Rachel just sent in a question for me to answer about the hopelessness of private student loan debt.
The tragedy of private student loan bondage is one that will sacrifice a generation of hardworking citizens under the hopelessness of private student loan debt if solutions are not made available.
Unlike government backed student loans, private student loans offer no real meaningful tools to use to overcome unbearable and suffocating private student loan debt.
Students that are unable to complete their degree still have to face the same issues as those that do. They are staring tremendous debt that can’t be discharged in bankruptcy, provides no income based repayment solutions, and leaves the borrower facing administrative wage garnishments, massive collection fees, and penalties that just pile up to turn an original debt into a mountain of insurmountable student loans debt.
This debt without solutions leads people to consider suicide, and some do kill themselves in the face of hopelessness. Other see leaving the country for good as their only way to live.
It wasn’t until Congress passed new laws that prohibited the discharge of private student loan debt in 2005 that the deadened for private student loan borrowers began to manifest itself. Before then, private student loan debt was dischargeable in bankruptcy. Some might say the situation now is grossly unfair to other creditors. If one loan can be discharged and a private student loan can’t how does that create a fair environment.
Bankruptcy is a process to give people a legal fresh start in the face of overwhelming financial problems. And while government backed student loan debt is not dischargeable in bankruptcy, it also real provides options and solutions for dealing with student loan debt through income based repayment programs. Private student loan lenders do not provide any real options.
If private student loans are allowed to continue this unfair and grossly harsh position an entire generation of private student loan borrowers will be lost in financial hell.