Could private student loans be eligible for discharge in bankruptcy? The Fairness for Struggling Students Act of 2013 is legislation recently reintroduced to Congress that aims to get private student loans eligible for elimination under Chapters 7 , 11 and 13. The Act is working to reverse changes made to the bankruptcy code back in 2005 that made student loan debt ineligible for discharge.
The legislation has been introduced twice by Senator Dick Durbin (D-Ill.) in 2010 and 2011. The Act has picked up more support from other senators including Barbara Boxer (D-Calif.) who signed on as a sponsor earlier this month. In January, the Act was reintroduced by 6 senators including Sen. Durbin. He has mentioned several concerns regarding student loan debt and how it continues to create a heavy burden for students. Durbin feels that students loan debt weighs down a student's ability to stimulate the economy, with some unable to consider major purchases such as a home.
Many Americans, including Durbin, feel that if something isn't done about the student loan debt issue, we may be looking at something bigger than the mortgage crisis. Outstanding student loan debt has been hovering the $1 trillion mark and does not seem to be getting any smaller any time soon. If the Act passes, it may give students the option to discharge certain student loan debt.
The student loan debt concerns continue to be a controversial subject. Some students feel they may not be able to get a job after finishing school to pay what they owe. Yet, some feel the Act may create other conflicting issues with bank lenders potentially changing the way they loan students funds for education.