Americans with Advanced Degrees Are Increasingly Filing for Bankruptcy
A new study by the Institute for Financial Literacy chronicles increasing rates of bankruptcy for Americans with advanced degrees.
The study found that the percentage of debtors with advanced degrees rose from 4.9 percent in 2006 to 6.7 percent in 2010. According to the report, the figures raise the question: “Why are those who are supposed to out earn their peers with lower educational attainment starting to seek bankruptcy protection in greater numbers?”
The study is based on a survey of more than 50,000 people who participated in financial counseling, a requirement for bankruptcy protection. It is not known what percentage actually filed for bankruptcy.
College graduates are the fastest-growing educational group of debtors counseled by the agency in the last five years, the Washington Post reports. The percentage with a bachelor’s degree rose from 11.2 percent in 2006 to 13.6 percent in 2010.
There has also been an income shift among people seeking bankruptcy counseling. People earning more than $50,000 had the greatest increase in filing rates compared to those at other income levels. In this higher-earning group, 15.8 percent sought bankruptcy counseling in 2010, compared to 10.5 percent in 2006.
Institute executive director Leslie Linfield told the Post she thinks falling home values contributed to the increase in filings among higher-income and better educated people. She told the New York Daily News that white-collar job losses also contributed to the trend.
Still, those with less income and lower education are the largest group of people seeking bankruptcy counseling. About 38 percent make less than $20,000 and about 42 percent have only a high school or primary school diploma.
This Article was provided by the American Bar Association.
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