Young adults are deeply in debt and, by and large, it’s not their fault. The youth of today are facing unforgiving student loans and seemingly insurmountable credit card debt — all during a time of slow job growth.
The main source of young adult debt is undoubtedly student loans. The percentage of borrowers who default on federal education loans within the first three years is steadily rising. College costs are increasing every year and wages are remaining stagnant, so students and parents are finding it increasingly more difficult to pay for college. The result is that more and more students default on their student loan debt.
Another main factor contributing to this debt is that there is currently less of a stigma associated with debt than in the past. Being in debt is almost expected if you are a young adult. Most young adults have some type of debt, as do all of their friends, and most are repaying it slowly.
The third contributing factor is that young people often can’t find jobs. The current unemployment rate for young people in the age group of 20 to 24 is about 30 percent. This has caused many young adults to move back home with their parents and has caused some of them to give up looking for a job until the economy fully recovers. This lack of steady income has led to a large increase in the amount of debt held by young adults.
As a result of all three of these factors, an increasing amount of young adults are filing for bankruptcy. Young adult Americans currently have the second-highest rate of bankruptcy filings, just after those in the age group of 34 to 44. It’s important to know that student loan debt for most students is not dischargeable in bankruptcy, which means you can’t get rid of this debt by filing bankruptcy. However, filing for bankruptcy can get rid of other forms of debt, so bankruptcy continues to be a good option for many young adults.
If you’re a young adult with a large amount of debt, you should consult a knowledgeable Pennsylvania bankruptcy attorney to help you understand your options and evaluate the best path to your financial future and goals.