North Carolina has seen drastic rises in average student loan debt.
Image source: EducationNews.org
Thanks to a tough economy and continually increasing tuition costs, graduates of North Carolina public and private colleges are leaving school with more debt than ever before. The rate at which the debt burden has increased is drastically higher than in previous years and that has many people worried (and rightly so).
Student Debt by the Numbers
On the average, almost 60 percent of students attending public and private colleges and universities in North Carolina will graduate with over $23,000 worth of debt. And at private schools, the debt is significantly higher than at public institutions and this is despite more assistance. When you look at Pell Grant average awards, Pell Grants were higher for students at private institutions. But because of much higher tuition rates at pricier private colleges, students were forced to borrow more in student loans to make up the difference.
Unemployment and Underemployment Challenges
When you get a degree, it comes with the expectation that you can get a good-paying job that will support you and enable you to pay off student loans. Unfortunately, as we wrote this week, North Carolina continues to have higher than average unemployment rates. Many grads have to go out of state to find a job resulting in brain drain that our state doesn’t need. It's a fact that young graduates typically face higher unemployment and underemployment during economic downturns which is what is persisting in our state right now.
North Carolina tuition has increased astronomically.
Image source: NCJustice.org
Unaffordable Student Debt Is a Plague
More graduates than ever are behind on their student loans – more than at any other point in history. Even as delinquency rates on credit cards, mortgages, auto loans and home equity lines fall, they continue to rise drastically on educational debt – as do the balances owed. This can result in serious financial problems. Income based repayment (IBR), forbearance and deferment are all viable options you should pursue rather than letting your loans grow more and more delinquent. And if that doesn’t work, there’s always one more solution…
Bankruptcy and Student Loans
As a last resort, bankruptcy may be a viable option for some that owe student loans. Many articles may tell you that student loans cannot be forgiven in bankruptcy but this is not true. What is true is that most people don’t try to have this debt forgiven. If you meet certain criteria, it’s worth the effort to ask – which is done by having your attorney file an adversary proceeding. If you can show that:
(1) you’ve made a good faith effort to repay your debt
(2) your financial situation is dire and likely to continue for some time
(3) if you are forced to pay off your student loans, you will be unable to maintain a minimum living standard for you and your family
These three criteria are known together as the Brunner Test and are key to getting student loans discharged in bankruptcy. If you are a North Carolina graduate facing an uphill battle because of a pile of student debt, contact the law offices of John T Orcutt to find out more about debt relief though Chapter 7 or Chapter 13 bankruptcy with a free consultation.