Settlement of Student Loan Debt

There have been many news reports recently about the large amount of student loan debt burdening young people entering the workforce. Most people know that bankruptcy may not discharge student loan debt except in circumstances of “extreme hardship.” . I am often asked by clients or just blog readers for suggestions dealing with large amounts of student loan debt.

I had read, and saved, an article I read several years ago in the N.Y. Times about how to negotiate reductions in student loans. I found most valuable the article’s link to a U.S. Department of Education manual instructing their agents about offers and compromises of student loans. However, this article says that borrowers can expect only minimal debt reductions. There are other sources to assist people who are struggling to pay student loans. Unless student loans are shown to be a significant drag on our economy it is unlikely that bankruptcy law will be changed to permit more people to discharge student loans.

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