Having a college degree is supposed help people improve their career opportunities and increase their annual salaries. Believing that the ends will justify the means, many students in New Jersey take out huge loans to cover the cost of increasingly expensive college tuition. After graduation, however, many of these students struggle to find a job that pays enough to cover their expenses, not to mention student loan payments.
In 2005, the average student loan amount was a little over $17,200. The average size of a student loan that people take out currently is more than $27,250. This is a whopping 58 percent increase. In the past five years, there has also been a significant increase in the number of people who are late on a student loan bill. In 2007, 12.4 percent of student loan payments were late. In 2012, 15.1 percent of student loan payments are at least 90 days late, which is an increase of 22 percent.
So what happens when a person is unable to pay these student loans?
In general, defaulting on student loans will lower a person’s credit score, reduce available spending capabilities and can result in a person losing a home or car. When or if this debt becomes unmanageable, it may be a good idea for a person to explore their options for debt resolution.
For many people carrying student loan debt, it is not possible to file for certain types of bankruptcy that eliminate debt altogether because student loan debt is handled differently than credit card debt. However, it may be possible to reorganize these debt levels and get them into one monthly payment that is more affordable. This option is called Chapter 13 bankruptcy and may be a good choice for people who want to restructure student loans, repay financial obligations and do so under a more manageable payment plan.
The fact is that many people carry some level of student loan debt that they must contend with. In fact, some economists believe that student loan debt could be the next debt crisis affecting the U.S. economy. Instead of waiting to get completely buried under unpaid bills and debt, folks in New Jersey can take the first step in making a financial fresh start by speaking with a bankruptcy attorney.
Source: Forbes, “More Evidence On The Student Debt Crisis: Average Grad’s Loan Jumps To $27,000,” Halah Touryalai, Jan. 29, 2013
- Our law firm in Cherry Hill, New Jersey, helps people who are struggling with debt due to student loans. For information on debt reorganization, please visit our page on Chapter 13 Bankruptcy.