Reform Student Debt, Allow Refinancing & Banktruptcy Filing for Student Loan Debt

While the current system may have been put in place in order to protect banks, to encourage them to lend more money for student expenses, the end result has been similar to what happened with the housing market just a few years ago.  Banks have been lending more money than many students can ever repay, and it's been happening for years.  The banks lend with the knowledge that students can NEVER file bankruptcy on the debts, and the only ways out from under the burden are payment in full, permanent and total disability, or death.  (As an added benefit, the banks get to count the uncollected debts and interest as assets, whether a student has any hope of repaying them or not.)

Then, when students graduate, especially in the current job market, many of us are saddled with tens of thousands of dollars in debt, which we have little to no hope of ever repaying, no matter how hard we try, or how hard we work, or how many nights our pile of debt keeps us awake. 

All we were trying to do is better our lives, improve ourselves, and help our families and communities, by going to college and growing our experience and knowledge.  However, many of us in recent years have been exiting college, unable to find jobs that pay well enough and/or are hit with other unexpected catastrophes and disadvantages, only to wonder if we should have just skipped college and been free of so much debt. 

Yes, the debts are forgiven eventually-- if a student or former student is still unable to pay the loan within 25-30 years, the remaining debt is forgiven.  This means if you graduate with $100K in student debt, and have not been able to pay it by the time you retire, they'll forgive you for it.  But you must spend your entire career with it hanging over your head.  The "income-based payment plan" is helpful, but for many, it just isn't enough.

Our educational system is already in crisis, and by treating students this way, it will discourage many from pursuing higher education.

There is no other debt for which one cannot file bankruptcy.  Long ago, our leaders and society realized that there are times when it is necessary and morally right to forgive a debt.  Why should student loans be different?  These are not people who just decided to pile up the debt with no intention of ever repaying it.  These are people who wanted -- and still want -- to be able to accomplish more for self and society.

And, as more and more students find themselves unable to repay the debts, it could impact the rest of business, banking, and our communities too, much like the bad housing debts did just a few years ago.  The efforts to reform student loans in the past few years have been much appreciated, but there is still much to do.  Please start by allowing students to file bankruptcy when the financial obligation is too much to bear.