Did you know that the total amount of student debt in this country has reached $1.2 trillion? That figure represents a total that is nearly double the amount of credit card debt in the country ($0.68 trillion) and far surpasses the amount of auto loan debt in the country ($0.86 trillion). As if those figures aren’t staggering enough, the $1.2 trillion in student debt — which represents the 2013 total — is more than triple the amount of student debt this country had just eight years ago in 2005 ($0.36 trillion).
Clearly we have a major student debt problem in this country, and there may come a point where the student debt bubble pops. That would be bad for everyone. This issue is far more important than many people may think, and it again brings up the matter of student debt and bankruptcy.
The problem is that these two elements don’t really mix. It’s basically impossible to get rid of your student debt with a bankruptcy filing. Even if the in-debt party dies — as morbid as that is — it is still very difficult to get rid of the debt. This rigid and ridiculous precedent only leaves people in difficult positions that make it unlikely they will ever be able to pay the debt off.
If there’s one thing you can say about a bankruptcy filing and student debt, it’s that bankruptcy could at least clear away other debts that a person has, therefore making it a little easier for the individual to pay off his or her student debt. However, that’s not the issue here. The issue is that student debt basically can’t be discharged through bankruptcy, and that’s a problem.
Source: Huffington Post, “The Growth Of Tuition And Student Debt Since 2005,” Tyler Kingkade, May 8, 2014