On May 26th, the House of Representatives introduced House Resolution (H.R.) 2028, which would change the Bankruptcy Code to allow private student loans to be discharged. After the massive overhaul of the Code in 2005, it became virtually impossible to discharge student loans, private or governmental. I like to call student loans “zombie debt” since they never seem to go away. Private student loans usually come with relatively high interest rates and can borrowers can be given the option to pay them off upwards of 30 years. Although there are some strong arguments on both sides of whether to allow them to be discharged, there are a lot of private schools out there that are promising big rewards for completing their programs and practically throwing money at students to enroll. Once the thrill of graduation fades, however, these students are finding that employers are not as interested in their degrees as the schools have represented.
Right now H.R. 2028 has been “referred to committee,” which means that a smaller committee of the House will decide whether or not the full House should vote on the measure. Check this page to see if your Representative is a cosponsor of this bill. If he or she is, contact them to show your support.
Stay tuned for this bill’s progress. Passage would be good news for people whose student loans are pushing them to the edge of financial survival.
You can read the text of the bill here.
