Bankruptcies Rise Among College Graduates
Acquiring a college degree might not be quite the promise to a great paying job that it once was. The amount of people with a university diploma filing for bankruptcy has increased in the last 5 years by 20 percent, as reported by a new study. The age and salary of filers has also increased.
Graduate degree is no guarantee
Tuesday, the Institute for Financial Literacy report was released. It showed, from 2006 to 2010, that there was an increase in the amount of bankruptcies filed by those with graduate degrees from 11.2 percent to 13.6 percent.
Individuals without a university diploma make up 70 percent of all bankruptcy filers. But the study showed that those with associates and bachelor's degrees also filed at a greater rate than in previous years. People possessing only a high school education make up about a third of all filings.
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."
Not a small study
The study was conducted from 2006 to 2010, involving more than 50,000 debtors in bankruptcy credit counseling or cash management courses. Its reason was to track bankruptcy statistics following the 2005 Bankruptcy Abuse Prevention and Customer Protection Act. The BAPCPA was an act signed into law by President George W. Bush which attempted to tighten the reins on who could and could not file bankruptcy.
Considering ethnicity
"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 the majority of the filings. By 2010 that demographic had shifted to people between the ages of 45 and 54. This is a large 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 number of filers generating than $60,000 leaped by 66 percent.
Asian Americans, whose numbers more than doubled, climbed from 2.1 percent to 4.5 percent. There was also a rise from 6.5 percent to 8.7 percent in Hispanic filers. There was a decrease from 2006 to 2010 in the amount of African-Americans that filed as it went from 15.4 percent to 11.3 percent.
Why is it taking place?
Linfield explains that there is a reason behind this massive increase in statistics. It is because of the career loss. The reasons cited by consumers were career loss, reduction of income and over-extended credit.
Last year, the amount of personal bankruptcies filed in America rose by 1.5 million, according to the New York Daily News.
Graduate degree is no guarantee
Tuesday, the Institute for Financial Literacy report was released. It showed, from 2006 to 2010, that there was an increase in the amount of bankruptcies filed by those with graduate degrees from 11.2 percent to 13.6 percent.
Individuals without a university diploma make up 70 percent of all bankruptcy filers. But the study showed that those with associates and bachelor's degrees also filed at a greater rate than in previous years. People possessing only a high school education make up about a third of all filings.
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."
Not a small study
The study was conducted from 2006 to 2010, involving more than 50,000 debtors in bankruptcy credit counseling or cash management courses. Its reason was to track bankruptcy statistics following the 2005 Bankruptcy Abuse Prevention and Customer Protection Act. The BAPCPA was an act signed into law by President George W. Bush which attempted to tighten the reins on who could and could not file bankruptcy.
Considering ethnicity
"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 the majority of the filings. By 2010 that demographic had shifted to people between the ages of 45 and 54. This is a large 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 number of filers generating than $60,000 leaped by 66 percent.
Asian Americans, whose numbers more than doubled, climbed from 2.1 percent to 4.5 percent. There was also a rise from 6.5 percent to 8.7 percent in Hispanic filers. There was a decrease from 2006 to 2010 in the amount of African-Americans that filed as it went from 15.4 percent to 11.3 percent.
Why is it taking place?
Linfield explains that there is a reason behind this massive increase in statistics. It is because of the career loss. The reasons cited by consumers were career loss, reduction of income and over-extended credit.
Last year, the amount of personal bankruptcies filed in America rose by 1.5 million, according to the New York Daily News.
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