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Congressman looks to change student loan bankruptcy, although debt consolidation may help as well
By Angela Hawke on Apr 27th, 2010
Trying to fund higher education is a challenge many people face, as are the effects of not being able to pay off student loans in the long run.
One aspect of student loans that make them even more difficult is the fact that they are difficult to get rid of through bankruptcy. New laws passed in 2005 made all types of student loans harder to erase through filing, although a congressman is looking to change that.
Tennessee Democrat Steve Cohen, along with fellow party member and Illinois Representative Danny Davis, have authored a bill that would bring bankruptcy rules for student loans back to the way they were. In doing so, privately originated student loans would be treated the same as other forms of debt.
Cohen said that people should not be discouraged from getting further education because of the fact that it could lead to financial difficulties, and that his bill helps with that.
"The bankruptcy system should work as a safety net that allows people to get the education they want with the assurance that, should their finances come under strain by layoffs, accidents, or other unforeseen life events, they will be protected," Cohen said.
If Cohen's bill doesn't pass, consumers may still have options in dealing with educational loans. One of those is debt consolidation, although people should keep in mind that private and governments loans must be handled separately.
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