The President has been considering ways to allow certain student debts to be expunged through the bankruptcy process. A prominent news source has reported that the White House is evaluating the steps to discharge student loan debt. They are hoping that there can be a shift in bankruptcy laws concerning student loan debt so that it follows the same rules and regulations as mortgage and credit-card debt.
Ninety percent of student loans are created by the federal government, whereas the remaining loans are held by private lenders. Unfortunately, student debt has doubled in just the past five years, and a majority of borrowers are behind on making payments. Some amount of the borrowers are graduate students who make a livable income; however, many are students and parents who survive on a very limited amount of income.
President Obama has advised his administration to begin considering how to allow all student loan borrowers to be able to use bankruptcy proceedings to discharge their student debt. Currently, federal law does not generally allow either U.S. government student loans or private loans to be discharged in bankruptcy proceedings. However, auto loans, credit-card debts, and home mortgages are allowed to be wiped out in bankruptcy proceedings. This disparity has resulted in many individuals facing serious financial troubles that can affect them for the rest of their lives, all because of their decision to better themselves by going back to school.