Getting a good education may provide the opportunity for a solid future; however, many graduates and their families are finding out the hard way that having overwhelming debt in the form of student loans may be a serious financial setback.
It is not just students are affected by student loan debt, which carries the same negative impact as credit card debt, such as high or fluctuating interest rates and fees. Parents, grandparents or other family members who co-signed for private student loans may find themselves facing financial challenges later on, with many years of loan payments they can't afford. Student loans have been notoriously difficult to discharge through Chapter 7 bankruptcy.
Illinois Sen. Richard Durbin is among several sponsors of a bill that may provide some debt relief for those affected by overwhelming student loans. The Fairness for Struggling Students Act of 2013 would make it possible for private student loans to be discharged through Chapter 7 with the other types of debt that bankruptcy forgives. Durbin is also co-sponsoring the Know Before You Owe Act of 2013, which would require schools to inform students of their financial aid eligibility and counsel them on the cost and ramifications of student debt before their loan is approved.
These bills may be encouraging news for the millions of people who owe an average of $24,301 in student loans, according to the Consumer Financial Protection Bureau.
Bankruptcy may provide a fresh financial start to those with high personal debt who are running out of options. If passed, these bills may make it easier for graduates to get back on their feet and begin a better future.
Source: Credit Union Times, "Student Loan Bankruptcy Discharge Bill Reintroduced in Senate," Heather Anderson, Jan. 28, 2013
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