Earlier this year, the United States’ collective student loan bill topped $1 trillion.
Amazingly, only about 30% of those over the age of 25 hold a bachelor’s degree or higher. Even more startling, 40% of college freshman fail to finish a four-year degree in—wait for it—six years!
For the most part, I believe an educated populace provides great economic benefits to the nation.
However, the neck-breaking pace at which we’re racking up student loans concerns me.
Unlike many Americans, I don’t view a college degree as a magic bullet to success, particularly if you borrow money for higher education that doesn’t lead to a job that affords you the ability to repay your debt.
You see, student loans—federal AND private—are practically impossible to discharge in bankruptcy.
Dare to default on a student loan backed by the taxpayers and, without even hauling your broke butt into court, Uncle Sam can
- Seize your tax refund
- Garnish your wages,
- Siphon money out of your bank account,
- Usurp up to 15% of Social Security retirement and disability benefits
- Slap a lien on your property, or
- Engage in any other gestapo-like tactics to recoup borrowed funds.
Private lenders employ more civil measures to shake down deadbeats. But since bankruptcy laws make it difficult to shirk student loan obligations, at some point during your life, you’ll probably pony up the dough you owe.
Private student loans should wash away in bankruptcy as easily as credit card, auto, and personal loans.
Maybe then, banks would exercise more diligence before forking over tens (or hundreds) of thousands of dollars to youngsters who don’t know how to properly wash, dry, and fold a load of laundry, let alone evaluate their ability to repay a massive amount of debt.
Alas, whether public or private, the only way to shake student loan debt is by paying it.
So how tough is it to bankrupt student loans?
As the infographic below shows . . . real tough.