Bankruptcies Rise Among College Graduates -


Bankruptcies Rise Among College Graduates

By Cornelius Nunev

We've all been told that it will pay to get a college degree. But perhaps it doesn't pay quite as well as it used to. A new study suggests that the amount of university knowledgeable individuals filing for bankruptcy has risen by twenty percent over the last 5 years. The age and income of filers has also risen.

No guarantee you won't fail with a graduate degree

The report, released Tuesday by the Institute for Financial Literacy, showed that the quantity of bankruptcy filers with a graduate diploma climbed from 11.2 percent in 2006 to 13.6 percent last year.

About 70 percent of filers are people that do not have a college diploma. But the study showed that those with associates and bachelor's degrees also filed at a greater rate than in previous years. Those with just a high school education have a higher chance of filing. These people make up for about a 3rd of all filings done.

Leslie Linfield, founder of the Institute for Financial Literacy, said:

"There's these mythologies out there that if you go to college and you get a degree, you're going to do financially better. I think this data is starting to erode at this myth. ... The Great Recession has had a dramatic impact on the bankruptcy filings of American consumers across the economic spectrum -- including college-educated, high-income earners."

Massive survey

The study was conducted from 2006 to 2010, involving more than 50,000 debtors in bankruptcy credit counseling or money management courses. Its reason was to track bankruptcy statistics following the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. The BAPCPA was an act signed into law by President Bush which attempted to tighten the reins on who could and could not file bankruptcy.

All factors considered

"While less educated, low-income individuals continue to represent the typical bankruptcy filer," Linfield said, "this report underscores a sophisticated evolution of the profile of the American debtor that now extends to disparate age, income and ethnic groups."

In 2006, those between 35 and 44 accounted for most of the filings. When 2010 came around, those numbers changed. It was between 45 and 54 at that point. This is a massive risk, Linfield notes. "At 54," she asked, "do they really have enough time in front of them to start over?"

The study also showed that the quantity of filers making more than $60,000 leaped by 66 percent.

There was a rise from 2.1 percent to 4.5 percent in Asian Americans, which more than doubled. Those Hispanic individuals who filed also had a rise. It went up to 8.7 percent from 6.5 percent. African-Americans had a significant decline in numbers, sinking from 15.4 percent in 2006 to 11.3 percent in 2010.

Over-extended credit and career loss

Linfield blames the huge number of white-collar job losses in the banking and other industries for the lion's share of the statistical boosts. Consumers responding to the survey cited over-extended credit, career loss and reduction of income more than any of other reasons as the causes of their financial turmoil.

There was a rise in the amount of bankruptcies filed in America last year. They went up 1.5 million, the New York Daily News reports.

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