Student loan debt is one of the most talked-about issues of our time – and for good reason. 

As total consumer debt continues to rise in the U.S., student loans ring in as one of the biggest sources of debt for households, alongside credit card debt, mortgages, and auto loans. In recent years, millions of Americans have cited student loan payments as one of the biggest factors holding them back from starting a family, buying a home, or making investments. At the same time, a significant number of Americans who pursue bankruptcy each year are dealing with student loan debt in some capacity. 

Student loan debt is such a pressing and far-reaching issue that it’s been called “a crisis” – one that could ultimately pose a threat to the strength of the U.S. economy as a whole. As of the time of this writing, many presidential candidates have taken up the issue as the 2020 election nears, and lawmakers on both sides of the aisle have brought up legislation addressing student loan debt in Congress.

Indeed, there’s so much talk about student loan debt that it can be a difficult subject to wrap your head around. Let’s see if we can provide some clarity! Below, we break down student loan debt into ten of the most important statistics and trends to know now – and then dive into one of the most important considerations about this crucial topic. 

Student Loan Debt, By the Numbers

Student loan debt has been a growing issue in this country for some time now. Here are some of the most relevant trends and stats to keep an eye on in 2019 and beyond: 

  1. Total student loan debt in the U.S. sits around $1.56 trillion as of 2019, according to data from Student Loan Hero
  2. 44.7 million Americans are living with student loan debt, per data from Student Loan Hero
  3. Borrowers are dealing with higher levels of individual student loan debt. According to data cited by CNBC, the share of borrowers “with balances in the six-figures is on the rise.” According to reports, roughly 178,000 students graduated owing more than $100,000 in the 2015-2016 academic year, up from 51,000 in 2003-2004. According to CNBC, more than 6% of all student loan borrowers owed more than $100,000 as of the first quarter of 2019, up from 5.4% in 2017.
  4. CNBC notes that the average American graduates from college with $30,000 in debt, up from just $10,000 in the 1990s. At the same time, the Wall Street Journal reports that the share of students with exceptionally high levels of debt is growing. According to the Journal, only 14 people in the US owed $1 million or more on their federal student loans; that number increased to 101 people by 2018.
  5. 11.5% of student loans are 90 days or more delinquent or are in default, according to Student Loan Hero. 
  6. The cost of receiving a degree is rising. According to data cited by Business Insider, the cost of receiving an undergraduate degree has increased by 213% at public schools and 129% at private schools, adjusting for inflation, from the 1980s to 2018. 
  7. Student loan debt is not only impacting millennials. According to research cited by Business Insider, more than 3 million Americans aged 60 and older currently owe more than $86 billion in unpaid student loans, in total. 
  8. The risk of a mass default is rising. According to research from the Brookings Institute, extrapolated data suggests that “nearly 40% of borrowers may default on their student loans by 2023.”
  9. Student loan debt is preventing Americans from living the lives they want. Per Business Insider, 13% of Americans cite student loan debt as a significant reason for deciding to not have kids. Meanwhile, CNBC reports that “83% of people ages 22 to 35 with student debt who haven’t bought a house yet blame their educational loans.”
  10. Student loan debt is pushing many Americans to consider lasting debt solutions. According to research cited by Business Insider, in a recent survey, “32% of consumers filing for Chapter 7 bankruptcy carry student loan debt” to some degree. 

Student Loans and Bankruptcy: What to Know In 2019

Facing the burdens of student loan debt, countless Americans seek out any option out there for relief, including bankruptcy. It’s important to bear in mind that, while bankruptcy may be a viable path forward for individuals facing significant debt, it does not automatically eliminate every type of debt. Indeed, student loan debts are among the types of debts that are not automatically dischargeable in bankruptcy. 

With that said, however? It’s also important to bear in mind that student loan debts may be discharged in some limited circumstances, if a debtor works with an attorney to successfully employ an adversary proceeding, proving undue financial or personal hardship. 

According to a prominent and frequently cited study originally published in American Bankruptcy Law Journal, roughly 40% of those who initiated an adversary proceeding were able to discharge all or part of their student loans in bankruptcy. 

Consumer information site NerdWallet fleshes out those numbers in a bit more depth: 

“Of people who filed for bankruptcy in 2007 and had student loans, only an estimated 0.1% attempted to have their college debt discharged, according to a study published in the American Bankruptcy Law Journal in 2012. But of the 207 cases the study examined, 39% got full or partial student loan discharges.”

It’s also important to remember that bankruptcy can offer benefits to debtors, even if it is not able to immediately discharge student loan debts. In many cases, this lasting debt relief solution may still be of use to debtors with student loans. In a nutshell, bankruptcy can allow debtors to discharge some debts and restructure others, making one’s day-to-day financial circumstances more manageable. Chapter 13 bankruptcy can allow a debtor to set up a structured repayment plan with creditors, offering significant monthly financial relief. Chapter 7 bankruptcy can allow a debtor to discharge many relevant unsecured debts, allowing them more breathing room to focus on other pressing matters. Both types of bankruptcy also offer a certain degree of protection from creditors, including the power of an automatic stay. Working with an attorney can also provide protection from some debt collectors, under the Fair Debt Collection Practices Act, or FDCPA. 

Whether you’re pursuing bankruptcy or want to discuss an alternative solution, many debtors ultimately find that working with an attorney is one of the most important steps forward on the journey to long-term debt relief. In addition to offering a degree of protection from debt collectors, an experienced bankruptcy attorney can help you better understand all of the options available to you based on your unique circumstances. An attorney can be an invaluable resource as you look into bankruptcy or explore other options. At the same time, a knowledgeable attorney can provide pragmatic, specific counseling and recommendations, to help you protect your assets and avoid debt issues in the future. 

Want to Keep the Conversation Going?

If you are considering bankruptcy as an option for debt relief, or have any questions about setting yourself up for success down the line, it’s vitally important that you consult with an experienced bankruptcy attorney.

Working with an attorney can help you determine if you qualify for bankruptcy, and, if so, which type. Your attorney can help you devise a strategy for attaining maximum success from your bankruptcy proceedings, and may even be able to offer counseling and guidance on alternative strategies, if bankruptcy isn’t the right option for you.

The bankruptcy process can be long and complex – but it gives countless consumers a fresh financial start, offering a much-needed “light at the end of the tunnel.” If you have any questions or concerns, don’t hesitate to get in touch with the attorneys and staff of the Gunderson Law Firm to continue the discussion.