In our blog Monday, we discussed how President Barack Obama recently urged Congress to pass laws making it easier to discharge portions of student loan debt through bankruptcy protection.
We fully support any legislation that could help people with student loans discharge their debts. A recent Time Magazine story paints a picture of despair among recent college graduates and the large amount of debt they face because of student loans.
According to Time, private student loan lending has ballooned over the last decade. “A $5 billion industry just over a decade ago, the private student-lending market ballooned to four times that size before the economic crisis hit,” the Time article said. The article then goes on to compare private student loans to subprime mortgages and says:
During the 2007–08 academic year, nearly half the students at four-year, for-profit schools had private student loans. These schools need private loans to augment the federal student aid they accept, so their top priority was getting students to borrow as much as possible — whether or not they needed it. The dismal rate of employment for graduates at many of these schools compounds the problem. Former students are stuck with a slew of loans they might not have needed, and a degree that’s worth little.
The article points out that in 2009, 10 percent of all students who took out private loans and earned a Bachelor’s degree owed more than 25 percent of their monthly income to student loan payments. It goes on to support a recommendation in a report by the Education Department and the Consumer Financial Protection Bureau, which says that Congress should consider modifying laws that, except in rare exceptions, prohibit the discharge of private student loans through bankruptcy.
It’s unfortunate that so many people are struggling to make student loan payments and we hope Congress does do something to change the current laws regarding bankruptcy. On Friday, we will discuss different things you can do if you are struggling with student loans and the benefits of bankruptcy.
If you feel like you are in a financial hole, our Washington DC and Maryland bankruptcy attorney can help you now with a free consultation by filling out the contact form on this website or by calling (202) 888-8454 to schedule an appointment. We can offer you the best solution for whatever your debt issues may be.