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Student loan delinquencies expected to rise even higher

The President of the National Association of Consumer Bankruptcy Attorneys predicted the home mortgage collapse and the increasing need for bankruptcy protection back in 2007. Now, the president and his group are once again warning of another looming financial disaster: student loan debt.

The sad truth is that many students have crippled themselves with college debt. To illustrate, consider that student loan default cases have jumped 50 percent. And it is not just young students. Many Florida residents who have lost their jobs have gone back to school and increased their debt loads with education loans, only to discover that jobs continue to be scarce.

In fact, $750 million in student loan debt is currently outstanding, surpassing that which is owed by consumers on credit cards. And that may be a conservative estimate.

While the problem of student loan default may not be at the level of the home mortgage collapse, it may still have the long-term negative effect of discouraging people from pursuing degrees due to fears of extraordinary expenses and the inability to pay back these expenses.

But who can blame them? Until the economy improves, graduating students are in a very difficult situation. Carrying the burden of college or professional education debt while trying to look for a job in an unforgiving market is obviously a harsh reality.

In addition, unlike home mortgage debt, it is very difficult -- if not impossible -- to discharge student loan debt via the bankruptcy process.

However, if you believe that defaulting on your student loan is your only option, you should know that you may have other options to help get you back on track and avoid the consequences of failing to make payments.

Source: Fox Business, "Student Loan Debt: Next Big Economic Shock," Gail Buckner, Feb. 13, 2012

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