Bankruptcy And Student Loans

    Student loan debt is difficult to discharge in bankruptcy.

With over a trillion dollars of student loan debt out there, a soft job market, with real wages declining, should we change the bankruptcy laws?

NACBA, the National Association of Consumer Bankruptcy Attorneys, says yes, change the laws to allow at least some student loans to be discharged in bankruptcy.

Jenna Ashley Robinson examines the option of forgiveness versus changing bankruptcy laws.

Limited bankruptcy protections would send a better message to both graduates and lenders. In 2005, Congress prohibited private student debt from being discharged through bankruptcy, except in rare cases. Government student loans have not been subject to bankruptcy protection since 1976, when Congress exempted them following reports that new doctors and lawyers were filing for bankruptcy to avoid paying student loans.

Read more: http://www.insidehighered.com/views/2012/12/07/encourage-bankruptcy-not-forgiveness-student-loans-essay#ixzz2ExQB0eE7
Inside Higher Ed

Not allowing discharge of student loan debt in bankruptcy sends negative waves throughout the economy.  Students who can get jobs, live with their parents so they can make payments on student loans, instead of saving for/buying a house, further depressing the housing market.  Not to mention postponing marriage and children.

One of the first questions to be answered before a relationship can get serious is:  how much student loan debt do you have?

My sympathies are with the students, because they were sold a bill of goods.  Promised jobs they could get with the degree the university was selling.  When the jobs and/or income do not materialize, the student is nailed while the university remains fully paid.

They system must be changed so that the colleges have some skin in the game.  If a student has to bankrupt out of student loan debt, or the loan is otherwise not being paid, make the college put up the difference.

That is the only way to reel in the costs, and get courses focused on fields of study that will allow students to be solvent after graduation.