Most everyone by now realizes that the student loan debt owed by Americans is staggering in terms of its amount, and several recent reports have indicated that it is approaching $1 trillion, or more than is owed by Americans to credit card lenders. You may be one of the many people around California who struggles to make your student loan payment every month on top of all of the other expenses that are simply part of living in a place that is expensive when compared to most of the rest of the country.

Even legislators are starting to notice the seriousness of this problem, and according to a recent article published by the Los Angeles Times, California Assemblyman Bob Wieckowski has put together several bills that are designed to deal with this growing problem. There are three bills overall, and if they were to become laws they would require the following:

$77 billion worth of student loans are currently in default. As of last year, more than 5.6 million student loan borrowers were also in default, which was defined by having failed to make payments on those student loan debts for at least 270 days. Collectively, Americans owe nearly $1 trillion in student loan debt, which is more than credit card debt for the first time in modern history. Each of these statistics continues to trend downward, and according to many experts the entire situation is going to get worse before it gets better.

As one would expect, this suffering creates opportunity for some. One of the markets that has been exploding in recent years because of all of these student loan problems is collections for these delinquent accounts. Dozens of companies spend their days chasing down borrowers who are delinquent in an attempt to convince them to start making payments on these debts. Naturally, those companies that are successful earn high commissions, and it’s estimated that the student loan collection industry generated $1 billion in revenue during the last year alone.

From the time you were a child, you were told by anyone who offered an opinion that you needed to do whatever you could to maximize your education. Even if your family was not in a position to pay for higher education, you were encouraged to apply for grants, scholarships and other forms of financial aid to help pay your tuition and other costs. You probably discovered that there were not as many of these options available to you as you once thought.

That left you with a choice – you could forego school for a while and save money in hopes that you’d return to it someday or you could borrow to continue your education thinking that your higher income that you’d earn after you graduated would be worth the risk. That’s the bet that many people made on themselves, and they were in a way enabled by those who lend this money for education. As you reviewed your options regarding student loans, you probably discovered that:

• They were easy to obtain
• They promised very low interest rates for a time
• You would enjoy flexible repayment terms
• You wouldn’t have to worry about making payments until you graduated
• You could defer those payments if you were having trouble finding work

 

If you are like millions of people in the United States, then you probably understand what it’s like to live with the burden of student loan debt. You have been trying to save money for months if not years so that you can afford to purchase a home, but you’ve been largely unable to do so because that enormous chunk of your net income gets lopped off the top of your personal balance sheet to make your monthly student loan payment. You know that you will not really start to get ahead until you can put down roots and make your money work for you.

You may also be familiar with other stresses that result from student loan debt. Perhaps you have encountered a mechanical problem with your car that will cost $1,000 to fix. Your car is old but you can’t afford a new one because you have to pay that much every month for your student loans to remain current. You can’t afford all of your bills that month because of that $1,000 unpleasant surprise. You need your car, so you pay that bill and decide to simply take the heat from your student loan lender until you can catch up.

 

There are certain things in life that people will borrow for in order to pay for them, and the typical loans that people will take out include those for vehicles, homes and increasingly for their educations.  Consumers in the United States have also long been borrowing from credit card companies, and these common forms of debt all combine to form one debt load for the average American household.  The amount of debt attributed to each form of borrowing, however, has been changing.

This was confirmed by a recent study that was done by a team of economists at Wells Fargo, which looked at several different variables that relate to household debt in the United States.  One of the most troubling findings was that student loan debt now makes up approximately 8.5 percent of total household debt across the country.  This represents an enormous jump from 10 years ago, when that number stood at 3.3 percent.  Experts expect this trend to continue in the coming years as more people finish their educations.

While this is clearly a troubling trend, there are many reasons for its existence.  Not only are tuition costs rising and income dropping for recent graduates, but people have also been reducing their mortgage and credit card debts.  Mortgage debt has dropped by more than 13 percent since the end of 2008 and credit card debt is down by 23 percent since that time.

San Diego Bankruptcy Lawyers

Unfortunately, many people are simply being crushed by student loan debt that cannot be effectively managed.  To make matters worse, student loan debt cannot be discharged in bankruptcy absent relatively rare circumstances.  However, there is almost always a way out for a consumer who is struggling to make ends meet every month.

If you are ready to plot a course to your own financial recovery, you need to seek the help of San Diego bankruptcy lawyers who have been helping consumers regain control of their lives for many years.  Contact the Golden State Law Group today to schedule a free initial consultation.

Bills were introduced in Congress that would allow for private student loans to be discharged in bankruptcy proceedings. Millions of people in the United States are saddled with student loan debt that can date back decades in many cases. One of the reasons for the existence of this massive amount of debt is because for many years, people who filed for bankruptcy protection have been unable to discharge student loan debts absent relatively rare circumstances.  However, that could be changing at some point in the future, as bills have been introduced in Congress that would eliminate those loan protections.