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With student loan debt now topping U.S. credit card debt and few or no options available for distressed borrowers (including parents who co-signed loans and now face the loss of nest eggs, retirement homes and other assets), America faces the very real possibility of another major economic threat, according to a new survey and report from the National Association of Consumer Bankruptcy Attorneys (NACBA).

The NACBA survey of 860 bankruptcy attorneys nationwide found that:

• More than four out of five bankruptcy attorneys (81 percent) say that potential clients with student loan debt have increased "significantly" or "somewhat" in the last three-four years. Overall, about half (48 percent) of bankruptcy attorneys reported significant increases in such potential clients.
• Nearly two out of five bankruptcy attorneys (39 percent) have seen potential student loan client cases jump 25-50 percent in the last three-four years. An additional quarter (23 percent) of bankruptcy attorneys have seen such cases jump by 50 percent to more than 100 percent.
• Most bankruptcy attorneys (95 percent) report that few student loan debtors are seen as having any chance of obtaining a discharge as a result of undue hardship.
• More than four out of five bankruptcy attorneys (82 percent) see the limited availability of student loan discharge in bankruptcy as "a big problem" barring a fresh start for clients.
• Seven out of 10 bankruptcy attorneys see the lack of ability to separately classify student loan debts for debtors using chapter 13 as a "big problem."
• Nearly two out of three bankruptcy attorneys (65 percent) say that student loan provider debt collections have become "much more" or "somewhat more" aggressive in the last 18 months.
• More than three out of five bankruptcy attorneys (61 percent) dealing with potential student loan debtor clients have seen cases of debts more than 15 years old still being pursued.
• Titled "Student Loan 'Debt Bomb': America's Next Mortgage-Style Economic Crisis," the companion NACBA paper points out:
• College seniors who graduated with student loans in 2010 owed an average of $25,250, up five percent from the previous year. Borrowing has grown far more quickly for those in the 35-49 age group, with school debt burden increasing by a staggering 47 percent.
• Students are not alone in borrowing at record rates, so too are their parents. Loans to parents for the college education of children have jumped 75 percent since the 2005-2006 academic year. Parents have an average of $34,000 in student loans and that figure rises to about $50,000 over a standard 10-year loan repayment period. An estimated 17 percent of parents whose children graduated in 2010 took out loans, up from 5.6 percent in 1992-1993.
• Of the Class of 2005, borrowers who began repayments the year they graduated, one analysis found 25 percent became delinquent at some point and 15 percent defaulted. The Chronicle of Education puts the default rate on government loans at 20 percent.

During January 2012, the National Association of Consumer Bankruptcy Attorneys (NACBA) invited more than 4,500 of its members to participate in an online survey. With 860 completed responses tallied, the online survey attracted a high percentage (19 percent) of potential respondents. The full survey questions and responses are set out in the survey report at http://www.nacba.org.

Published with permission from RISMedia.