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Credit bureau TransUnion has released data from a study which shows that more than half of all student loans accounts are in deferment, meaning that the repayment of the interest and principal of the loan is being temporarily delayed. In addition, 43.5 percent of all student loan balances are currently defered, and the company further reports that over the past five year period, student loan balances have increased by three-quarters.
Ominously, the report also indicates that more than 50 percent of all college graduates under 25-years-old are either underemployed or unemployed. This figure represents the highest rate of unemployment for that demographic group in the last 11 years. Some additional facts from the report include:
· In the last five years, balances for federal student loans increased by 97 percent. In contrast, private student loan balances decreased by 4 percent.
· Also for the past five years, federal student loan delinquencies increased by 27 percent and private student loan balances decreased by 2 percent
· Of all student loans, federal loans accounted for 92 percent of all accounts and 86 percent of all balances
· In March 2012, the 90 day or more delinquency rate for federal student loans was 12.31 percent. Private student loans had a 90 day or more delinquency rate of only 5.33 percent
Some commentators are concerned that the student loan crises may be the next housing bubble, and these figures do little to dissuade their concerns. Under current law, federal student loans are not dischargeable in bankruptcy, something that has been true since the 1970s. Private student loans were dischargeable until bankruptcy reform in 2005, but there is current proposed legislation that would return some degree of bankruptcy protection to borrowers of private student loans. Fortunately for borrowers, federal student loans have several built in protections for borrowers, such as flexible deferment and forbearance options, as well as programs such as income based repayment that limits a borrower’s to a certain percentage of their disposable income.
If you are experiencing financial problems, bankruptcy may be an option that may help you. In order to determine whether bankruptcy could benefit you, you should have your financial circumstances reviewed by an experienced St. Louis bankruptcy attorney. The Westbrook Law Group practices exclusively in the area of bankruptcy law, and has helped hundreds of clients gain a fresh financial start through bankruptcy. To schedule a free consultation with a St. Louis bankruptcy lawyer, call The Westbrook Law Group today at (636) 493-9231. If you would prefer, you can contact us via email through the contact form available to the right, and a member of our staff will be in touch with you soon.