A recent CNBC article discusses the ongoing issue of ballooning student loan debt. The new Federal Reserve Chairman, Jerome Powell, said this week that he believes the student loan debt could slow down economic recovery. Education debt tops the scales at nearly $1.38 trillion and approximately 11% of student loan borrowers are 90 days or more delinquent on their loans.
Discharging Student Loan Debt?
Student loans are very difficult, and in my opinion, nearly impossible to discharge in a bankruptcy. Delinquent student loans linger on borrower’s credit for the rest of their lives burdening their credit abilities. Simple things like insurance coverage are linked to credit scores and a lower credit score can make insurance rates higher. When testifying before Congress this week, the new chair made a statement that he wondered why student loan debt could not be discharged in a bankruptcy. He said, “I’d be at a loss to explain why that should be the case.” He also acknowledged that is an issue for Congress to tackle. He made it clear in his statements to Congress that as the student loan debt grows larger, “then it absolutely could hold back growth.”
What If Bankruptcy Were an Option?
Bankruptcy is meant to provide a fresh start for consumers. If someone has made the arduous journey through college or technical school but cannot find a job making wages capable to supporting everyday living expenses and a hefty student loan payment, it seems to reason that students will be discouraged from pursuing higher education if they are not better off because they are being garnished against, levied against and collected against by student loan companies. Congress needs to take a serious look at these issues. The cost of higher education continues to rise far beyond the increase in wages.
Our law offices assist consumers in ways to pay their bills, including student loans, and maybe it means paying them in a Chapter 13 bankruptcy. Every situation is unique. Our offices offer a free, no-obligation consultation. Contact a Bond & Botes office today.