May 13, 2009
Students graduate with degrees and debt
Graduating college students who cannot find jobs or discharge their federal student loans are facing
mountains of debt, Sen. Dick Durbin, D-Ill., said.
sky-high interest rates on private loans combined with questionable practices by lenders "¦ over the past decade have resulted in mountains of debt that can follow students from graduation to the grave.
Students who file for bankruptcy must prove they faced an unavoidable hardship to include federal loans in bankruptcy cases, USA Today reported Wednesday.
Durbin is reintroducing a bill that would reverse the bankruptcy law that forces the exclusion of federal student loans, which dates back to 2005.
Proving a hardship in court often requires hiring a costly expert, Associate Professor of law Rafael Pardo at Seattle University said.
We're talking about people who are in bankruptcy because they don't have money, he said.
Yet we're asking them, 'If you want relief, you have to find a way to pay for a full-blown lawsuit.'
FinAid.org said 66 percent of four-year college students graduate with debt to accompany their diplomas.
Financial Services Roundtable lobbyist Scott Talbott, however, said forgiving student loans
will increase the cost of tuition.