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Arizona Bankruptcy Often Won't Help: Student Loans at All-Time High

By Joseph McDaniel, Esq.

While it's possible for a debtor to scrape off student loans in a Chapter 7 Bankruptcy in Arizona (or anyplace else), that doesn't mean that it's easy.

The combination of impossibly high unemployment, and underemployment, AND gigantic student loan amounts paid to institutions with more administrators than professors is having an interesting effect.

And by "interesting", I mean gosh-awful.

See, a University is dependent for its continuing survival on a regular flow of lambs to the educational slaughter.

And kids are catching on that getting a very, very expensive degree with student loans may not be a good economic investment if there are no jobs to be had by new graduates, or anybody else.

Student loan lenders have zero motivation to be economically reasonable; they'll cheerfully garnish for the entire life of the student, and keep running interest rates and default penalties that would make The Godfather blush.

Here's my prediction for the Student Loan Bubble; it will be put off for a little while, as the Government punishes for-profit educational institutions and puts them out of business, routing the reduced flow of student to not-for-profit schools.

But there will be a greatly reduced flow of students as they figure out that they have been chasing a worthless brass ring, and that there's no rainbow at graduation.

And when some bright guy figures out that the future of education is hooking up videos of the very best and finest professors on the internet, and handling the attendance issue the way the Bar Association deals with online attendance, traditional Universities are doomed.

Now, they may not know that today.

But they'll first ask for bailouts, and after that doesn't keep 'em afloat, they'll tank.

And getting an education online will become the norm. Which only makes sense, because the University Lecture System came about because of a book shortage; and now we have Kindle!

Full post as published by Arizona Bankruptcy Attorney Blog on February 04, 2011 (boomark / email).