Democrats have proposed that student loans should be easier to discharge in bankruptcy and now Obama has weighed in on the issue. The staggering unemployment and underemployment of young people has both sides using this issue to win over voters for the upcoming elections. Politicians contend that the bankruptcy laws should be changed to make it easier to discharge student loan debt.
Under the current law, neither public or private student loans are dischargeable except in very few circumstances. The Consumer Financial Protection Bureau recently issued a report indicating that Congress should consider allowing debtors to discharge private student loans.
Republicans argue that the ability to obtain student loan financing will dry up if lenders are not protected by the bankruptcy code. Democrats insist that debtors are struggling underneath an overwhelming and insurmountable student loan debt load and are desperate for relief. Democrat would likely require that the debtor make an effort to repay the loans before they can attempt to discharge. them.
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