MSNBC recently did a report on the effects unpaid student loans are having on thousands of Americans, and from the looks of it the economy may suffer if those who owe on outstanding loans don’t get the financial relief needed in order to stay afloat. More and more people owe thousands toward these loans and one of the main issues is that they cannot be discharged in bankruptcy; a measure that many claim needs to be reversed.
More American families across the country just can’t afford to pay rising education costs. While the thought of getting an education to better yourself is the intention, many don’t foresee the financial ruin they could face upon finishing school. Unemployment is still an issue for those who have lost their job and those just finishing college face challenges in trying to gain employment. How can you repay loans when you don’t have an income? Some debtors are even finding it difficult to get a job because they have student loans in default. What’s worse is the interest and collection fees continue to grow making the outstanding balance more impossible to pay.
Data has shown the student loan debt in the United States has surpassed the $1 trillion mark. Some financial analysts think this may turn into a crisis worse than the fall of the housing market if something isn’t done. The National Association of Consumer Bankruptcy Attorneys (NACBA) claim that rates for students and parental loans have jumped significantly in recent years. Parents, who signed on as a co-signer for the loans, have also been hurting as they deal with ongoing debt collection attempts.
NACBA reports that 81 percent of those seeking bankruptcy relief also deal with student loan debt. They are hoping the bankruptcy code can change to the way it was in 1978 when such loans could be discharged.