New Report: Bankruptcy Should be an Option for Student Loans

The Center for American Progress recently released a report advocating that some student loans should be dischargeable under federal bankruptcy laws. The report recommends limited bankruptcy protection based upon the repayment terms and track record of employment for students from a particular institution.

This is encouraging because it could cause some institutions to take their students job prospects more seriously. Essentially, if a school had a poor track record of employment for its students, or their students regularly defaulted on student loans, those loans may be dischargeable. The hope is that this would force lenders to create loans that are better for borrowers, and discourage predatory practices because both lenders and, quite possibly, institutions could be on the hook if loans were able to be discharged in bankruptcy.

While this is a great first step, it does not go far enough. As the number of people with unmanageable student loans has exploded, their options for repaying the debt have shrunk. Ultimately it would take an act of Congress to restore bankruptcy protection to student loans, so if you or someone you love is affected by student loan debt, please contact your congressman or congresswoman and make your voice heard.