faithtuppers - Democratic Lawmakers Push for Student Loan Debt ...

A number of Democratic U.S. lawmakers are now making a large push that may help those?in?particularly dire financial straits?to?find relief from student loan debt, which?currently cannot?be discharged through bankruptcy.

U.S.?Senators?Dick Durbin, Sheldon Whitehouse and Al Franken joined with Reps. Steve Cohen, Danny Davis, George Miller and John Conyers?to?introduce bills that will allow consumers?to?clear outstanding?private?student?loan?debts when filing?forbankruptcy,?Durbin?s office announced. Prior?to?the passage of new?bankruptcy?laws?in 2005, these?loans?could?be?cleared like any other?private?debt, but are no longer able?to be?discharged. Durbin first introduced legislation?to?change that policy in?2007.

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?Students, especially those at?for-profit schools, who find themselves unable?to?get enough government aid?to?pay their high tuition are turning?to?private?loans?to?fill the gap,? Durbin said when announcing the proposed legislation. ?Unlike federal?student?loans, there are few consumer protections available?for?these?private?student?loans?leaving some students stuck with this debtfor?the rest of their lives. Today?s bill will restore some fairness?in?student?lending, by allowing financially distressed borrowers of?private?student?loans?to?discharge those?loans?in?bankruptcy, just as other types of?private?debt can?bedischarged.?

[Related Story:?7 Savings Tips for College-Bound Students]

Billions of dollars worth of?private?student?loans?are now being issued every year, and many of these carry interest rates as high as 15 percent. Federal?student?loans, meanwhile, carry interest rates?in?the single digits. However, many students seek out the?private?lines of credit when they find it difficult?to?qualify?for?federal?loans, or simply don?t get as much financial help from the latter type as they need?to?cover their various costs, including tuition, room and board, necessary supplies, and so forth.

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Students looking?for?help making ends meet without taking on costly?student?loans?may want?to?talk?to?their college?s financial aid office about the options that may?be?available?to?them, including scholarships, grants and so forth, as these options will help consumers finance their education without incurring debt. However, failing those options, the office can also help students find the most affordable?student?loans?available.?In?many cases, all it may take is asking?for?help?tofind a wide variety options.

[Related Story: Defaulting on Private vs. Federal Student Loans]

Image: GlynLowePhotos, via Flickr

Tagged as: bankruptcy, debt, student loans

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