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Americans owe trillions in debt including student loan debt

If you had to guess what category holds the largest debt for Americans, most of you would probably guess it was mortgage debt. You would be correct. But you may not as easily guess that the second debt category is student loans.

According to the Federal Reserve Bank of New York's Quarterly Report on Household Debt and Credit, at the end of 2017, Americans were $13.15 trillion in debt. Mortgage debt was nearly 71 percent of the total. Student loans, the second largest debt owed by Americans, is about 10 percent of the total debt.

Why such a rise in delinquent student loans?

At the end of 2017, "about 11 percent of nearly $1.4 trillion in student debt was at least 90 days delinquent." Part of that is because many students are still attending school, are still unemployed or they have deferred their loans.

Cumulative smaller loans, such as those less than $10,000, account for a good portion of the delinquent amount. Many people go back to school to earn a degree and get a good job. This is because most companies now require a degree of any kind just to show an applicant has soft skills and the education for a position. But the job market is still very competitive and having a degree isn't always enough.

There are other ways to handle debt besides acquiring more. Consider bankruptcy for a fresh start. Chapter 7 or Chapter 13 bankruptcy can help you get rid of debt or reorganize your debt and pay it off within a three- to five-year plan. This can give you a fresh start with a clean slate. Depending on your income and assets, you may be able to have all of your debt discharged. Talk to an attorney and let him or her tell you about your options.

If you have a student loan already, it may not be dischargeable; it takes special hardship requirements to discharge a student loan, but is possible if you fit those circumstances. Either way, if your other debt is dissolved, you may be able to afford to begin paying off that student loan.

Source: Forbes, "The Real Reason Behind The Student Debt Problem," Patrick W. Watson, Feb. 26, 2018

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