Student Loan Debt in Bankruptcy: An Empirical Assessment

Source: Daniel A. Austin, Northeastern University School of Law Research Paper No. 188-2014, May 27, 2014

From the abstract:
Education loan debt in the U.S. recently reached $1.2 trillion. Thirty-nine million Americans — nearly 20% of U.S. households — owe student loans, and student loans are by far the fastest growing component of non-housing consumer debt. For example, in fourth quarter 2013, U.S. households incurred $82 billion in debt (exclusive of housing debt), a 3.3% increase from the previous quarter. Of this amount, $53 billion (65%) was student loan debt. In contrast, auto loans and credit card debt accounted for only $29 billion.

Student loan debt is also a rapidly increasing element in consumer bankruptcy. This study examines the growth of student loan debt in consumer bankruptcy cases filed each year from 2005 to 2013. In this study I obtain data from 500 randomly-selected cases per year to calculate values such as annual percentage of filers with student loan debt, average annual amount of student loan debt, and student loan debt as a percentage of debtor income and percentage of total unsecured debt. Among the findings of this study, the percentage of debtors with student loan debt increased from 15.7% in 2005 to 22.3% in 2013, while the average student loan debt load for such debtors more than doubled from $15,350 to $32,096 during the same period. As these and other numbers reported in this study show, student loan debt is a rapidly increasing component of consumer bankruptcy.