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Student Loan Debt Continues To Plague Consumers

Outstanding student loan debt has reached an estimated $867 billion and now exceeds the outstanding credit card balances for consumers. The real plague is private student loan debt. Many government backed student loans offer repayment options that allow for special circumstances of financially distressed borrowers, including income based repayment. However, this is not the case with private student loans with Sallie Mae being the largest lender. Prior to 2005, private student loans could be discharged in bankruptcy just like any credit card debt. However, the law was changed and all student loans cannot be discharged in bankruptcy unless there is a showing of some exceptional circumstances set out in In re Brunner 831 F2d 395 (http://www.moranlaw.net/student_loan_brunner.htm)

Legislation has been off and on concerning possible changes to the law which would restore the discharge to private student loans but passage seems unlikely given the nature of the Republican controlled House of Representatives. Student loan delinquencies continue to increase. All of this occurs while the education costs continue to outpace inflation causing the need for more student loan debt. (http://www.cbsnews.com/8301-505145_162-57505921/student-loan-debt-is-worse-than-it-seems/).

If you are overwhelmed by debt from student loans and are having great trouble catching up, you can contact our office for assistance.

Categories: Bankruptcy, Student Loans

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