In a meeting on Thursday, House members took a look at the bankruptcy laws associated with private student loans and considered making them a discharge possibility for those who are struggling to pay their debt. Under current law, private student loans fall under a category called nondischargeability; however, if changes are made, former students who can’t pay their debts may be able to get them liquidated with everything else.
Some Responsible Students Can’t Afford Their Loans
In 2005, Congress made changes to the bankruptcy system so that private student loans would not be included with items that were able to be discharged. The reason this change was made was because some believed that students were more likely to abuse the bankruptcy system.
However, no evidence of this has been proven. In fact, many lawmakers have found that there are tons of people out there who want to pay their student loans and simply can’t.
As a result, the House is considering making changes to the law so that individuals who are suffering serious financial hardships and must declare bankruptcy won’t be forced to still pay a huge monthly student loan payment.
Drawbacks to Discharging Private Student Loans
While some in Congress are praising the idea of discharging private student loans, so say that doing so could become a threat to investors who bundled securities because they could fear that their investments could easily be liquidate. If people don’t invest in this area, there could be less money available for students and fewer options for attending school.
It looks like more House members are in favor of adding the loans to the discharge category, but only time will tell whether this possibly indeed becomes a reality.
