Here at Hurst & Hurst Law we like to try to keep people informed about potential changes in the law that are likely to affect people across the state of Kentucky. Such a change may be on the horizon. As many are already aware, Americans are currently unable to file for bankruptcy protection on student loan debt. Congresswoman Frederica Wilson of Florida is trying to change that with her proposed new bill, the Student Borrowers Bill of Rights Act. If passed, this bill would do far more than just allow Americans to discharge student loan debt through bankruptcy. It would limit the collection period on student loan debt to six years so Americans are not being hounded by collection agencies for decades over their student loans. It would also prohibit lenders from garnishing wages, Social Security benefits and tax returns to collect on student loan debt.
The impact of this bill becoming law would be astounding for the people of Kentucky. As you already know, countless young people across Kentucky and the rest of the Nation have graduated college to find themselves in an abysmal job market and unable to find employment sufficient to repay their loans. This bill could provide many here in Kentucky, especially young college graduates, with much needed relief by allowing them to discharge student loan debt.
Before concluding, I do find it a moral obligation to discuss the draw backs of this bill. Our current student loan system that does not really consider credit worthiness when providing college money to students could be strained by permitting people to file bankruptcy on student loan debt. Student loans are so widely available because lenders know that the student cannot discharge the debt through bankruptcy so the lender is more willing to loan money to a person who may not have the credit worthiness to qualify for any other type of loan.
Also, you have to consider what remedy Congresswoman Wilson is seeking to provide. We are not talking about just discharging the student loan debt as a matter of policy with no repercussions to the borrowers. While it would be wonderful for many Americans to be able to file bankruptcy on their student loan debt you have to keep in mind that it will ruin their credit for several years. For many people it may be a better option to have those loans placed in deferment until they can find more lucrative employment rather than having them file bankruptcy.
I advise all readers to give serious thought to this bill and once you have made up your own mind contact your Congress member to let them know how you feel.