Many people have student loans as part of their debt problems.  Unfortunately, even bankruptcy will not get rid of the debts for these loans.  While student loans are classified in bankruptcy as general unsecured debts just like credit card debts, unlike credit card debts they are not "dischargeable," which means that filing bankruptcy has no effect on the debt owed for them.  (There is an exception for undue hardship, but very few people are in bad enough shape to qualify for that.)

However, there is good news!  Legislation has just been introduced in both houses of Congress to allow discharge of private student loans in bankruptcy, just like credit cards.  A little explanation is required here.

Government-issued or government-guaranteed student loans are generally Stafford, Perkins, and PLUS loans.  Before the major changes to the Bankruptcy law in 2005, these government loans could not be discharged in bankruptcy, but private student loans could be.  Since the 2005 changes, no student loans are dischargeable, even private ones.

The new legislation would merely change the Bankruptcy law back to what it had been before the 2005 changes, so this legislation is nothing radical.  However, allowing people to discharge at least private student loans in bankruptcy would provide a much-needed safety net for those who cannot pay those loans.

If you want this badly needed legislation to become law, please write your senators and congresspersons and tell them so.  The private lenders will surely hire lobbyists in order to stop this change, and your representatives need to hear that you support it.  This website allows you to find your representatives in Congress.