Student borrowing crossed the $100 billion threshold for the first time in 2010 and total outstanding loans exceeded $1 trillion for the first time last year. The consequences are growing, says Forbes:
With student loan debt now topping U.S. credit card debt and few or no options available for distressed borrowers (including parents who co-signed and now face the loss of nest eggs, retirement homes and other assets), America faces the very real possibility of another major economic threat on par with the devastating home mortgage crisis, according to a new survey and report, Student Loan ‘Debt Bomb’:America’s Next Mortgage-Style Economic Crisis, by the National Association of Consumer Bankruptcy Attorneys (NACBA).
The stats are scary. More than four out of five bankruptcy attorneys say that potential clients with student loan debt have increased “significantly” or “somewhat” in the last three-four years. Overall, nearly 50% of bankruptcy attorneys reported significant increases in such potential clients.
Ninety five percent of bankruptcy attorneys polled said that few student loan debtors are seen as having any chance of obtaining a discharge as a result of undue hardship.
The bad news isn’t just about students, but their parents. Loans to parents for the college education of children have jumped 75% since the 2005-2006 academic year. Parents have an average of $34,000 in student loans and that figure rises to about $50,000 over a standard 10-year loan repayment period.
Community Colleges set to boom in popularity as a response?
A few days ago the The Century Foundation announced the creation of a taskforce that will come up with recommendations to make community colleges more mixed income. Dubbed the “Task Force on Preventing Community Colleges from Becoming Separate and Unequal,” the group will include representatives from two-year and four-year schools, scholars of higher education, and members of the business, philanthropic, and civil rights communities. One of the main areas that the task force will examine is why the racial and socioeconomic divide between two- and four-year institutions is growing.