Federal Student Loans

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.

Student loans are not usually wiped out in bankruptcy like other debts (although bankruptcy can provide assistance). But the court still requires that you list your student loan debt in the bankruptcy, since this is a debt that you owe. This can be difficult, especially while they were in forbearance, if you have not kept track of your loans

For federal student loans, you can locate all of your lenders and student loan debt on The Department of Education website. It’s called the “National Student Loan Data System”. Go to www.nslds.ed.gov and click the “Financial Aid Review” button, and just follow the instructions. This will give you a print out of all your student lenders and their contact information.

For private student loans, you can’t go to a single website that has information about all of your private student loans. However, private student lenders may be reporting your loans to the credit bureaus and you can locate their names by requesting a free credit report at www.annualcreditreport.com.

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