Student Loans Haunt You, Even in Bankruptcy
June 8, 2010 by blackgirlgrown
Filed under money
I think I will amend the old phrase that, “nothing is certain but death and taxes” to include student loan repayment.
If you run up big credit card bills buying a new home theater system and can’t pay it off after a few years, bankruptcy judges can get rid of the debt. They may even erase loans from a casino.
But if you borrow money to get an education and can’t afford the loan payments after a few years of underemployment, that’s another matter entirely. It’s nearly impossible to get rid of the debt in bankruptcy court, even if it’s a private loan from for-profit lenders like Citibank or the student loan specialist Sallie Mae.
This part of the bankruptcy law is little known outside education circles, but ever since it went into effect in 2005, it’s inspired shock and often rage among young adults who got in over their heads. Today, they find themselves in the same category as people who can’t discharge child support payments or criminal fines.
There’s a hint that Congress may try to amend these rules as a part of the financial regulatory reform bills.
We’ll see.
blackgirlgrown
