Student Loan Debts Could Trigger Next Financial Crisis

A recent survey of U.S. bankruptcy attorneys found a major jump in student loan debtors seeking their help, pointing the way to a possible mortgage-style debt crisis.

Now that state attorneys general across the country have reached a $25 billion deal with the major banks on their investigation into “robo-signing” and other foreclosure abuses, the next financial crisis may be on the horizon, one group is warning.

A survey and report released Tuesday by the National Association of Consumer Bankruptcy Attorneys found that 81 percent of the bankruptcy attorneys polled said that potential clients with student loan debt have increased “significantly” or “somewhat” in the past three to four years. Overall, 48 percent of the bankruptcy attorneys in the survey reported significant increases in such potential clients.

In addition, 39 percent of the bankruptcy attorneys surveyed said they have seen potential student loan client cases jump 25 to 50 percent in the past three to four years. An additional 23 percent of bankruptcy attorneys have seen such cases jump by 50 percent to more than 100 percent.

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