For a long time now, student loans have been pretty much prohibited from being discharged through bankruptcy. That could change by the looks of this proposal. The S.2598 – FRESH START Through Bankruptcy Act has been recently referred to committee.
Why is it so hard, if not impossible, for people to get rid of student loans through bankruptcy now?
Due to a 1976 law, student loans are not allowed to be treated like other forms of debt (ie: credit cards or car loans). This comes from a federal commission on bankruptcy laws that heard testimony claiming the discharge of student loans could damage federal student loan programs. Congress was concerned that students could borrow thousands from the federal government, then graduate, then file bankruptcy, and never repay their student loan debt.