On Thursday January 22, Maryland Democrat Rep. John Delaney introduced
legislation that would allow student loan debt to be discharged in bankruptcy.
The proposed bill - the Discharge Student Loans in Bankruptcy Act (H.R.
449) - aims to close what Delaney has called a "huge loophole in
bankruptcy law that's hurting real people."
Under current bankruptcy law, student loan debt is treated differently
than other types of unsecured debts, such as medical bills or credit card
debt, and cannot be discharged in bankruptcy proceedings. H.R. 449 would
allow individuals who are struggling with insurmountable student loans
debts to discharge their student loan balances just as they would other
types of dischargeable debts.
The Student Loan Problem
Student loan debt has become a serious concern in the U.S. and has long
surpassed credit card debt as the largest consumer debt. To put things
into perspective, consider these statistics:
- Americans owe over $1.2 trillion in student loan debt.
The average Class of 2014 graduate carried roughly $33,000 in student loan
debt. The 2014 graduating class is considered the
most indebted class to date.
- Last year, just over 70% of graduates who earned a Bachelor's degree
left school with student loans. In 1994, that percentage was less than
half of grads.
The scope of the student loan problem is sizable, but it hasn't stopped
lawmakers from making efforts to end an unsustainable trend. Just this
week, President Obama noted his student loan concerns in his State of
the Union speech. He also announced his goals to ease the burden on students
by making community college free and finding ways to help those already
burdened reduce their monthly payments.
Wadhwani & Shanfeld has worked with many clients who were struggling
with student loan debts and other financial concerns. If you have questions
about student loan debt, bankruptcy, and your financial situation,
contact our legal team for a free case evaluation.