While the push for student loan debt to be discharged in bankruptcy continues, the Obama Administration is pushing Congress to act on the issue. The Administration, along with other political figures, claims the bankruptcy code should be revised to allow student loan debt to be dischargeable. While all types of student loan debt may not be considered for elimination in bankruptcy, the act may help reduce an overwhelming number of Americans with outstanding loans.
A recent report was published by the Consumer Financial Protection Bureau and the Department of Education in regards to student loan debt in the United States. Data continues to show student loan debt increasing with Americans owing more than $150 billion. Yet, what is interesting is that a majority of these loans are private. One reason why so many Americans are struggling to repay outstanding private loans is due to repayment plans not being structured in borrower-friendly manner. This is an element many may not realize when they take the loan out.
In 2005 when the bankruptcy code was revised, it claims that private loans are banned from being wiped out in bankruptcy. But certain analysts say Congress may consider allowing private loans to be discharged if the debtor has repaid on the loan for a certain time period. Discharging debt may also be beneficial for those who are pursing work in what is being called a challenging market when it comes to getting work. Financial institutions such as Sallie Mae claim they also support private loans to be discharged in bankruptcy, only if the debtor has made an ongoing effort to repay what they borrowed.