Student loan debt can be a burden on any new graduate, but there’s something bigger at play here too: the trillions of dollars worth of debt in the US is resulting in a slowing economy. When younger people can no longer afford to buy houses, cars, and necessities due to an overwhelming amount of debt, the whole country suffers.
An even bigger problem is that students choking on debt from student loans cannot find relief in bankruptcy. Currently, a declaration of bankruptcy (which is meant to protect consumers struggling with too much debt) does not discharge a student loan debt.
The National Association of Consumer Bankruptcy Attorneys (NACBA) aims to do something about this dilemma by testifying before the House Judiciary Committee Subcommittee and making a strong case for bankruptcy relief for student loan debtors. If a law were passed to relieve people from student loan debt after declaring bankruptcy, the ripple effect would be huge ultimately resulting in a stronger economy.
Legislation from the Left
Senator Bernie Sanders recently introduced legislation that would cancel all $1.6 trillion dollars of student loan debt. The legislation would relieve 45 million people of student loan debt. Sander’s plan would have no limits or restrictions and is the first of its kind. As unusual as Sander’s legislation is, it’s not the only one on the table concerning student loan debt.
Senator Elizabeth Warren has also presented a plan to relieve student loan debt based on income. Both plans aim to eliminate the mounting debt that students are now expected to carry with them for life.
The Reality of Student Loans
In order to secure a high-paying job (or almost any job, really), people are expected to obtain a higher-education degree. But, those degrees come with a price due to increasing tuition fees. The average American student graduates with $30,000 worth of debt with medical and legal students graduating with more than $100,000 in debt. Not only does it take a lifetime to pay off this debt, most people simply can’t make those payments.
As a result, graduates are putting life off by living with elderly parents (draining retirement funds), are unable to purchase houses, and start families much later in life. None of this is good for the current economy and bankruptcy should protect these people from being choked with student loan payments. The NACBA’s recent testimony will, hopefully, push forward the need to relieve people from student loan debt following bankruptcy.