A college education is often the key to unlocking a fulfilling and financially rewarding career. However, a college degree is not cheap, and students in Connecticut and across the rest of the United States often struggle with paying back hefty loans. As experts predict high future rates of default, personal bankruptcy could be a smart option for some borrowers.
By the year 2023, as many as 40 percent of student loan borrowers might end up defaulting on their student loans. This prediction comes from the Brookings Institution, which also found that 250,000 people default every quarter. However, it is not necessarily those with tens of thousands of dollars in student loan debt who are struggling the most, as 32 percent of people with balances less than $5,000 defaulted once or more in the last four years. Only 15 percent of borrowers with $35,000 or more in loans defaulted.
With 44 million borrowers taking an average of nearly 20 years to pay back their loans, even small debts can pose serious hurdles. Still, student loans are just one among many other debts carried by the average person, although they do comprise the second largest category of consumer debt. Topping out at a current $1.5 trillion, it is perhaps easy to see why so many borrowers are struggling.
When student loans are just another monthly bill on top of a mountain of insurmountable debt, Connecticut borrowers can quickly begin to lose hope. While people usually cannot discharge their student loans during personal bankruptcy, the process is still useful for renewing hope in their financial futures. When other debts are successfully discharged, consumers can refocus their efforts on their student loans and overall financial well-being.