The Good News: If Student Loan Rates Double, At Least I Can Declare Bankruptcy
Who knew I’d ever be comforted with the notion that if I was unable to pay back my incredulous amount of student loan debt, I had the fallback alternative of bankruptcy? In 2007, Congress passed “The College Cost Reduction and Access Act” which reduced subsidized Stafford loan interest rates from 6.8% to 3.4% over a period of 4 years. [http://www.foxbusiness.com/personal-finance/2012/03/26/students-loan-rates-could-double-if-congress-doesnt-act-soon/]. Lawmakers must address whether or not to extend the provision by June 30th. With my considerable amount of loan debt, a refusal to extend the provision is going to put me into a world of fiscal hurt and apparently I’m not alone, considering that the Consumer Financial Protection Bureau reported that student loan debt topped $1 trillion earlier this year. [http://www.consumerfinance.gov/blog/too-big-to-fail-student-debt-hits-a-trillion/].
The bittersweet silver lining is the Durbin bill being introduced that would allow some student loans to be discharged in bankruptcy. [http://oakpark.patch.com/articles/durbin-legislation-would-allow-student-loan-bankruptcy-7b43c33e]. Regretfully, the bill would not include federal loans, but might lessen the burden on students who will be paying off both federal and private loans (i.e. me). All in all, the forecast is looking grim. Seriously reconsidering my decision to do law school over bartending.