The White House is looking for ways to help people who can’t afford to pay back their student loans file for bankruptcy in the same way they might deal with credit card debt. Yet, the potential new policy would only address loans owned by private companies and not ones owned by the federal government.
The White House is ignoring the many borrowers who, after an identity theft situation, severe medical issue and/or other big negative life event, can’t afford to pay back their loans — people who have also used up all of the assistance that is available for providing them with more time to do so.
Between credit card and student loan debt, many Americans are barely getting by in the post-Great-Recession economy. Some critics of a bankruptcy plan argue that former students who can’t pay their loans would learn fiscally unsound behaviors. Others have tried to say that these former students are deadbeats or that they should have to return their college diplomas because they did not pay for them. Advogando reports these critics fail to recognize that severe negative life events can often completely destroy a person’s finances whether they are a recent student or someone who finished college more than a decade ago.
What is needed is a case-by-case review of every borrower’s personal situation. There also needs to be more controls over the third-party companies that manage federal student loans.