Students struggling with debt may soon see student loan changes
Since the 1970s, student loans have been mostly exempt from bankruptcy discharge. Students and graduates crushed by overwhelming debt have been unable to find relief from their student loans by filing for Chapter 7 bankruptcy. Florida’s governor and many other politicians from both political sides are listening to student activist groups and advocates about today’s student loan problems.
Federal student loan interest rates are being heavily focused on now, as they are scheduled to rise as much as double in July. Student groups would like to see this interest jump delayed or stopped, while Governor Scott gave Florida State University a challenge to set “$10,000 Bachelors Degree” to make college attendance easier for many students.
Since the laws were enacted that exempted student loans from bankruptcy, many students have found themselves struggling with debt, from unforeseen changes in employment or other life challenges. Federal student lenders have also been accused of taking advantage of this exemption by participating in unfair practices that put bigger burdens on students, including collection abuses. The recession has seen even more people with student loans suffering, after they’ve been unable to pay their loans or find debt relief through bankruptcy.
Almost nobody enters into a loan agreement expecting to have problems paying the loan back in the future. Financial difficulties are, unfortunately, a common part of life today. Dealing with student debt is hard enough without the added worry of collection agency harassment and wage garnishment. It will be interesting to see how much lawmakers pay attention to the requests of student groups and consumer advocates, and whether their attempts will be able to bring changes to the current bankruptcy laws.
Source: Examiner.com, “Congress listening more to student outcry over loan rates and crushing debt,” John Guzzardo, Mar. 31, 2013