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The Student Loan Crisis: America’s Slow Poison

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You’ve probably heard of the dangers of excessive student loans in your life, but what exactly does it mean for our country’s future?

Four out of five bankruptcy lawyers point out that over the past four years, they have been seeing more and more potential clients burdened with student loans arriving on their doorsteps. Nearly half of all bankruptcy lawyers report that they have also seen a marked increase in these kinds of clients. Despite these disturbing trends, 95 percent of these attorneys say that only a few student loan debtors are qualified to get a discharge due to undue hardship. What this simply means is that an increasing number of people are unable to escape the debts they took out for their education. Case in point: 25 percent of student loan debtors in the class of 2005 were delinquent in their payments at some point. 15 percent of them defaulted.

John Rao, vice president of the National Association of Consumer Bankruptcy Attorneys, emphasizes that we as a nation need to “relieve the pressure [from student debt] before this whole thing blows sky high.” You know these words mean something when someone who makes his living handling bankruptcies raises a red light. 

While the subprime mortgaging recession of 2008 was a sudden punch to the gut when real estate prices crashed, student loan debt is a slow, insidious poison that will kill our nation from the inside out. What makes student loan debt dangerous is the fact that it cannot be expunged by regular bankruptcy.

Take the case of Dave Ingham. He and his wife live in a condominium unit in Minneapolis, along with their 35-year old son. The son has been out of work since 2009, forcing him to default on his loans. Any time he looks for work, employers see his battered credit score and deny him the job. So he stays unemployed while his credit score continues to freefall thanks to his default. Ingham, the father, cosigned for his son’s student loan and now stands to lose the family’s assets, including their home. Ingham points out that it was their fault for being suckered by predatory lenders, but he adds that the rest of their life should not be ruined because there is no escape route for student loans.

Here’s hoping that someone in Congress hears their plea and makes it possible for bankruptcy to expunge student loans. At the very least, maybe our government can find some way for individuals to handle their student debts better when they are unemployed or underemployed.

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About Yan Susanto

  • Donny Gamble

    College graduates are in a tough situation after they have completed with college due to the lack of jobs that are available. Most college graduates have to settle for entry level position due to the lack of job experience that they have in their industry. By the time they do find a decent paying job, their student debt is spiraling out of control.

    Donny Gamble
    Senior Editor
    Assistance for Single Mothers

  • Baronius

    Every HR person knows that he may have to defend his decisions in court. So he has to rely on quantifiables like education. So higher education becomes mandatory to get jobs that don’t require it. This increases the demand for degrees, and drives up costs. Of course, we don’t suddenly have a population more capable of higher learning, so we have to reduce the qualifications and standards of our schools – it doesn’t matter anyway, because the students are looking for schooling rather than learning. So the market for education finds a new equilibrium, but one that takes five unnecessary years and oodles of money away from everyone entering the job market.

  • The problem, from the way I see it, is that many grads aren’t aware of how much debt they’ve owed and how much interest they’ve accrued. Many were left in the dark right from the very beginning.

    Unless we all make a concerted effort to educate prospective borrowers on the danger of “too much borrowing” (read: less fraudulent marketing), I see no light at the end of the tunnel. What we really need is to fix the problem before it “rears its ugly head” and I hope it ain’t too late.


  • This is one of the reasons we need to get out of perpetual wars like Afghanistan and others. Domestic infrastructure, education, health care and many other items beg for attention. We also need to keep a strong public school system from K through college so that people don’t have to go bankrupt to get an education. The community colleges are extremely helpful in providing cheaper education. The problem of student loan repayment will require a lot of things like reducing the interest rate payments for repayment. The paperwork would be a lot easier if we made some important changes in the way student loans are negotiated and repaid.

  • Glenn Contrarian

    Gee, let me see here – “Brian” thinks that if we designate contributions to student loans as charitable for tax purposes, that will make a real difference. Problem is, it looks like Brian doesn’t know just how big the problem is since student debt has exceeded America’s total credit card debt, and somehow I doubt that Americans would be willing to donate enough to make even a hint of a dent in the mountain of student loan debt.

  • I have an idea for student debt relief that will provide hope to millions of Americans and stimulate the economy.

    I want Congress to provide an exemption to the current tax code which would allow for donations to student debt to be considered charitable contributions, and therefore be deductible from income. I have already started a petition on Change.org titled “Modify Tax Law for Student Debt Relief” that currently has 128 signatures in 1 month, and it has been featured in an article by Bill Conrad of the Plano Star Courier.

    I envision large corporations buying the idea that if they designate a portion of their annual charitable contributions towards student debt, then they could free up that equivalent amount of cash for student debtors (consumers) and immediately impact the US economy. First, Congress must provide the incentives for these corporations to do so. Many people may believe that student debtors don’t deserve money for getting themselves into this debt, but the fact of the matter is that the US has a crisis on its hands, and rather than make unproductive judgements and pointing fingers, the ethics should be left up for the donor to decide. At the very least, we should exhaust our efforts to find creative ways to provide relief. This is a new, fresh idea that does not place a burden on taxpayers and would be completely voluntary. It is also not loan forgiveness or a bailout like so many debtors are asking for, and which I think is very unlikely to pass.

    Please help me stir debate across the US about my idea by writing about it. I have copied the link to my petition below. Thank you very much for you consideration, and please pass this on to anyone who may help.

    Modify Tax Law for Student Debt Relief