Student loan debt can be a crippling millstone around a debtor’s neck. Education costs have skyrocketed and loan debt has shot up as well, topping $1 trillion this past year. Now that a college degree is no longer a guarantee of earning power in the weakened economy, many college grads are facing terrifying amounts of student loan debt. What’s worse is that most student loan debt is not dischargeable in bankruptcy, eliminating one of the best options for debt reduction. Luckily, there is some good news about student loan debt.
Some Student Loans May Be Discharged
New legislation currently being deliberated in Congress would turn some types of private student loan debt into forgivable debt, under Chapter 7 or Chapter 13 filings. Similar bills have been introduced in the past and never passed, but there is reason for lawmakers to believe this time will be different.
Should the bill pass, it would mean that approximately $150 million in private student loans would become dischargeable during bankruptcy proceedings. While this is only a fraction of the total student loan debt, it could mean relief for those suffering under the weight of private loans, many of which feature higher interest rates than federal loans.
Compared to years past, a much larger percentage of voters are concerned with their mounting student loan bills. Nearly half of all current loans are in deferral, meaning payments are not being made due to financial hardship or other concerns. These are encouraging signs that the bill may pass this time around.
Of course, you can’t depend on lawmakers to resolve your debt. Consulting a bankruptcy lawyer is still the best option when it comes to determining your financial future.