In June of 2010, for the first time in history, total student debt surpassed total credit card debt in the United States. This is a staggering statistic considering the fact that Americans are notoriously strung out on credit. Moreover, the vast majority of Americans do not hold professional degrees. According to Businessweek, only 25% of Americans have college degrees, while (anecdotes) a far greater percentage possess and use credit cards. What's worse is that in 99% of cases, the bankruptcy code does not allow a debtor to discharge student debt in bankruptcy. The same is not true for credit card debt (in fact, the vast majority of discharged debt is credit card debt).
So what's the good news? According to a recent blog post, the American Bar Association has passed resolutions aimed at stemming the ballooning student debt problem in the US. The resolutions present several different aspirational goals. These include encouraging transparency by forbidding law schools from fudging employment statistics and tweaking the loan repayment structure to better fit today's graduates. Although these resolutions are not binding, I think this it's great that the ABA is finally stepping forward to confront the problem rather than just rubber stamping law school policy. There are some truly dishonest practices in the student loan industry that need to be addressed by lawmakers, and I think the ABA's resolutions are a first step in making these changes a reality.
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