By Andrew Lipsitz
With the onset of the economic breakdown in 2008, it appears that more and more middle-class Americans are filing for bankruptcy now more than ever before. There once was a time when a college education and home ownership meant that a family was financially secure of debt problems, however this ceases to be the case in these times.
A study conducted by Harvard Law School’s Elizabeth Warren suggests that these two main assets have become more risky since the financial stresses that have been plaguing the economy. Higher education may be a great investment for learning, but with such high student loan rates, and a declining job market, many middle-class Americans are finding it hard to repay the massive debt that they owe to these agencies. It has become an increasingly competitive market out there, forcing many to file for personal bankruptcy.
Homeownership, much like a college education, is proving to be less and less valuable to these middle-income families. Since the 80’s, many middle-class families relied on their houses, with fixed-rate mortgages and appreciating values, as an economic safety net should something go wrong. However, today’s home value market is plummeting and leaving many of these families with no cuss ion. Some are stuck with mortgage payments that they can’t even afford, but cannot sell their house for below the price they paid.
Middle Class people should save more money in order to avoid filing for bankruptcy. Since we know that we are going to take out loans for our education, when we get a job we should start saving some money in order to pay off these loans.
ReplyDeleteScarlett Lu