Student loans are swelling so much that they could threaten the country's financial sector in a manner similar to the mortgage meltdown of a few years ago, warns a report by the National Association of Consumer Bankruptcy Attorneys.
Total student loans stand around $1 trillion, about 14 times more than 15 years ago, and well above the estimated total credit card debt of $798 billion, USA Today reports.
"Take it from those of us on the frontline of economic distress in America," says William Brewer Jr., president of the National Association of Consumer Bankruptcy Attorneys.
"This could very well be the next debt bomb for the U.S. economy."
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Bankruptcy attorneys say swelling student debt "feels too much like what they saw before the foreclosure crisis crashed onto the national scene," the report finds.
Changes to bankruptcy laws to include student loans are needed now, as without them, the entire financial system remains vulnerable.
Lawmakers agree.
"It's not fair and needs to be corrected," says U.S. Rep. Steve Cohen, D-Tenn., sponsor of legislation that would make changes suggested in the report, USA Today adds.
Overall, consumer borrowing is on the increase in the U.S.
Consumer borrowing rose by $19.3 billion in December after posting a $20.4 billion gain in November, according to the Associated Press, citing Federal Reserve data.
The two increases were the biggest monthly gains in a decade, fueled in part by rising student loans.
Still, it's too early to claim victory for the U.S. economy.
"Despite recent good economic news from the January employment report and business surveys, euphoria should be tempered by still-high unemployment, still-high levels of debt and still-low household wealth," says Gregory Daco, an economist at Global Insight, according to the Associated Press.
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