Overdue debt burdening students, graduates

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Despite signs that the economy appears to be on the rebound, many consumers continue to struggle under the weight of debt they can’t pay off, especially when it comes to student loans.

Equifax reported Monday that student loan charge-offs, debts that creditors deem uncollectible, rose more than 36 percent to $3 billion in the first two months of the year, compared with the same period a year ago. When debt reaches that stage, lenders usually turn to collection agencies to get the money they’re owed.

High unemployment among recent graduates – and underemployment among those have been able to land a job – is hurting their ability to put dents in student  debt. That, combined with credit card debt and mortgages, makes the problem more acute.

According to Forbes, the size of the average student debt load in 2005 was $17,233, but that figure had climbed to $27,253 by 2012, a 58 percent increase.

“Continued weakness in labor markets is limiting work options once people graduate or quit their programs, leading to a steady rise in delinquencies and loan write-offs,” Equifax chief economist Amy Crews Cutts said in statement on the charge-offs. She said the company is seeing a steady growth in lending to students.

Scott Scredon of Atlanta-based CredAbility, a consumer credit counseling service, said 15 percent of  the group’s clients have a mix of mortgage, credit card and student loan debt.

“Student loans have been a problem for a while,” said Scredon, a CredAbility spokesman. To help some clients, the group works with lenders to try to restructure as much of the mortgage and credit card debt as possible.

Equifax said the balances outstanding on student loans rose more than 14 percent to $852.7 billion in January and February, compared with the period a year earlier. The number of student loans outstanding rose nearly 13 percent to more than 123 million.

Have ever you had to just walk away from a debt, leaving a creditor to charge it off, and has that debt ever come back to haunt you?

36 comments Add your comment

mark

March 25th, 2013
5:19 pm

I wonder how many teachers can relate to this article. Its not losing your job, its the furloughs. eight this year, that is about $2400. That could have been $200/month towards my student loan. If over the last four years, I was not furloughed, I would have paid it off.

Guest

March 25th, 2013
5:30 pm

Let me save our Tea Party friends some time:

STEM blah blah blah… Art history liberals underwater basket weaving Obama blah blah blah… Plumbers and mechanics make six figures blah blah blah… Entitlements taxes socialist Muslim 47 percent blah blah blah…

Independent voter

March 25th, 2013
5:35 pm

HUGE mismatch in high school education/counseling and job skills… we need engineers.. but also electricians, plumbers, auto mechanics… we need doctors .. but also nurses.. we DON”T need liberal arts majors or lawyers !! learn to do something… not just over educated libs…. trade schools.. apprenticeships.. coop.. work your way through school…. get paid while you learn .. NO LOANS !!!

Destin Dawg

March 25th, 2013
5:38 pm

Guest… free market capitalism…. get a Job.. be proud to work and pay taxes !!!!!

yard man

March 25th, 2013
5:52 pm

Mark….take your furlough time and WORK !!!!! hey I make $50 K a year mowing lawns and doing a little irrigation repair…. wife makes $40 at OutBack 35 hours / week… no loans here !!

Independent

March 25th, 2013
5:55 pm

I know liberal arts grads with big loans due….bar tending ???? learn a skill .. jobs are out there !!!

[...] graduates remain jobless, underemployed or cash-strapped in a slow U.S. economic recovery …Overdue debt burdening students, graduatesAtlanta Journal Constitution [...]

[...] graduates remain jobless, underemployed or cash-strapped in a slow U.S. economic recovery …Overdue debt burdening students, graduatesAtlanta Journal Constitution [...]

[...] graduates remain jobless, underemployed or cash-strapped in a slow U.S. economic recovery …Overdue debt burdening students, graduatesAtlanta Journal Constitution [...]

[...] graduates remain jobless, underemployed or cash-strapped in a slow U.S. economic recovery …Overdue debt burdening students, graduatesAtlanta Journal Constitution [...]

Independent

March 25th, 2013
7:20 pm

jobs are out there… no need for college degree.. just mechanics… righty tighty .. lefty Lucy ??

Alsonic

March 25th, 2013
7:32 pm

I went to college a couple of years–got bored. I make decent money bartending (on good nights bring in $400) — pays my bills plus the “benefits” are very good–tons of hot chicks to pick from every night.

Funkisha

March 25th, 2013
8:57 pm

Sure some people can’t repay their student loans because they don’t have a job, but a lot of them never intended to pay. The word’s getting around that if you just stall long enough the loan will be written off.

Bob Walters

March 26th, 2013
12:49 am

Most of these deadbeats are camped out at the parents house with a doting mom and dad spoiling them rotten. We need to make default on debt a crime and let some of the younger generation spend a few years in prison for a well needed attitude adjustment.

Vote Tea Party to keep the country strong and debt free.

Cherokee

March 26th, 2013
5:39 am

Funkisa the loan is never written off – student loans follow you forever.

And Bob Walters, one of the things our forefathers gave up was debtors prisons. Why do you hate America?

Independent

March 26th, 2013
6:43 am

to get votes Obama ( who defines highly educated socialist ) led gullible young students to follow his lead… college towns are havens for overeducated liberals.. in tenured teaching jobs….

Progress

March 26th, 2013
7:54 am

@Bob Walters- Yeah, voting for the Tea Party is the right thing to do. That makes perfect sense. If you’re concerned about debt and the deficit, then you should vote for the fiscally irresponsible party, the Republicans, who got us piled in debt to begin with. Yeah, that sounds logical.

Progress

March 26th, 2013
7:58 am

Sounds like “Independent” could use a little more education himself because it appears that he doesn’t understand the definition of socialism. And considering he views education as being associated with liberalism (I wouldn’t necessarily disagree), he must be one uneducated SOB.

Nobama

March 26th, 2013
8:29 am

1%ers pay cash for private colleges.

BWAHAHAHAHAHAHAHAHAHA

@Guest

March 26th, 2013
8:49 am

Hahaha! As soon as you say that, one crazy after another crawls out of the woodwork. So predictable!

Independent

March 26th, 2013
9:01 am

Progress … when you don’t have a valid you call names…. very weak

Progress

March 26th, 2013
9:06 am

You mean like calling someone a socialist? Or calling students gullible? Hypocrite.

Independent

March 26th, 2013
9:51 am

you mean this kids aren’t gullible?? Obama not a socialist ?? another name ?? Hypocrite ??

yard man

March 26th, 2013
9:55 am

Headlines today.. “Global companies can’ find skilled workers ” .. “14 million on disability ” not counted as unemployed.. ” learn a trade.. get a job and pay taxes !!!

Timmy

March 26th, 2013
10:43 am

Progress

March 26th, 2013
11:22 am

Independent- Kids are less gullible than you are. I wish Obama was a socialist, but if you think he qualifies as a socialist then you don’t understand what the term means, and you need to get yourself an education. And yes, you are a hypocrite for complaining about name calling after you were the first perpetrator of it.

Big Al

March 26th, 2013
12:29 pm

Loan forgivess/cancellation is a taxable event so you will get a nice little 1099 at the end of the year. So instead of owing money to the lender now you owe money to the IRS. Oh yeah, and your credit will be trashed. So don’t walk away from those student loans.

Don't Tread

March 26th, 2013
12:49 pm

Funny how libs campaigned for “most favored trade nation” status for China and want “open borders” and citizenship to illegals.

Billion-dollar trade deficits with China: check. Hordes of illegals in the US: check. (Citizenship: check that one off soon)

Then they wonder why college graduates (who are legal citizens) can’t find a job that pays well enough to pay off the student loan debt, and default on the loan. Next they’ll be wondering what happened to consumer demand for big-ticket items, or why people don’t own homes any more.

Independent

March 26th, 2013
1:45 pm

college degree needs to be in fields of need… technical training, like math, science, Engineering, Medical, or a trade school.. like Vo Tech… not just English or liberal arts.. etc… learn to DO SOMETHING…. jobs are out there

Independent

March 26th, 2013
2:05 pm

I earn very good money racing seatless bicycles and didn’t need some expensive liberal degree to do it!

Alecia

March 26th, 2013
3:00 pm

Debt forgiveness/charge off is taxed as income if it makes the taxpayer solvent. Usually in a bankruptcy case this will not be taxed. However, it is wise to spend a couple hundred bucks and speak to a CPA. Even if a person pays tax on written off debt, it is still cheaper than paying in full. People are using strategic default as part of their financial plan. Considering that we have been in this economic mess for 6yrs which is almost enough time to recover . Why should someone pay their bills if no one else is?

blackbird13

March 26th, 2013
8:01 pm

If Obama is a Socialist, he’s the worst one ever, considering it’s mostly corporations and the super-rich getting all the goodies.

Destin Dawg

March 27th, 2013
12:59 am

Obama does not understand free market capitalism… the rich are getting richer by far… poor getting poorer… young folks, minorities and women = 20 % + unemployment .. but stock market is way UP !!!

rita

March 27th, 2013
4:35 am

To the person who suggests the teacher “work” on furlough days…it is difficult to arrange work when the individual days are scattered throughout the year. As the schools develop calendars to shorten the summers, they also make it difficult for teachers to work summer jobs to supplement their income. I wish their would be an article in the AJC about teacher pay in the metro counties over the past 8 years. It baffles me why any quality student would go into teaching these days. It’s all well and good to love the profession, but you also need to be able to support yourself and your family while doing it.

Destin Dawg

March 27th, 2013
6:53 am

a married couple both teaching do pretty well with lots of time off….. as schools shorten summers its also more difficult for kids to get jobs… and develop a work ethic that we had in the 50’s and 60’s…. we delivered papers, sacked groceries, mowed lawns, pumped gas…. kids don’t have the opportunity to develop personal responsibility… need to work their way through school to reduce all this student loan debt !!!

tiimov

March 27th, 2013
11:31 am

@Alsonic
Wonder how you’ll like bartending when you’re 50 years old and still working for tips.