The Consumer Financial Protection Bureau (CFPB) announced last week that it is trying to gather information to develop legislation making the repayment of private student loans more manageable for struggling borrowers.
“Too many private student loan borrowers are struggling with unwieldy debt that prevents them from climbing the economic ladder,” CFPB Director Richard Cordray in a press release. “We will be analyzing plans for policymakers to consider that might help avoid a repeat of the mortgage meltdown for today’s student loan borrowers.”
Last year, the CFPB submitted a report to Congress showing that there are more than $8 billion nationally in defaulted private student loan balances. Unlike federal student loans, most private student loans do not have forbearance, income-based repayment or rehabilitation options for borrowers if they default.
The CFPB announced that they are studying the following:
- How student loan burdens might impact the broader economy and hinder access to mortgage credit and automobile loans
- How distressed borrowers manage their student loan obligations
- What options currently exist for borrowers to lower their monthly payments on private student loans;
- Examples of successful alternate payment programs in other markets and which features could apply to this market
- The most effective mechanisms for communicating with distressed borrowers
The video above from NBC News discusses the student loan crisis. In Washington DC, residents owe nearly twice as much in student loans as the average American, with an average balance of $47,390.
Student Loans and Bankruptcy
In an overwhelming majority of cases, student loans are nondischargeable in bankruptcy. However, filing a Chapter 7 bankruptcy can eliminate debts like credit card debt and medical bills, which may hinder your ability to pay student loans.
To find out more about whether Chapter 7 or Chapter 13 bankruptcy can help you deal with student loans, contact our Washington DC and Maryland bankruptcy lawyer now for a free consultation.