Debt Student Loan • Author Mark Martella, Esq • Sep 12, 2014
As I have previously written, one of the biggest challenges my bankruptcy clients face is the inability to discharge their student loans. The bigger question then becomes is whether the inability to discharge this debt it something that only affects the individual debtor or does it hurt the economy as a whole? Recent articles in the New York Times appear to project different answers.
One article written by Phylis Korkki which appeared on May 24, 2014, asserted that because of the higher student loan balances, students were less likely to start businesses, purchase homes and take on lower paying public service jobs. However, in another article by David Leonhardt which appeared on June 24, 2014, it is his position based upon a report from the Brookings Institute that the Federal Reserve numbers that Ms. Korkki relied upon were inconclusive since the statistics only went back to 2003. It is Mr. Leonhardt’s position that student loan debt is not that much different from a percentage standpoint when inflation is taken into account tan it was 20 years ago.
However, where Mr. Leonhardt does say there has been a change in which I can verify based upon my empirical experience with my clients is “among households with college but no bachelor’s degree, the incidence of debt increases from 11% to 41%” over the last twenty years.” He likens it to buying a house but not getting to live in it. There is really no return on your investment if you do not get a degree but have spent the money. Unfortunately, the usual political shenanigans are taking place in Washington and the Republicans stopped the passage of a bill that would allow the refinancing of student loans (not discharging the loans as some had called for). However, probably because of the fear of giving the democrats something to promote com election time, even a modest refinancing bill has been defeated. It does not look like there will be any relief anytime soon for those struggling with student loans.
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