Number of college grads who end up filing for bankruptcy jumps 20% over past five years: report

BY ELIZABETH LAZAROWITZ
DAILY NEWS BUSINESS WRITER
Wednesday, September 14, 2011

Link to article: http://articles.nydailynews.com/2011-09-14/news/30173751_1_filers-personal-bankruptcies-institute-for-financial-literacy

These days, book smarts may not add up to financial success.

The number of bankruptcy filers who have college degrees has swelled more than 20% over the past five years as the impact of the economic downturn broadens, a new study showed.

Those with just a high school diploma still account for the biggest proportion of bankruptcy filers, making up more than a third of them, according to a report by the Institute for Financial Literacy.

But bankruptcy filers with college diplomas climbed to 13.6% in 2010 from 11.2% in 2006. Those with an associate's or graduate degree also climbed, while those with just a high school diploma slipped.

"There's this mythology out there that if you go to college and you get a degree, you're going to do financially better," said Leslie Linfield, the institute's executive director. "I think this data is starting to erode at this myth."

Last year, personal bankruptcies rose to 1.5 million, according to government data.

While bankruptcy filers are becoming better educated, they're also increasingly well-heeled. The percentage of filers making more than $60,000 jumped 66% in the past five years, the survey showed.

Linfield pegged the trend largely on big losses in white-collar jobs. More consumers surveyed blamed a reduction of income or job loss as a reason for their financial distress.

Still, the biggest reason for their money problems remained being overextended on credit - more than 70% of filers gave that as the main cause.

A particularly worrisome trend, Linfield said, is that bankruptcy filers are aging. Consumers aged 45 to 54 made up the highest proportion of them in 2010, a shift from the prior year, when those aged 35 to 44 held the top spot.

That could leave many older Americans in a tight financial spot as they approach retirement.

"At 54, do they really have enough time in front of them to start over?" Linfield said. "They are at risk."

The group surveyed more than 50,000 debtors in credit counseling or money management courses.