Will Student Loan Debt Cause the Next Economic Crisis if Bankruptcy Laws Are Not Changed?

Recently, several sources have been reporting on the growing concern over the amount of student loan debt in which many young individuals and parents of college and graduate students alike now find themselves.  One reason why student loan debt is getting so much attention is because the total amount of student loan debt in the United States now exceeds the amount of outstanding credit card debt and, in 2011, the amount of outstanding student loan debt exceeded $1 trillion for the first time.  Some feel as though indications are there that we are on the verge of a potential student loan related crisis similar to the mortgage related crisis our country has been in for the last few years.

The National Association of Consumer Bankruptcy Attorneys (NACBA) has prepared a report regarding this issue, and is actively working to convince lawmakers to change the current Bankruptcy Code to allow student loan debts to be discharged in a bankruptcy.  As the Code is written today, student loans are non-dischargeable and, as such, individuals whose primary source of debt is educational in nature are unable to obtain the fresh start that bankruptcy provides.

NACBA’s full report entitled “The Student Loan ‘Debt Bomb:’ America’s Next Mortgage-Style Economic Crisis,”  is available on its website at http://tinyurl.com/7o6eckp

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