Bankruptcy laws in the U.S. protect the lenders in that case, not the borrowers. Even going bankrupt does not relieve them of the money owed. How did that happen?
“It’s kind of strange that credit cards are dischargeable when private student loans aren’t,” said Mark Kantrowitz, publisher of the financial aid websites, Fastweb.com and FinAid.org. “They should be treated the same.”
The TIME article that quote comes from points out they used to be dischargeable, at least till 1976. And they explain, more or less, how the change came about.
That won't be very consoling to the millions of college grads who took out loans thinking they would easily make enough money to pay them back after they graduated, only to find themselves trapped and unable to pay.
[UPDATE: Heard on a National Public Radio interview over the weekend of May 18, 2013, information about a way to have some student loans forgiven..what's called a Public Service Loan Forgiveness program. It is not available for all loans, but it you qualify it can be a godsend.]
The general public was warned long ago that changing the bankruptcy laws to include forbid discharging student debt was a very bad idea.
ReplyDeleteNow, the chickens are coming home to roost, and we're finding out the rational voices of reason were right all along.