Many students turn to private student loans to help finance their education. Traditionally, private student loans issued by for-profit lenders have been—appropriately—treated like credit card debt and other similar types of unsecured consumer debt in bankruptcy. If student debt became so overwhelming that a graduate had to declare bankruptcy, private loans could be discharged like any other debt. But in 2005, a provision was added to bankruptcy legislation that protects the private lenders that extend private credit—not federally guaranteed student loans—to students.
Where students could once find relief from suffocating debt, there is now no escape from high-interest, predatory student loans. And the student lending industry has not been the same since the law was changed–it quickly exploded from $11.8 billion the year before 2005 to a peak of more than $23 billion just four years later.
Today, a significant portion of students are burdened with tens—or even hundreds—of thousands of dollars in student loan debt, and, in our current economic climate, too many are struggling to make timely payments on these loans.
If you have had a first-hand experience struggling to pay off your private student loans, I would love to hear your story.