial Protection Bureau, “Too many student loan borrowers are struggling to pay off private student loans that they did not understand and can’t afford.” Cordray is currently urging Congress to reconsider how borrowers might be able to restructure student debt in the bankruptcy process.
Consult an OK Bankruptcy Attorney Today
In 2005, Congress amended the bankruptcy code to make it more difficult to discharge private student loans. For college graduates, the first payment for student loan debt typically isn’t due until six months after graduation, but it’s a bill they will have to consider early on if they are thinking about taking on other payments as well, such as buying a car or renting an apartment. If you are struggling with significant debt and are considering filing for bankruptcy in Oklahoma, consult our experienced bankruptcy attorneys at Oklahoma Legal Center today. Our law firm is located in Oklahoma City, and our bankruptcy lawyers have years of experience helping consumers determine which course of action is appropriate for their financial situation.