Monster Debt

How much is too much?

Most current figures suggest we as a nation have exceeded $1.2 trillion in student loan debt.  While the figure is alarming on its own with underemployment a serious concern for a new graduate, what is even more alarming is that $1 trillion of that debt is backed by the United States government.  Media is never short of stories describing recent graduates struggling to keep up with their student loan payments knowing the consequences if they do not: wage garnishment! While student loans remain one large part of US national debt (second only to Mortgage debt) and ever present concern among two thirds of student graduating, it does not seem to show signs of decreasing.  

Defaulting and/or inability to repay student loans incurred as a result of higher education can have devastating affects on an individual.  First consequence on defaulting of federal loan is of course documented on your credit report.  With credit report still a primary gage of one’s credit worthiness, this diminishes individuals future opportunities ranging from further credit to employment with companies evaluating one’s credit history.

Moving forward, there are many steps we can take to eliminate this problem for future generations such as early on financial education of borrowers/students, but what can be done about current borrowers who are already neck deep in debt?

Possibility of debt being included into bankruptcy has been suggested by the current administration, which could be last resort for some borrowers.  While we should always be focused on ability to repay, option to discharge student loan debt in BK would definitely help the individuals who otherwise do not see a way out.  One does not need to experience this to know the devastating effect of knowing you cannot start over.  Allowing student loans to be discharged in BK would allow an individual to eventually improve their financial situation (prospect of which prompted this individual to take on student loans in most cases).  

I believe that current administration has realized the seriousness of the situation and is forward thinking enough to suggest above solution.  This could be that last resort that some student loan borrowers will have to resort to.