Student loan debt is at a record high, according to a recent Bloomberg study. It is reported that U.S. student loan debt is at a total $1.465 trillion, and financial analysts believe that this debt figure is so high that it is now raising significant fiscal risks.
Student loan debt was at $675 billion in June 2009 at the end of the recession, which means the total has doubled since that time. One problem that economists are pointing to involves the fact that more than 90 percent of all student loans are guaranteed by the U.S. Department of Education. In the event another recession hits, resulting in mass unemployment as well as defaults on student loans, the government budget could face a major loss.
Interestingly enough, Bloomberg’s study reported that student loans that were issued to students embarking on college in 2012 have defaulted on their student loans at a faster rate than any other group since the last recession. According to Bloomberg’s analysis, these loans have the highest cumulative loss percentage when compared to other loans, which means that these particular students have had a harder time keeping up with their monthly payments with their current incomes. This group of students could arguably be hit harder than others in the event another financial crisis occurs.
The individuals in this group are between the ages of 24 and 33 and are at a point in their lives when they are just starting out and beginning to establish their careers. They may have struggled with finding a job since unemployment was twice as high when they graduated as it is today. According to Bureau of Labor numbers, graduates in this group took three times longer than graduates today in finding a job following graduation.
Another cause for concern is the rising student loan interest rates. Currently, the interest rate for a direct student loan that was issued on or about July 1, 2018 and before July 1, 2019, has a basis point that is higher than those that were issued before 2012. Average federal student loan interest rates were: 4.81% for undergraduates. 6.38% for graduate students. 7.44% for parents and graduate students taking out PLUS loans.
Student loan debt is a widespread problem in the U.S. More than 2.7 million student loan borrowers have debt amounts in the six figures. Approximately 700,000 borrowers owe more than $200,000. Within this group, borrowers who were between the ages of 25 and 34 owed $489 billion as of the third quarter reported, while those who were between the ages of 35 and 49 years old owed $530 billion total.
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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.