President Trump Is Right
We Need to Remove the“ Albatross” of Student Loan Debt From Our Young People and Families
By Jim Haller, Esq. Sulaiman Law Group, Ltd. Oak Brook, Illinois View Bio
During the presidential campaign, then-candidate Donald Trump promised to“ negotiate” a solution to the student loan debt crisis.“ This debt should not be an albatross around their necks for the rest of their lives,” Trump said.“ It’ s not fair and we are going to fix it!”
President Trump is right. Student loan debt is thwarting the creation of young families. It is delaying marriages and putting off the raising of children. It means that first homes and new cars are purchased much later, if at all. The family is the key to American life … the American middle class … and the American economic engine. President Trump’ s choice of metaphors is an apt one; like the albatross in Coleridge’ s The Rime of the Ancient Mariner, student loans are the burden that becomes a curse when hanging around the necks of millions of young Americans.
It would be wise for the new White House and Congress to move quickly to convert Trump’ s enthusiasm for providing student loan debt relief into policies that will ease the pressure of rising tuition costs for future students. But the help shouldn’ t stop there. Even before they address student loan costs for future generations, President Trump and Members of Congress can provide relief to today’ s millennials, their families and older student loan borrowers by enacting legislation to restore bankruptcy protection.
My colleagues and I in the world of bankruptcy law witness the plight of student loan borrowers in trouble every day. We witness firsthand the cumulative effect of the fees, interest and penalties that push loan balances to several times the original amount. Unlike virtually every other debt, student loans – both government and private – are generally not dischargeable in bankruptcy. Financially distressed borrowers face a lifetime of debt with little or no chance for escape, no matter how dire their economic situation.
How big is the problem?
According to the Federal Reserve Bank of New York’ s 2016 Q3“ Report on Household Debt and Credit,” outstanding student loan balances stood at $ 1.3 trillion as of September 30, 2016, growing by $ 20 billion from the second quarter of last year. At that time, 11 percent of aggregate student loan debt was 90 or more days delinquent or in default.
We know that unmanageable student loan debt can have devastating financial consequences for people of all ages, often placing ruinous burdens on borrowers in cities, suburbs and rural communities, and preventing middle class and poor Americans from using their education to build better lives for themselves and their families. In fact, student loan debt is so crippling for millennials that young families often cannot get off the ground. Student loan debts dramatically deter new graduates from using the fruits of their education to start new and innovative businesses. The prospect of becoming a parent and taking on financial responsibility of a home mortgage( and, even more daunting, another human being!) is often so unimaginable that marriage is put off.
Bankruptcy attorneys see all of this every day … and we also know what the solution is. The truth is that there currently is no real way out for Americans saddled with student loan debt when there is little realistic chance that debt can be repaid. For most other consumer debts, the bankruptcy
6 CONSUMER BANKRUPTCY JOURNAL Spring 2017 National Association of Consumer Bankruptcy Attorneys