Bankruptcy lawyers warn of student loan 'debt bomb'
A new study reports that student debt in this country could be the next “debt bomb," a major economic threat not unlike the mortgage crisis.
Jeremy Hobson: Now to a new report about a looming problem that bankruptcy lawyers say could end up being as big as the mortgage crisis. The $1 trillion student loan "debt bomb."
From the Marketplace Education Desk at WYPR in Baltimore, Amy Scott reports.
Amy Scott: You’ve probably heard that student loans surpassed credit card debt for the first time not long ago. But unlike credit card debt, it’s next impossible to escape student debt by filing for bankruptcy.
William Brewer is president of the National Association of Consumer Bankruptcy Attorneys.
William Brewer: Those student loans literally becomes a ball and chain that the person drags to their grave.
His group wants to change that, and as bankruptcy attorneys, they’d get more business. But consumer advocates agree.
Mark Kantrowitz edits the financial aid website finaid.org. He says the federal government offers borrowers other forms of relief, like income-based repayment plans and deferment. Private lenders don’t.
Mark Kantrowitz: There are many options for financial relief for the federal loans that are lacking with the private student loans.
Some lawmakers have been pushing a bill that would make it easier to discharge private student debt. With a divided Congress, Kantrowitz says it’s unlikely to pass anytime soon.
I’m Amy Scott for Marketplace.