Rising Concern about Long-term Consequences of Educational Debt

By: Steve Grumm

Because everyone loves to think about student debt as they begin their weeks…

  • In a Minnesota Lawyer piece, legal management analyst Edward Poll notes that the landscape is changing with respect to the value of legal education, and cites alarming statistics about loans as he wonders whether law student loans are a “debt bomb” in the making.
  • Will Congress move to make student debt dischargeable – or at least subject to more flexible treatment – in bankruptcy proceedings?  The Wall Street Journal reported over the weekend:

The growth of student debt is stirring debate about whether the government should step in to ease the burden by rewriting the bankruptcy laws—again.

In 2005, Congress prohibited student debt from being discharged through bankruptcy, except in rare cases, because of concerns that many young graduates—who often have no major assets such as a house or a car—would be tempted to walk away from loan obligations.

Some lawmakers now want to temper that position, pointing to concerns that a significant number of Americans could be buried under education loans for decades. Their efforts, however, would apply only to private loans—a fraction of the market.

All of this suggests to me it’s dawning on high-level policymakers that decades of increased tuition costs and student borrowing have saddled millions with debt that they’ll be servicing for years to come.  (Including yours truly!) 

The single most important key to managing your educational debt is educating yourself about it.  Use resources provided by our friends Heather Jarvis and the folks at Equal Justice Works to understand what it is you’ve borrowed and how you can minimize your debt obligations most quickly.

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