Under the current Bankruptcy Law student loan debt can be discharged, unless the Debtor(s) has experienced an undue hardship. The standard has proved to be a very difficult one and requires a severe diability for the student loans to be discharged through the bankruptcy process. Lawmakers are considering making provate loans dischargeable through Bankruptcy. Under the proposed changes federal loans, like Stafford and Perkins Loans would remain the same and not be dischargeable.
It is necessary for some students to take out Private student loans to supplement their income while in school or pay for tuition in excess of federal loan limits. The private loans have no government guarantees and have fewer repayment options, however, according to the College Board Reasearch, private loans are held by one-thrid of all undergraduate students.
There are concerns that if such a changes to the bankruptcy laws were implemented, the private student loan lending institution would not be able or willing to lend due to the increased risk. Further, the cost of the loan, as far as interest, would rise as well due to the increased risk of discharge of the debt through bankruptcy.
If there are any general questions or topics you would like to read about relating to bankruptcy law in the Philadelphia, Pennsylvania region, you may contact the Philadelphia Bankruptcy Lawyers at Sadek Law Offices, LLC at 215-545-0008 or email brad@sadek-cooper-site. Thank you.