April 24, 2010
Pending Student Loan Legislation
Thanks to David Goch who posted this on the Bankruptcy Roundtable Listserve:
Yesterday, the House Judiciary Committee's Subcommittee on Commercial and Administrative Law held a hearing on H.R. 5043, "The Private Student Loan Bankruptcy Fairness Act of 2010".
H.R. 5043, according to Rep. Cohen (D-TN), the bills sponsor along with Rep. Davis (D-Ill.), "is very narrowly tailored to make debt resulting from student loans issued by private, for-profit institutions dischargeable in bankruptcy."
H.R. 5043 amends Bankruptcy Code Section 523(a)(8), eliminating Section 523(a)(8)(B), which currently makes debt from private loans issued by for-profit lenders nondischargeable in bankruptcy absent undue debtor or debtor's dependents hardship. The bill also amends Section 523(a)(8)(A)(i) to clarify that only loans for which substantially all of the funds were provided by a nonprofit institution remain nondischargeble in bankruptcy.
Deanne Loonin, a staff attorney for the National Consumer Law Center, pointed out that student loan borrowers are a very diverse group of people but they chare one common trait: "they're all trying to better themselves through education" and are all struggling with student loan debt. However, Loonin stated "[B]ankruptcy is not and should not be the entire safety net" for borrowers who cannot repay their student loans."
Loonin said she supports H.R. 5043, not because bankruptcy is the best option, but because it is the only option some have to be able to move on with their lives.
According to John Hupalo, managing director at Ramirez Capital Advisors, a group specializing in student loan finance, whether or not to permit bankruptcy discharge of private student loan debt is a complex issue. Huppalo indicated he understood the intended benefit of repealing non-dischargeability of private student loans, but went on to state he is concerned the bill would be "counter-productive to the country's shared goal of making a college education more accessible to the greatest number of students possible."
Adrian Lapas, a solo practitioner testifying on behalf of the National Association of Consumer Bankruptcy Attorneys, voiced support of H.R. 5403, noting that the legislation will "restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt."
Meanwhile, in an April 21 letter to Cohen, more than two dozen organizations representing students, consumers, institutions of higher education and civil rights and public policy organizations expressed their support for the bill. Among the groups signing the letter: The American Council on Education, Consumer Action, Consumer Federation of America, Consumers Union, Demos: A Network for Ideas & Action, Rock the Vote, U.S. Public Information Research Group, UNCF, and the National Association for Equal Opportunity in Higher Education.
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Does this include debts from Quasi Private Sallie Mae Loans, Not Dept of Education backed? Any idea?
Posted by: James | May 6, 2010 2:42:13 PM
I would agree that bankruptcy should not be your first move, but a person in my situation (roughly over 2,000 former Silver State Helicopter students) that have no way out of a "bad deal" this honestly gives me hope again. After all the searching and research the only thing I have come up with is that I would not be able to put the loan on bankruptcy because of it being a "student loan" and can't discharge it because of the flight school closing down because its a "non-federal private student load" I just gave up and assumed I would be stuck with this debt ($75,000 + interest) for the rest of my life.
Posted by: Clay K | Jun 2, 2010 2:02:43 AM
As a result of the Health Care and Education Reconciliation Act, beginning July 1, 2010, federal student loans will no longer be made by private lenders under the Federal Family Education Loan (FFELSM) Program. Instead, all new federal student loans will come directly from the U.S. Department of Education under the Direct Loan Program.
Posted by: Ryan | Jun 3, 2010 11:04:42 PM
Wish I had recourse. Beginning in his Sophmore year, at age 19, in addition to his Federal loans, Sallie Mae approved has given my son private student loans in the amount of somewhere between $175,000 and $200,000 WITHOUT a co-signer!! It's been like a merry-go-round....the further he got into debt, the higher the degree he needs in order to secure the financial stability needed in order to repay. He's finished both a B.A. and M.A., attending colleges outside the U.S. and has less than two years before he exhausts all ability to defer and must start repayment and as it is now, the only job he's been able to find is working in retail! At our wits end.
Posted by: Kim | Dec 3, 2010 9:51:12 PM
I am so glad that this passed, although I'm not sure if it will be able to help me. I made the mistake of attending a scam school (sanford Brown) and because I spoke up about it being a scam I was thrown out. This was a 17 month course that cost over 27,000. I am now having my wages garnished of 85.00 a week and am no longer able to make my mortgage payment or car payment. I looked into bankrupcy but was told that this student debt was not discharable. Maybe Iwill check ito it again to see if I can get this discharged.
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Posted by: bridging loans | Feb 23, 2011 6:19:04 AM
No Need for a loan top up you could be owed a refund of £2400 if you've had a loan top up
Posted by: loan top up | May 25, 2011 5:20:10 AM
True, bankruptcy may not be the best first move, but if you have already made some bad moves bankruptcy may be the best option for you.
Posted by: Spencer Hale | Jul 5, 2011 3:56:18 PM
Student loans are different from federal loans that private loans are issued by private banks and other lending institutions. Private loans may be offered at variable or fixed rate and comes with a number of payment periods possible conditions . If you have multiple private loans you may be interested in consolidating your loans into a single private consolidation loan.
Posted by: Spara pengar | Jul 11, 2011 2:34:45 AM
Agreed, it's good to talk with a non-profit government approved credit counseling agency to see what your options are for getting out of debt.
Posted by: Kevin Porter | Jul 19, 2011 3:30:17 PM
The credit card corporations don't want you out of debt. It's a trap by design. I'm glad that some people out there are waking up and starting to question the industry. It's an economic prison!
Posted by: Fast Internet Loan | Sep 29, 2011 2:08:56 AM