While the economy is certainly better than it was at the end of 2007 when the financial crisis really hit the U.S., times are still tough for many Florida residents, especially those who are struggling to pay back student loans. In fact, when it comes to delinquency rates, failure to make payments is more of a problem with student loans than it is with credit card debt.
According to the Federal Reserve Bank, student loan debt increased by 4.6 percent from the second to the third quarter of the year. During this time, the delinquency rate among student loans also rose to 11 percent. This means 11 percent of those with student loans are at least 90 days behind on making their payments.
Overall, the effect of student loan debt is also one that is far reaching. For example, as more students graduate, unable to find jobs -- or good enough paying jobs -- more and more young people put off buying a home. This in turn contributes to the overall decline in the U.S. homeownership rate, which in turn affects the housing market.
Of course, many might say to avoid this problem of student loan debt people just shouldn't take out student loans. However, the reality is that with the rising cost of tuition, many who want to go to college have to take out student loans. In fact, two-thirds of those earning a bachelor's degree take out some sort of loan. These loans come from private lenders or the government. In some cases, the lender is a family member.
In general, student loan debt ends up impacting many parts of a borrower's life; from not being able to qualify for a mortgage, to having repeated phone calls from collectors. However, while bankruptcy will not typically discharge student loans, keep in mind that it is one debt relief solution that can result in more freed up money to put toward those loans.
Source: CBS News, "Student loan debt nears $1 trillion: Is it the new subprime?" Jill Schlesinger, Nov. 28, 2012
- Our firm has experience working with those struggling with debt. To learn more, visit our Orlando bankruptcy page.