If you've been reading the news lately, it appears that out-of-control student loan debt is the dirge of American society. In fact, many are worried that unpaid student loans in default could bring down the American economy in a way that's much worse than the real estate market collapse of 2008.
How much student debt do Americans have on average?
At this time, Americans owe 1.31 trillion worth of student loans. This is more money than Americans own for auto loans. It's also more money than Americans own for credit card debts. Divided among the 126 million American households, this averages out to approximately $10,397 of student loan per household.
However, it's highly unlikely that the student loan debt is evenly distributed. Many American households could have over $100,000 in student loans that they're struggling to pay off. Indeed, when looking at the 23.2 million American households that have student loan debt, households with student hold an average of $49,905.
Can I get rid of my student debt through bankruptcy?
It is nearly impossible to get a federal bankruptcy court to include your student loan debts as dischargeable in your bankruptcy. That said, it can happen in certain situations when the bankruptcy filer is suffering from extremely dire circumstances.
Bankruptcy can help those with student debt problems, however, in an indirect way by assisting individuals to resolve other debts. When other borrowers can resolve other outstanding debts, they will free up income that was being used to pay off those debts, and redirect that income toward paying off their student loans faster and without inflicting so much economic burden on themselves.
Source: Motley Fool, "The Average American Has This Much Student-Loan Debt," Matthew Frankel, June 25, 2017