Student loan debt is a huge problem in the United States. To move up in this world, you need to have an education, high school degrees just don’t do it anymore. We tease sometimes that the college degree today is what a high school degree was in the 50s…everyone needs one to get a good job. Although the average student loan debt is $29,000, when it’s costing $30,000 to $50,000 a year for someone to get an education, people are sometimes graduating $200,000 in debt or more. I see people come through my doors with $300,000 to $400,000 in student loan debt. These clients are often overqualified, underpaid, and just can’t afford the required loan payments.
Collectively, Americans owe more than $1.7 trillion in student loan debt that is 92% backed by American taxpayers. Student loan debt is not just affecting the debtor, it’s affecting our tax rates and our ability to help our children have successful adulthoods.
As OF October 2021, Has Student Loan Debt Been Dischargeable With Bankruptcy?
Yes, student loan debt has been dischargeable through bankruptcy but it’s very difficult. Under the Brunner Standard, student loan debt can be discharged when 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) the debtor has made good faith efforts to repay the loans. Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987). In practice, Brunner has made it so a Debtor needs to show the court that you will never be able to earn money to pay the student loan debt. It’s been extremely difficult to prove and is not very common.
What Is The Proposed ‘FRESH START Through Bankruptcy’ Act Of 2021?
The proposed FRESH START Act, being worked on by Senators Durban and Cornyn, is an attempt to alleviate some of the issues caused by student loan debt. They are aware of how the $1.7 trillion debt owed to the federal government is affecting Americans across the board. If passed, the Act will make federal student loans eligible for discharge in bankruptcy proceedings ten years after your first loan payment is due. The Act stipulates that you will need to be able to pay some of the debt back before discharge and proposes a new cost-sharing structure, but there is not a lot of detail yet on what that means.
A lot of private student loans are partially refunded by the government when they are later discharged. The Act proposes to make those private companies more accountable with stricter standards on who can be approved for private loans. They also want to identify other options for student borrowers to come up with realistic paths to pay for school.
Additional Information On The Student Loan Sector In Illinois
There is a lot of turmoil right now in the student loan industry. Navient, one of the largest agencies working with student loans, has recently announced that will not be doing them anymore…it will be interesting to see what happens next.
People need to know that scam artists exist in all industries, including student loans. Do not believe everything you get in the mail. If you receive an unbelievable offer, double-check first to protect yourself from being scammed. Concerning student loan debt relief, I recommend checking with the Department of Education.
For more information on Student Loan Debt in the United States Today, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (847) 440-5998 today.