Indiana Students Carrying More Student Loan Debt
A recent analysis of student debt loads shows students at Indiana colleges or universities had an average of $30,000 in debt for each degree they earned in 2009.
This was $10,200 per degree higher than the national average. Most distressing was the fact that the 2009 numbers showed a 64 percent increase from the average $18,200 debt load for an undergraduate degree in 2006.
The report was authored by policy analysts at Education Sector, a non-partisan education think tank. The report contains a new measure of college success, the 'borrowing to credential ratio' (BCR).
The BCR seeks to combine measures of two chronic problems in higher education: dropouts and debt. They came up with a "debt to credential ratio" to draw a connection between the problems of low graduation rates and high debt burdens.
The BCR may act as a red flag that indicates a number of issues; high debt loads, low graduation rates, and in many case, both.
The Looming College Debt Crises
Students in Indiana are like those throughout the country. Being demanded to pay ever-higher tuition for their degrees, and amass mountains of debt in the process.
The New York Times reported early on this issue, noting "eerie similarities" to the mortgage debt crises. Students, with no jobs, because they are in school, take on $50,000 loans with no questions asked, just like the no-doc mortgage loans of a few years ago.
One reason why lenders may be so "generous" in offering these loans is their knowledge that they generally cannot be discharged in bankruptcy. Student loans are among the few types of debt that are practically excluded from the bankruptcy process.
The only way to discharge a student loan debt in bankruptcy is to successfully claim "undue hardship." A leading court decision created a test, known as the Brunner test, of what a borrower needs to show for a debt to meet the undue hardship exception:
- The debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for the debtor and the debtor's dependents if forced to repay the student loans.
- Additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans.
- The debtor has made good faith efforts to repay the loans.
If you believe your student loans are creating an undue hardship, contact a bankruptcy attorney. Additionally, even if you don't qualify as having an undue hardship, filing for bankruptcy may allow you to discharge other debts and free up additional funds to be put towards your student loan repayment.
