Student loan debt is now outpacing credit card debt
As the economy struggles to get back on track, both the government and the media seem to be focusing almost exclusively on mortgage and credit card debt as the overwhelming causes of bankruptcy and foreclosure and obstacles to recovery. Little has been said about student loans, however, which is troubling. In a personal bankruptcy, most forms of debt can be discharged or minimized in some way, with one major exception: student loans. This means that student loans can continue to burden Georgia residents for years or even decades, causing major hardship and possibly resulting in serious financial consequences.
The problem may only continue to worsen, according to new information from the federal government. Recently, the Federal Reserve Bank of New York reported that Americans now owe more on student loans than they do on credit cards as students borrow, on average, twice as much as they did 10 years ago. Further, total outstanding student loan debt has doubled in the past five years, while outstanding mortgage and credit card debt dropped.
In 2010, the amount of student loans taken out exceeded $100 billion for the first time in history. This year, the total amount of student loans is projected to cross the $1 trillion mark, also for the first time.
Clearly, there are potentially serious ramifications of the increase in student loan debt. More students are now leaving college deep in debt, and facing a job market that is less than promising. As a result, the number of student loan borrowers who were more than nine months behind on payments rose from 6.7 percent in 2007 to 8.8 percent in 2009, and it appears that it will only increase from here.
Source: USA Today, “Student loans outstanding will exceed $1 trillion this year,” Dennis Cauchon, Oct. 20, 2011
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