In the sphere of national modern day politics, issues of debt and spending seem to dominate almost every discussion. One looming specter in many conversations of both private and government debt is the ever-increasing total of student loan debt. As the average amount owed by those pursuing or finished with higher education continues to rise, many are worried that these debts will make it impossible for future generations to prosper.
Recent findings released from the Consumer Financial Protection Bureau affix hard numbers to this general sentiment. The average student loan debt for an American is $24,301, and yet many both across the nation and here in Florida owe much more. All told, more than $1 trillion is tied up in student loan debt, with $150 billion of that coming from private lenders.
Some degree of debt relief, however, may be on the horizon. Last month a number of Senators introduced a bill that, if passed, would allow private student loan debt to be absolved through a declaration of personal bankruptcy, including both Chapter 7 and Chapter 13 filings.
Known as the Fairness for Struggling Students Act of 2013, the measure would essentially allow some, though not all, student loan debt to be lifted for those who have reached a dire financial situation-much in the way credit card and home mortgage debts can frequently be assuaged.
Supporters of the bill placed their focus on private loans due to their striking similarity to credit card debt; both frequently carry uncapped interest rates, steep origination fees, and little (if any) protective safeguards for consumers and students.
With the growing problem of massive student loan debt only intensifying, it’s reasonable to expect that changes to bankruptcy and debt relief laws that open up a wider array of options may become a reality over the coming months. Should bankruptcy become a viable means of recourse from a daunting student loan, debtors’ best option will be to work with an experienced attorney toward the quickest, most comprehensive legal outcome.
Source: Credit Union Times, “Student Loan Bankruptcy Discharge Bill Reintroduced in Senate,” Heather Anderson, Jan. 28, 2013
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