Student loan debt has reached a staggering $1 trillion far surpassing other debts, but there is little people can do to eliminate or reduce these debts, which can effect the growth of the economy.
President Obama is visiting to colleges, urging lawmakers to pass a bill that would keep student loan interest rates from doubling. And while this will save people with student loan debt about a $1,000 a year, nothing is being done about a law that keeps people from having their student debts discharged in bankruptcy.
Bankruptcy attorneys can help a person reduce or eliminate debts from car or mortgage loans, credit cards and even gambling debts, but due to a 2005 law student loans are immune to the bankruptcy process.
Students graduate with an average of $23,000 in student loan debt. With the struggling economy these graduates face dismal job prospects and now have to pay off their loans. In a speech earlier this week, President Obama talked about how he and Michelle struggled to pay their loans. He told the crowd of mostly college students that he didn’t completely pay off his loans until 8 years ago.
A new bill introduced by Senator Dick Durbin (D- Ill.) would make all student loans granted by private lenders dischargeable through bankruptcy. This measure has the approval of student advocates and bankruptcy lawyers, who think these indebted students, should get some of the same rights as a corporation or individual who seeks bankruptcy protection.
No one really wants to hire a bankruptcy attorney and enter into a bankruptcy structure but this system is in place to help those burdened by debts they can no longer afford and gives them the opportunity to once again become financially solvent.