Is student loan debt going to cause the next financial crisis?
Are you one of the 40 million Americans with student loan debt? If so, you probably understand how pressing the issue is. You might have noticed that those without student loan debt don’t seem to get it. However, some financial experts say that it’s only a matter of time before the problem starts affecting the economy on a broader scale, which is sure to get everyone’s attention.
According to the president of Purdue University and the former Republican governor of Indiana: “Every citizen and taxpayer should be concerned about it.”
He explained in an article for CNBC that student loan debt is causing people to postpone getting married, having children, buying homes, starting businesses and making other significant purchase, which could soon have a jarring effect on the economy.
As you may already know, student loan debt is typically not dischargeable in bankruptcy, so people stuck with student loan payments that they simply cannot afford sometimes resort to defaulting, which is also very damaging on the economy.
People who default on their student loans also face serious consequences like lawsuits, wage garnishment, and the withholding of tax refunds and federal benefits such as Social Security.
The student loan ombudsman and assistant director at the Consumer Financial Protection Bureau says while the federal government — which either guarantees or owns most of student loans — is often able to recover most of the monies lost through defaulted loans, the problem will still “create economic drag if it’s unaddressed.”
At this point, many experts and policymakers seem to agree that something needs to be done to ease the burden of student loans on borrowers, but there is little agreement on how that should be done. Hopefully, action is taken before another economic crisis occurs.
If your student loan debt is wreaking havoc on your finances, talk to a bankruptcy lawyer in your area for advice. Although bankruptcy might not be the best option for you, an experienced lawyer can inform you of all of your options so that you can get your finances back on track.
