Student loan debt is a growing problem that many Americans, young and older, are currently facing. In fact, student loan debt now exceeds credit card debt in our country. With the rising costs of tuition nationwide, young people are finishing college or beyond with a mountain of unmanageable student loan debt with few options to get out from under this debt.
Young people are not the only ones affected by mounting student loan debt. There are many middle aged Americans that are going back to school following a job loss or failed business venture who are trying to learn new skills and obtain further education to get a job in this unsteady employment market. Many are unable to find a job that will allow them to make the high payments required on student loans. Even more disturbing are the folks who are nearing retirement age but who have had to assist their children with student loans. In many instances, the children are unemployed or more likely under-employed, living at home and their parents are still trying to support the family and deal with a mountain of student loan debt, unable to put anything away for retirement.
Currently, student loan debt, both private and government, is generally not dischargeable in any form of bankruptcy. However, there is currently legislation in the U.S. Congress that is due to go before the judiciary committee in the very near future entitled The Fairness for Struggling Students Act, Senate bill S.114. This act is seeking to make private student loans dischargeable in bankruptcy. Private student loans are issued by the same entities as other unsecured debts. They are no different than any other unsecured credit line. A huge problem with private student loans is that there is no interest rate regulation and no type of income based repayment plan. Further, these private student loan lenders can bring lawsuits against borrowers and eventually end up garnishing wages. Some recent studies performed by the Consumer Financial Protection Bureau and the Department of Education found little or no evidence that restricting bankruptcy rights improved either loan prices or access to credit. These agencies have recommended that Congress revisit this unfair restriction that currently deems private student loans non dischargeable in bankruptcy.
I am currently serving as the Alabama State Chair for the National Association of Consumer Bankruptcy Attorneys (NACBA). NACBA is working to generate support for legislation to reinstate the dischargeability of private student loans. I recently met with one of Senator Jeff Sessions Washington staff attorneys to express the importance of this legislation to the Senator and his staff in hopes of giving them an understanding on how this impacts our economy. The Senators staffers were very receptive to the plea and were very interested in how this is affecting his constituents’ lives. We are hoping for his support in the upcoming vote on The Fairness for Struggling Students Act as he has shown that education and the economy are a few of his top priorities.
If you are struggling with student loan, I urge you to also contact your member of Congress with letters or emails to state your support for S. 114.
Further, if you are seeking guidance for assistance with any type of debt including student loan debt, please contact our office nearest you and schedule a free consultation with one of experienced attorneys who can help you get the relief you need.