Getting a college education is perhaps one of the best ways to obtain a satisfying and well-paying job in Connecticut. Unfortunately, the cost of getting that education is firmly out of reach for most people. While student loans bridge the gap between university tuitions and what students can afford, they are also pushing many toward personal bankruptcy.
Currently, over 44 million people carry about $1.5 trillion worth of student loan debt. This makes student loans second only to mortgages in terms of consumer debt. While trillions of dollars spread across millions of borrowers might not seem like that much, consider this -- the average 2016 college graduate left school with $37,000 in loans. In 2017, grads carried $40,000 with them at graduation.
With this information, it might not be surprising to learn that approximately 1 million people default on student loans annually. The effect is surprisingly more pronounced among borrowers who owe less, with 32 percent of people defaulting on balances under $5,000 compared with 15 percent who owe at least $35,000. Experts predict that, by 2023, 40 percent of people who have taken out student loans will default.
Borrowers have a few options to handle their loans when payments become too overwhelming. Deferral is possible for some, although some may still have to repay interest during that period. Repayment plans based on income can also be helpful for others, although, again, interest is an issue as it will continue to accrue at a regular pace.
Unfortunately, student loans are generally not eligible for discharge through personal bankruptcy. This does not mean that the process is useless, though. By discharging other debts like credit cards and medical bills, Connecticut graduates may be better financially prepared to resume payments on their loans.