Student Loan Debt A Growing Problem In California

Right now, a college education is more important than it has ever been. With the manufacturing sector on the decline, it has become increasingly difficult for young people to find career-track jobs with only a high school education.

Unfortunately, a college education is also more expensive than it has ever been, leaving many struggling with debt. In the wake of the recession, state governments have cut appropriations to their higher education systems, leaving students to shoulder a greater percentage of the cost of education. California hasn't been exempt from this problem — in fact, it has seen higher college cost increases than anywhere else in the country.

According to a report by the College Board, four-year public college and university tuition was up 8.3 percent nationwide at the start of the fall 2011 semester as compared to the year before. In California, though, tuition was up approximately 21 percent — the highest increase of any state.

Although two-year community colleges continue to be a more cost-sensitive option, students there are getting hit with tuition hikes as well. On average, community college tuition rates in California went up 37 percent between the 2010-2011 and 2011-2012 school years, though California continues to offer some of the lowest community college tuition rates in the country.

Delinquent Student Loans Outpace Credit Card Debt

All of these tuition increases are leading to an explosion in student debt. There is now more student loan debt than credit card debt in the United States — a total of $956 billion according to data from the Federal Reserve Bank of New York.

With the economy still in rough shape, many college graduates are having a difficult time finding or keeping jobs to pay these loans back. For the first time since the Federal Reserve Bank began tracking this issue, delinquent student loan debt exceeded delinquent credit card debt in the third quarter of 2012.

The burden isn't just falling on students. Many parents take out loans to finance their children's education, meaning they are working to pay off loans when they should be focusing on retirement.

Student Loans And Bankruptcy

Student loan debt can be particularly troublesome for struggling borrowers. This is because unlike most types of debt, student loans are almost never dischargeable in bankruptcy. This is true for both government-backed loans and for student loans taken out from private for-profit lenders.

This doesn't mean that borrowers are without options, though. In many cases, bankruptcy can help by discharging other forms of debt — like credit cards, medical bills and bank loans — allowing borrowers to focus their resources on paying back student loans. Borrowers may also be able to modify their loans or pursue income-based repayment plans.

If you are struggling with unmanageable student loan debt, know you are not alone. A California bankruptcy attorney can evaluate your case and help you identify options for moving forward.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.