While the subject of student loan interest rates has been a hot topic for the past few weeks, the ABA Journal had a story over six weeks ago by Debra Cassens Weiss about a “looming student loan ‘debt bomb’”.
Interest on student loans was not even mentioned in the article. The ‘debt bomb’ as Ms. Weiss described it has to do with the potential inability of the borrowers to pay back the loans. Some of those borrowers are parents who co-signed the loans and now are reaching an age where they may stop working, their incomes will decline and they may find it difficult to pay back the loans.
While other debts may be discharged in bankruptcy, a debtor with student loan debt must meet a hardship standard in order to have student loan debts forgiven. According to Ms. Weiss’ article, 95% of responding attorneys said “few student loan debtors have any chance of meeting hardship standards” for these loans.
With all the political talk these days about student loan interest rates, I’m still waiting to hear a news report mention that Washington is reconsidering the dischargeability of student loan debts.