Bankruptcies Among Edumacated Americans Up 20 Percent

College graduates and Americans with advanced degrees are filing bankruptcy more often, according to a report published today by the Institute for Financial Literacy. But even though bankruptcy filings by degreed persons increased 20 percent since the passage of the Bankruptcy Abuse Prevention and Protection Act, non-degreed filers still make up 70 percent of bankruptcy cases. Here's the snapshot provided by the Institute:

• The following changes have occurred since the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA): 
o The Gender Gap in bankruptcy filings is closing; 
o Over 70% of debtors didn't graduate from college; 
o Americans with advance degrees are filing at higher rates; 
o The majority of bankruptcy filers earn $40,000 a year or less; 
o Americans who are unemployed saw a jump in filings by 23% since 2008; and 
o Americans who are married are more likely to file and represent over 60% of all filings and of those filings, nearly 35% were joint petitions. 
• The following changes have occurred during the previous five year period and may be attributable to the Great Recession: 
o Americans 45 years and older increased the rate of filing bankruptcy by 19%; 
o Americans age 34 and younger decreased the rate of filing bankruptcy by over 30% since 2006;
o Asian American filings have doubled while Hispanics/Latinos filings increased by over 33%; 
o College education doesn’t appear to ward off bankruptcy as the rate of degree holders filing bankruptcy increased by 20%; 
o Bankruptcy filers earning incomes above $60,000 increased their rate of filing by over 66%; 
o Americans who are unemployed increased filings by 21% since 2006; and 
o Americans who are married have seen a 12% increase in filings since 2006. 
• The percentage of Americans reporting Reduction of Income and/or Job Loss as a cause of financial distress increased by 24% and 21% respectively since 2006. 
• The other common causes of financial distress reported by Americans include Overextended on Credit, Unexpected Expenses, Illness/Injury and Divorce.

Notice that bankruptcy filings are down 30 percent among people 34 and younger. That demo includes recent college graduates, not a single one of whom can get rid of student loans by filing for bankruptcy, because that debt is nondischargeable. The cold hard (rent sought) realities of paying for education, coupled with tighter lines of credit for youngsters, is hopefully teaching millennials how to live within their means; something their married and divorcing parents (couples represent 60 percent of all filings) are less good at. 

A thought experiment: Imagine if student loan debt were dischargeable, and families had to put up collateral to borrow big bucks to put junior through college. For a while we'd probably have even more brokeass boomers, but eventually we'd also get some cheaper colleges. 

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  • A Liberal||

    A thought experiment: Imagine if student loan debt were dischargeable, and families had to put up collateral to borrow big bucks to put junior through college. For a while we'd probably have even more brokeass boomers, but eventually we'd also get some cheaper colleges.

    You hate children, and want only the children of rich plutocrats to have higher education, you monster.

  • fish||

    ....and want only the children of rich plutocrats to have higher education

    Look if the kid doesn't pop out of the womb with a tophat and monocle he can suffer like the rest of us. It's what nature intended.

  • Eryk Boston, Esq||

    We could return to the old way of allowing student loans to be discharged if the borrower is still broke after several years or we could make them partially dischargeable and non-guaranteed. Basically, we need to give lenders an incentive to consider if the borrower will actually be able to repay their loan after getting their B.A. in Sociology with a minor in theatre.

    Disclosure: I'm a bankruptcy attorney so I would greatly benefit from allowing students to discharge their loans.

  • ||

    Sorry, but every man, woman, and child in this country must own a home and have a college education.

  • Starbucks Barista||

    I got a great job after earning my BA in Women's Studies with a minor in Art History.

  • ||

    Please tell me that you own a home, as is your right under the Constitution.

  • Scruffy Nerfherder||

  • Ironic||

    Maybe the best thing is to remain in college part time for life. That way you never have to pay off your loans and you can keep getting new loans. Plus, you get free gym membership and access to JSTOR.

  • jtuf||

    Everyone has free access to JSTOR now. The wall starts in 1923, but unless you majored in a STEM field, you won't be missing any valuable new developments.

    http://about.jstor.org/partici.....al-content

  • Invisible Finger||

    I forgot Tom Hanks used to have Eraserhead hair.

  • jtuf||

    I planned on majoring in Biology before I started college. At the start of my freshman year, I would ask my hallmates what they planned to major in. Many of them said they hadn't decided yet. I asked "Why are you paying $25K per year before you even know what you want?" I learned to stop asking that question after it got a few shocked responses.

    It is amazing how many parents will write those tuition checks without even planning out what a child will major in and how the child will benefit from that major.

  • Invisible Finger||

    All the cool parents do it.

    That really is the entire thinking.

  • LK||

    ... hopefully teaching millennials how to live within their means...

    Generation M? They're only 12 now, or 11 if you're one of those count from 1 types. They get the bill. On deck: generation B. The barterers.

  • Nike Dunk Shoes||

    thanks

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