With college tuition increasing at an almost exponential pace, debt-burdened students have one more thing to look forward to after graduation.
According to a new report by the Institute for Financial Literacy, as mentioned in the Daily News, bankruptcy filings by college graduates have increased 20% in the last five years.
From Daily News:
“There’s this mythology out there that if you go to college and you get a degree, you’re going to do financially better,” said Leslie Linfield, the institute’s executive director. “I think this data is starting to erode at this myth.”
Last year, personal bankruptcies rose to 1.5 million, according to government data.
While bankruptcy filers are becoming better educated, they’re also increasingly well-heeled. The percentage of filers making more than $60,000 jumped 66% in the past five years, the survey showed.
Linfield explained the trend by pointing out the large number of white collar employees – a group that traditionally had more job security than workers in blue collar sectors – who have been laid off in recent years.
Increasingly, positions held by college graduates in some of America’s largest corporations are being outsourced abroad.
Yesterday, in the comments section of a Bensonhurst Bean story on increasing poverty rates, reader Joe123 made several astute points.
Joe informed fellow readers that his job, which he attended college to qualify for, is being eliminated and subcontracted to an Indian firm at the end of the year.
While Joe’s student loans have fortunately been paid off, he also stated that his lack of employment security has led him to stop making non-essential purchases.
He blamed our current economic predicament, in part, on short-sightedness by upper level management, who have a fiduciary responsibility to make money for investors.
Joe’s comments also made mention of a vicious cycle that can be created as large numbers of people, who are either uncertain about their future or deep in debt, spend less – further lessening the demand for new products in an already stalled economy.
“Companies have to maximize shareholder profits by law and there are only two ways to do this: increase sales or decrease costs,” Joe told Bensonhurst Bean. “Sales are down because people are either too burdened with debt or too worried about their job.”
Are you or someone you know a college grad who has had to declare bankruptcy?
Please feel free to share your story, or suggestions on improving the economy, in the comments below.