Attending college often feels more like a requirement than an optional move after high school graduation. Not only do many jobs now require even entry-level employees to have graduated from college, but having a college degree often feels like job security in highly competitive fields. Unfortunately, that security comes at a cost. An increasing number of personal bankruptcy filings are being blamed on student loan debt.
A study from LendEDU determined that 32% of people who file for Chapter 7 bankruptcy have student loan debt. Of those, student loans made up nearly half of total debts. With student loan debt reaching a recent record high of $1.5 trillion, this may come as no surprise to college students and recent graduates in Connecticut.
Part of the problem is the rising cost of higher education. In 2018, the average student graduating from college had to borrow $29,800 just to pay for school. The high cost of living and stagnant wages associated with the post-recession era contributed to this problem, making it difficult for most millennials to save money.
The figures from the recent LendEDU study only include filings for Chapter 7 bankruptcy, which a person can only file for if his or her income falls below the statewide average. Since Connecticut college graduates earn more on average than their peers who only graduated from high school, it is possible that the issue of student loan debt is just as prominent in Chapter 13 filings. It is also particularly worrying since student loans usually cannot be discharged through personal bankruptcy. However, those who successfully complete the bankruptcy process and discharge other debts may find that they are better prepared to handle any remaining debts, including student loans.