If you go to college, you most likely have loans. It’s a glaringly obvious fact, but it bears stating.
Another glaringly obvious fact is that the cost of higher education is rising. According to CNN Money, the cost of private education has increased by 60 percent from the mid-80s and the cost of public education has doubled in that time.
This means there are more people taking out more money in student loans that they will have to pay back at increasing interest rates.
What you might not have known is that, except in incredibly extreme cases, student loan debt cannot be shed by declaring bankruptcy.
Student loans fall into the category known as non-dischargable debt. Types of debt like that include debt for tax evasion, embezzlement and non-payment of alimony or child support.
In short, criminal debts.
That means if you take a student loan you are automatically banished to that circle of hell that pirates reserve for traitors and mutineers in a financial sense.
That means if you file bankruptcy under Chapter 7 or Chapter 13 — what most people file under — then all of your student loan debt stays with you. That means if you took out $50,000 in loans, you have to pay it back with interest, no matter what.
This is in direct contrast to, say, credit card debt, which can be gotten and shed comparatively easily. The fact is that it’s easier to shed debt accrued from a Jet-ski shopping-spree than to shed debt from student loans.
What’s worse is, this isn’t even a long-standing agreement. The non-dischargable status was only implemented in 2005 to make student loans more lucrative for the lenders. The consequence was that students who borrowed were shackled to mounting debts in a declining economy and since then the debts have only gotten bigger and the economy has tanked.
So you had better get a steady job after college so you can afford to pay your loans back.
As if this system wasn’t bad enough, the student loan industry has been coming under fire lately for not adequately explaining the conditions of the loans to borrowers. That leaves students and parents saddled with debt that is increasing at a rate that they cannot afford to pay.
All this together creates an industry that, intentionally or not, is tricking people that are trying to better themselves into a financial purgatory from which they cannot escape. As the recipients of these cloying, toxic loans, we must stand up and say that the criminalization and exploitation of students will not stand.
Fortunately there is a solution on the horizon.
The Fairness for Struggling Students Act of 2013 — sponsored by Senators Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I.) and Jack Reed (D-Ill.) — along with a similar bill making its way through the House, promises to revert the bankruptcy laws to the pre-2005 wording about student debt and eliminate the restrictions on bankruptcy for student loans.
That means that everyone who has a legitimate need to shed their student loan debt will be able to. If this bill goes through it will free thousands of students from a financial burden that circumstance has rendered them unable to handle.
Obviously, having everyone with student loans declare bankruptcy at once would be catastrophic and safeguards will have to be put in place to make sure that people will not abuse the situation.
However, repealing the protection for student loan debt will encourage people to seek education, better themselves and better America. That’s something that anyone should be able to get behind.
So get out there and call your congressman. Call someone else’s congressman if you have to.
Together let’s make the looming fear of non-dischargeable student loan debt nothing more than a story told to frighten naughty children.
