Wednesday, February 8, 2012

Whopping 'Shocker:' Survey - 4 Out 5 U.S. Bankruptcy Attorneys Report Major Jump in Student Loan Debtors Seeking Help, Fears Grow of Next Mortgage-Style Debt Threat to U.S.

Wow. So, now that we are close to hitting $1 trillion in outstanding loan debt, there is apparently a problem.

A PRNewswire via COMTEX over at Market Watch had this to say:

With student loan debt now topping U.S. credit card debt and few or no options available for distressed borrowers (including unwary parents who co-signed loans and now face the loss of nest eggs, retirement homes and other assets), America faces the very real possibility of another major economic threat on a par with the devastating home mortgage crisis, according to a new survey and report published today by the National Association of Consumer Bankruptcy Attorneys (NACBA) at .

The NACBA survey of 860 bankruptcy attorneys nationwide found that:

More than four out of five bankruptcy attorneys (81 percent) say that potential clients with student loan debt have increased 'significantly' or 'somewhat' in the last three-four years. Overall, about half (48 percent) of bankruptcy attorneys reported significant increases in such potential clients.
Read the entire press release here.

In a paper published about the trend, the NACBA used the following title, "Student Loan 'Debt Bomb': America's Next Mortgage-Style Economic Crisis." The word style is particularly important, since student loan debtors, unlike distressed homeowners, cannot walk away from their debt. That's why these comparisons are problematic and do not provide people with the full picture. I'll say it again: student loan debtors cannot walk away from their debt. Even worse, many bankruptcy attorneys do not understand the laws and legislation that apply to student loan debtors. In fact, I know of cases in which borrowers have gotten into more trouble when seeking out legal advice from bankruptcy attorneys. That said, I am not suggesting, for those of you struggling with student loan debt and considering bankruptcy, that you do not seek out an attorney's advice. Simply be aware that they might not be fully educated on the ins and outs of things. (That's why it is always best to be prepared with lots of questions for these meetings).

So, I have a solution for disgruntled borrowers: return your degree and request a refund (if you didn't graduate ask for your money back for the credits you took).

If students are "customers," then they should be able to return to the school and say, "you know what? This degree didn't do squat for me, so I'm returning my diploma and asking for a full refund." That's how it works when you are dissatisfied with a product. (Of course, higher education should not be part of the market system, but if folks want to spin it that way, then I say these customers who are unhappy with their final "product" should be able to get a refund when returning their diplomas).


Anonymous said...

Refunds would put University of Phoenix out of business. As well as all those other schools that advertize on late night TV.

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