Many Americans turn to bankruptcy as a means of debt relief. In fact, it has become quite common as 1 out of 70 households in the United States files for bankruptcy. In July of 2013 alone, there were a whopping 87,684 bankruptcies filed according the Bankruptcy Institute. Similarly, according to the American Journal of Medicine, nearly 62% of bankruptcy filings in the United States are due illness, and as a result, medical related expenses and bills.
Unfortunately, not all debt can be discharged through bankruptcy. Student loan debt cannot be discharged by bankruptcy, and continues to burden thousands of college graduates, many of whom are struggling to find high-paying jobs during this economic recession. However, many graduates may soon be typing “how to find a bankruptcy lawyer” into their search engines, as lawmakers are currently in the process of discussing options to ease the plight of indebted students and graduates.
Following the infamous Occupy Wall Street protests of 2011, Americans have become increasingly aware of the student loan crisis, which is shouldered by many college students, graduates, and even parents. As a result, pro-education lawmakers have used this opportunity to begin discussing solutions to prevent the student loan bubble from bursting.
For example, Senator Elizabeth Warren is pushing for allowing students to refinance their loans at much lower interest rates. In addition, President Obama recently expanded and reformed the federal loan repayment system, ensuring borrowers who are employed in public service positions never have to pay more than ten percent of their discretionary income for twenty years until the remaining balance on the loan is completely forgiven.
But what about bankruptcy as a means of student loan debt relief? Ike Brannon thinks so. Brannon spent nearly a decade in government serving in economic and financial advisory roles, but now currently serves as President of the consulting firm Capital Policy Analytics. He is a Growth Fellow at the George W. Bush Institute. He believes if individuals can seek relief from heavy credit cared debt, medical bills, and other debt through bankruptcy, why should student loan debt be any different?
However, many Americans fear that allowing student loan debt to be discharged through bankruptcy will only encourage careless borrowing and force taxpayers to cover the costs. Brannon’s solution, however, is to take the burden off of taxpayers and to make colleges and universities responsible for loan payments after a graduate files for bankruptcy. This would dramatically change how colleges enroll potential students.
Though there are many opinions on the matter, everyone agrees that the student loan crisis need immediate attention.