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Bankruptcy Reform Act hurting student loan borrowers
By Angela Hawke on Oct 4th, 2010
More Americans are taking out loans to obtain a higher education. Even with a college degree, graduates are finding difficulty repaying their loans. The Bankruptcy Reform Act passed in 2005 by Congress prohibits education loan borrowers declaring bankruptcy in court without proving "undue hardship." However, many who are drowning in student loan debt are finding it impossible to plead their case.
Current law offers no deferment options for disabled or unemployed borrowers, according to the Chicago Sun-Times. Families of borrowers who are deceased are also left to take care of payments. Although the bankruptcy option still exists for private loan borrowers, very few individuals have succeeded in court.
"Fewer than 100 people in Illinois alone even attempted to get rid of private loan debt in bankruptcy last year. Of those, five were successful," founder of Student Loan Justice, Alan Collinge, told the newspaper."No one even bothers. No attorneys will take on that effort."
Borrowers who are struggling with student loan debt can look into consolidation or the income-based repayment plan for federal loans. Income-based plans cap monthly payments at no more than 15 percent of the individual's current income.
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