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Student debt reaches all-time high, worrying financial analysts

As many New Hampshire residents are aware, the cost of college has swollen to ridiculous levels. Tuition rates are always rising; books, supplies and other costs put students in tough financial spots; and after college is all said and done, these graduates enter a harsh reality where there simply are not enough jobs. In fact, according to the U.S. Education Department, roughly 30 percent of people aged 20-24 are either unemployed or not in school.

This has created a massive student debt bubble, one that some financial analysts say could result in another crippling economic recession. Currently, more than $1 trillion in U.S. student debt exists; more than all credit card debt in the country.

Worrying still, the percentage of overdue student loans -- specifically "seriously delinquent" loans, which mean the in-debt party is at least 90 days late -- has increased from 6 percent to 11 percent in the past decade. It all points to a generally broken system that does little to help in-debt graduates.

Nothing accentuates that point more than the fact that student debt is practically impossible to discharge through bankruptcy. There needs to be extreme circumstances for it to be partially or wholly eliminated through bankruptcy -- so it can be done. But in most cases, the debt remains with a graduate student until it is paid off.

Even without this ability (something that some lawmakers are considering), filing for bankruptcy can be a helpful step for struggling graduates. It can clear debt in other financial areas, allowing you to pay down other debts.

Source: Bloomberg, "Overdue Student Loans reach Record as U.S. Graduates Seek Jobs," John Hechinger, May 22, 2013

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