What Congress Should Do to Give Student Loan Borrowers Hope For Relief

Written by Administrator

The only debts that aren't discharged in a bankruptcy court are education loans.  People are fighting to fix this law.

Currently, these loans that were built to build for the future could put parents in debt because they are responsible for the loans.People are struggling to provide for their families while paying off educational debt.

For any other kind of debt (car debt, credit card debt, mortgages, etc..), there would be a way out, bankruptcy. 

But there is a way to get out of this. Student loans.

This way around the bankruptcy laws dismisses any individual tragic life issues, and must be changed. 


This is how education loans become the exception

Before, alll kinds of loans were equal in reference to bankruptcy. But congress issued an exemption, stating bankruptcy could dismiss education loans under serious circumstances.

Congress changed the exception to also include private education loans.

Bankruptcy judges are currently able to throw out student loans for anyone who will never be able to work again.

Currently, it is close to impossible to discharge current student debt with bankruptcy. 

 

How to Fix it

There are two options that can make student loans more fair:

1. Let judges discharge private loans of any private lender who does not:

A. Throw out loans in cases of disability or death

B. Have fair interest rates.

C. Let borrowers have more flexible payment plans, forbearance and deferment 

2. Let judges clear out loans for colleges that

A. Have large dropout rate.

B. Have large loan default rate.