The bankruptcy trend

The bankruptcy trend
The number of personal bankruptcy filings in the fiscal year ended Sept. 30, 2003, rose 7.8% from the same period in 2002, reaching 1,625,813, according to the American Bankruptcy Institute (ABI). Thats twice the number of people filing for personal bankruptcy protection in 1993.

The amount of debt as a percentage of personal income tends to track bankruptcy filings, the ABI said. And the amount of debt payments as percentage of income has steadily increased in the last 10 years, according to the Federal Reserve.

Entering the real world
A cap, a gown, a degree, maybe a hangover and an average of $20,000 in debt: Thats what graduating students are leaving college with.

In the 1999-2000 academic year, about 60% of students graduating with a bachelor's degree from a four-year public college took out a federal student loan at some time, with a cumulative average debt load of $16,100, according to National Center for Education Statistics. Thats up more than 36% from the average amount public university graduates borrowed just four years previously.

For students at private institutions facing larger tuition bills, the debt load tends to be even higher. In 1999-2000, about 66% of students graduating with a bachelor's degree from a private institution borrowed an average of $18,000, up more than 27% from the $14,100 they borrowed on average in 1995-96.

Credit card debt among students is also growing at a fast clip. In 2000, 78% of students had a credit history and credit cards, up from 67% a scant two years before, according federal student-loan financier Nellie Mae. The average credit card debt per student jumped to $2,748 in 2000, up more than 46% from the average of $1,879 in 1998. The percentage of students with four or more cards rose to 32% from 27%.

Is there any evidence at all that America's youth is learning some early lessons about debt? Well, it's not much to cling to, but the average number of credit cards per student fell to three in 2000 from 3.5 in 1998.

And yet, if recent history is any guide, the typical student -- rather than paying off that college debt in the working world -- is destined simply to gather more: The average U.S. household with a mortgage, two college graduates who borrowed money for school and more than one credit card, owes about $112,000. And that figure is only expected to rise.