It’s June and it seems like graduation season is in full swing. In the mean time, student loan debt is on the rise and is currently more than $1.16 trillion dollars, exceeding credit card debt in the United States by $305 billion. There seems to be a domino effect that this enormous debt has on college grads. Tuition continues to rise and jobs are scarce. It’s holding back our economy and here’s why.
Economic markets that have been impacted thus far are the mortgage market, small businesses, retirement security and consumer spending. When grads are having their entire paycheck evaporate from debt repayment, they can’t buy a home, start a business or save for retirement. We need to rethink how we pay for college, and how much we’re willing to pay for an education in America. In the meantime, the debt load on our future leaders is forcing them to live in abject poverty during repayment.
Living in poverty may be a long-term condition as these graduates pay off a student loan debt that looks more like a mortgage in the total amount due. While a present undue hardship is one step toward getting these loans discharged in bankruptcy, alone it is not enough for bankruptcy to help. Bankruptcy courts around the country differ in their approach to determining the dischargeability of student loans, but most will use a totality of the circumstances approach. Until Congress takes action to change the current rules in Bankruptcy, the economic will continue to drag along carrying an increasing pile of debt.
It’s a proverbial ‘ball and chain’ for the Millenials. They’re stuck at home with their parents, working part-time at minimum wage jobs; maybe several just to pay their loans. With no room left for discretionary spending, which is a true sign of economic recovery, the drag continues. We see a failure to launch having social implications for Millenials. Even students who have thoroughly prepared themselves for the repayment period are finding hard times. For a complete report on the student loan crisis, click here. Graduates should not be carrying the financial burdens for greedy for profit colleges and our federal government’s ability to collect on this debt indefinitely.
It looks like criminals have more rights than our college grads. There is little incentive to make changes in Congress because the government is making money off the backs of our children and our country’s future through default collections costs, servicer fees, and the ability to garnish wages and intercept income tax refunds without a court order. This student loan lawyer believes it’s time for revolution.