PRESIDENT TRUMP IS RIGHT system affords that remedy. But, that is not the case when it comes to student loans, where borrowers must overcome substantial hurdles if they need bankruptcy protection.
The National Association of Consumer Bankruptcy Attorneys( NACBA) flagged the troubling parallels between the rise of student loan debt and the mortgage crisis half a decade ago in 2012. Over the last few years NACBA has reported on the growing numbers of Americans who are now seeking help with unmanageable student loan debt.
Of course, it is true that not all student loan borrowers will need bankruptcy protection, and that a small number of other programs, including refinancing to lower interest rates and repayment plans based on the income of the borrower, are available to some borrowers under certain circumstances. But for every borrower granted assistance through a program, there are scores or even hundreds of others left with unmanageable or unrealistic payoff plans with no alternative.
To be sure, the student loan debt crisis is a multi-faceted problem and will require a number of tailored approaches to address it. Restoring the bankruptcy discharge for student loans is an important piece of the puzzle – a targeted solution that would provide immediate relief to the most distressed student loan borrowers.
Congress must act now to defuse the student loan debt bomb. The good news is that S. 729, The Fairness for Struggling Students Act, introduced by Senator Durbin( D-IL) and cosponsored by several of his colleagues, would restore bankruptcy protection for private student loans. Also, H. R. 449, The Discharge Student Loans in Bankruptcy Act, introduced by Congressman John Delaney( D-MD), would restore bankruptcy protections for both private and federal student loans.
President Trump has taken the important first step of highlighting the student loan debt crisis, and making a sweeping policy proposal to cap student loan repayment plans at 12.5 percent of income. Now, it’ s time for Congress to respond. Doing so will be a real shot in the arm for the economy, and it will help ease the way for millions of young people to move ahead with their dreams of marriage, family, a first home, children, and all the rest of the American Dream.
National Association of Consumer Bankruptcy Attorneys Spring 2017 CONSUMER BANKRUPTCY JOURNAL 7