By David Randall for Forbes
Private student loans have long been one of the scariest debts that a
person could take on. Unlike, say, a mortgage loan or a credit card
balance, private student loans cannot be discharged in bankruptcy
except in extreme circumstances.
Two bills recently introduced in Congress aim to change that. Senators
Dick Durbin (D-IL), Sheldon Whitehouse (D-RI) and Al Franken (D-MN)
introduced a bill in the Senate that would rework the bankruptcy code,
while Representatives Steve Cohen (D-TN) and Danny Davis (D-IL)
introduced a similar bill in the House. While there are some
differences between the measures, each aims to have the courts treat
private student loans like most other types of debt. However, both
bills would continue to except private student loans offered by state
agencies from bankruptcy proceedings, according to Mark Kantrowitz,
who tracks the student loan industry for FinAid.com.
A hearing on the bill is scheduled for this morning in the House.