• 19
  • May
    2011

Although individuals with college degrees tend to earn much higher annual salaries, and are, on average, more likely to become and remain employed, recent findings show that college graduates are among the fastest-growing groups of bankruptcy filers in Tennessee and across the country. This is largely due to the increasing costs of college and resultant student loan debt, as well as greater use of credit cards among college students and a poor job market.

Recent statistics show that 55 percent of individuals filing for bankruptcy are college graduates, despite the perceived financial and employment benefits of a college education. For example, 2009 college graduates had average salaries that were 101 percent higher than non-graduates. Theoretically, this increased income should be enough to pay credit card debts and student loans, but many graduated have difficulty landing a job immediately after college, especially in today's precarious job market.

Even when graduates do begin working, many start at entry-level positions that do not pay significantly more than an average job that does not require a college degree. A degree certainly gives its holder increased competitiveness in the job market, but does not guarantee safety from debt and bankruptcy. This is largely because graduates enter the working world with debts that non-graduates do not have, such a student loans.

In 2009, the average student loan debt of college graduates was $18,000, which is nine percent greater than just one year earlier, and a whopping 47 percent greater than graduates owed ten years ago. It is important to note that student loans are not dischargeable in bankruptcy, although a Chapter 13 filing will allow a debtor to place their loan payments on a more manageable payment plan.

Bankruptcy often allows debtors to discharge credit card debt, which likely comes in handy for many college graduates that decide to file for bankruptcy protection. In 2009, the average college student owed $4,000 to credit card companies.

Source: Bankruptcy Home, "A Correlation Between College Grads and Bankruptcy," 13 May 2011