Student loan debt is pushing an increasing number of young people and their parents toward bankruptcy, according to a survey.
More than four-fifths of bankruptcy attorneys say they've seen a notable jump in the number of potential clients with student-loan debt in the past few years, with nearly half the lawyers reporting a significant increase in such cases, according to a survey released Tuesday by the National Association of Consumer Bankruptcy Attorneys.
Nearly one-quarter of the attorneys surveyed say the number of potential student loan clients have risen 50 percent to 100 percent, while another 39 percent of lawyers report spikes of 25 percent to 50 percent.
Student debt is rising for obvious reasons: steadily spiraling college costs, financial-aid cutbacks at public universities and a stubbornly weak economy that's making it difficult for graduates to find jobs.
Student-loan debt is brutal for people who can't pay it off. Unlike many other forms of personal debt, student loans cannot be discharged in bankruptcy, meaning the debt can hang over students well into their adult lives.
The bankruptcy lawyers group, which issued a report on student-loan debt along with its survey results, says student loans could spur a financial crisis similar to the mortgage meltdown.
"Take it from those of us on the front line of economic distress in America," said William E. Brewer Jr., the group's president. "This could very well be the next debt bomb for the U.S. economy."