Saturday, May 22, 2010

Democrats Push for Student Loan Reform

Congress may soon pass a law that would permit private student loans to be discharged in bankruptcy. Prior to the 2005 Bankruptcy Reform Act, private student loans were considered to be equivalent to other private, dischargeable loans. If the proposed bill is passes, this would be terrific news to the countless law students who are struggling to repay their six-figure loans.

Personally, my private loans are not really a problem (I owe about $14K in private law school loans, which is about $100 a month). The bulk of my student loans are government-backed, so I really have no hope of ever making them go away apart from doing it the old-fashioned way - by paying up. Even if I could discharge all of my loans through bankruptcy, I'm not sure I'd want to. I used to clerk at a bankruptcy firm and I know how much it can wreak havoc on one's credit. For me, bankruptcy would be an absolute last resort. Which is what it's supposed to be anyway.

If this law passes, would you declare bankruptcy to wipe out your private loans? Why or why not?

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