For students in Kentucky, another school year is beginning and with it, for many college students, the taking on of additional school loans to pay for tuition. School loans used to be seen as a safe bet for the student. A better education meant a higher paying job. The odds on that bet have gotten longer, as the ease of finding the first “good” job has become more elusive.
Many former students in Kentucky are still looking for that job. However, their loan providers are not waiting to look for their payments. The problem is enormous, with an estimated $1.2 trillion in outstanding student loans, which almost a third more than total credit card debt. Some former students struggle for years, with loans in deferral, forbearance or even default. If only they could file a bankruptcy to discharge that crushing debt.
Under the current version of the Bankruptcy Act, student loans are dischargeable only if the debtor can show an “undue hardship.” This is a difficult standard to meet and this leaves many people in a virtual indentured status, where they have to forgo future economic activity, like buying a car or home, or practically any consumer products as the vast majority of their income is swallowed by student loan debt.
We think lenders should accept some of the risk of education. They should not be able to offer loans on sometimes outrageous terms, taking advantage of naïve or unsophisticated borrowers and then being guaranteed a return on their investment.
If you do have an overwhelming student loan debt you should speak with a bankruptcy attorney, as there may be more options available to deal with your debt.
Source: Deseret News, “How bankruptcy could help solve the student loan crisis,” Devon Merling, August 23, 2013