Friday, February 10, 2012

Student loan holders headed to bankruptcy

The LA Times has a brief update on what may become the "student loan crisis" talking about how bankruptcy attorneys are seeing a large increase in the number of potential clients with student loan debt.  Over half of attorneys, according to the article, report increases of greater than 25%.

This is of course inevitable simply because the number of students taking out student loans has increased significantly over time as well.  However what I don't know is how much the increase bankruptcy attorneys are reporting is beyond the expected increase based on the population of people with student loans.  If this is much higher and there is no relief for the student loan debt burden then this could potentially spiral into something much more significant.


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  2. When banks have access to federal capital at nearly zero percent, mortage rates are the lowest they have ever been and the prime rate has been hovering at all time lows for years... why are my graduate plus loans pegged at 8.25% (the best rate available when I started B-School in 2006) and adequate student loan consolidation options are non-existent?

  3. Couldn't agree more with Jason. The interest rates on student debt don't have any correlation to the market.

    More importantly, the ease with which students may access loans for (in all probability) less than useful degrees (underwater basket weaving, certain law degrees, etc.) must contribute to the problem.