Most Americans are experiencing the benefits of a falling unemployment rate, improving wages and an overall more stable economy. Most, but not all.
According to a February 18 Business Insider article, millenials — the generation born roughly between the early 1980s and the early 2000s — are largely exempt from America’s economic recovery. The reason? Student debt.
In its recently-released Quarterly Report on Household Debt and Credit, the Federal Reserve Bank of New York found that delinquency rates were on the decline for most types of consumer loans during 2014’s fourth quarter. When an individual is unable to make payments on his or her loans by their due date, the loan becomes delinquent. The only two types of debt delinquencies that increased were auto loans and student loans.
The New York Fed’s report found that the delinquency rate for student loan has risen substantially over the last 12 years; the rate currently sits at 11.3%. In 2012, student loans’ delinquency rate surpassed that of credit card loans for the first time in history.
Only adding to the problem is the fact that student debt can’t be discharged when an individual seeks Chapter 7 bankruptcy help. This means that defaulted and delinquent student loans will stay on one’s credit reports for as long as it takes for them to be repaid, severely harming the individual’s credit score.
In addition, the amount of student debt accrued by the average college graduate has skyrocketed by a terrifying 74% over the last decade, according to Gawker. In 2014, the average college graduate entered the real world with $27,000 in debt. Combined with the fact that Americans are living — and working — longer, meaning there are fewer open jobs for graduates, millenials are in a financial crisis while the rest of the country is prospering.
There are two potential outcomes to this crisis — either the U.S. will have to start allowing people to discharge their student loans via bankruptcy, or we’ll eventually start seeing a lot more people with college degrees asking for spare change on the street.
What are your thoughts on this data? Do you think student debt should be able to be discharged in the Chapter 7 bankruptcy timeline? Share your thoughts and ask us any other questions you may have about Chapter 7 or Chapter 13 bankruptcy information or seeking Chapter 7 bankruptcy help by leaving a comment below. See this link for more.