Will bankruptcy soon be forgiven during bankruptcy? Speaking to the Georgia Institute of Technology on March 10th, President Obama says his administration is looking into it. The president revealed that he had ordered officials to look into whether or not making student loans forgivable during bankruptcy would be helpful to the millions of Americans who are burdened by significant student debt.
The research is just the latest in a series of efforts by the White House to alleviate student debt in America. As bankruptcy laws stand now, student loan debt is protected from being wiped away by a bankruptcy filing. However, the tremendous prevalence of crippling student loan has mobilized U.S. lawmakers to seek new, flexible ways to free former students from a stunted financial trajectory. "We're trying to make sure that across the board, more and more young people can afford to go to college, and then afterwards, aren't so burdened with debt that you can't do anything else," the Wall Street Journal quoted President Obama saying.
The WSJ also offered the following numbers on U.S. student debts:
- U.S. student debt has more than doubled in the last seven years.
- Almost 25% of current borrowers are behind on payments.
- The average student loan debt nationwide is just below $30K.
- The government lends 90% of the national student debt.
In his speech, President Obama offered only a few preliminary details of this effort. It was not clear whether or not an eventual proposal would address solely loans issued by the Federal Government, or would also somehow affect private loans—such as those issued by firms like Wells Fargo & Co. and SLM Corp.'s Sallie Mae.
Student Debt Uncertainty Going Forward
Clearly, the president's interest in altering bankruptcy law is still in its formative stages, but even if the White House did propose a change, it would likely face significant opposition in the Republican-controlled Congress. As the WSJ also reports, it is still unclear how effective changing bankruptcy law would be in actually helping borrowers. They report that only 713 bankruptcy filings in 2014 were filed to seek relief from student loans.
If you are facing financial hardship and believe bankruptcy could provide the relief you need to reorganize your life, then we encourage you to call us at Washington Fresh Start today. A dedicated and compassionate Tacoma bankruptcy lawyer is ready to hear you story.
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