At one time, getting a degree, particularly an advanced degree, was all one needed to do to practically ensure financial success. Today, that no longer seems to be the case. A recent study found that the numbers of Americans with advanced degrees filing for bankruptcy has increased 20 percent since 2006.
The Institute for Financial Literacy questioned 50,000 people receiving credit counselling, a requirement before filing bankruptcy. The study also saw an "income shift" from those receiving counselling for bankruptcy. When compared with other income brackets, the biggest increase was in the group that earns more than $50,000.
Potential Causes of the Trend
The failing housing market could be to blame for some of these better-educated, higher-income individuals filing for bankruptcy. Those who fall behind on their mortgage payments risk going into default and potentially facing home foreclosure. Bankruptcy is one way people can avoid losing their homes, whatever their tax bracket, particularly if they have less equity than their homes are worth and consequently have limited options.
Another potential cause of this trend is the loss of white-collar jobs. In this sluggish economy, businesses are downsizing, jobs are being cut or possibly consolidated. It may be difficult for someone who loses a job, even someone with an advanced degree, to immediately find a new one. While the job search is on, bills don't get paid and eventually people may be left with no other choice than to seek bankruptcy protection.
While those without college degrees still make up around 70 percent of all bankruptcy filings, the economic recession has increased bankruptcy filings across the board, and that includes filings for those better educated.
