Growing up many American teens knew they would attend college after graduating high school. Media reports touting the monetary benefits of a college degree lead parents to push teens to study hard and gain admittance into college where a degree was considered a ticket to landing a first job and building a lucrative career. As a result, attendance rates at higher educational institutions around the country skyrocketed, as millions bought in to the idea that obtaining a college degree was essential to securing a better future.
Today, the costs associated with earning a college degree have dramatically increased. According to the College Board, today average tuition at an in-state public school is nearly $23,000 and nearly $45,000 at a private school. To fund this cost, many students rely heavily upon financial aid and student loans. However, while previously the monetary benefits of obtaining a college degree were more apparent, today many college graduates leave school with a degree and thousands of dollars in student loan debt only to join the millions of unemployed or underemployed Americans struggling to make ends meet.
For many, the Great Recession only compounded economic troubles as out-of-work Americans decided to go back to school to improve their employment chances. In fact, from Dec. 2007 to Dec. 2013, student loan debt increased from $634 billion to $1.2 trillion.
Recently, there has been growing concern about both the costs of earning a college degree and the 37 million men and women burdened by student loan debt. Economists are concerned the financial impact of massive amounts of student loan debt will have dire consequences for both college graduates as well as the U.S. economy.
Those attempting to pay off student loans often delay making large purchases such as a home or car, or rely heavily upon credit cards. Both scenarios have dire economic consequences as consumer spending will decrease thereby negatively impacting major U.S. sectors including housing, automotive and retail.
Currently, the vast majority of student loans are not dischargeable under Chapter 7 bankruptcy. However, for Illinois residents who, in addition to student loan debt, are also struggling to repay credit card and medical debt; Chapter 7 bankruptcy can provide relief from these types of unsecured debt and allow an individual to focus on repaying student loans.
Source: The Huffington Post, “The Student Loan Explosion,” Michael Farr, April 9, 2014
American Student Assistance, “Student Loan Debt Statistics,” 2014
College Data, “What’s the Price Tag for a College Education?” 2014