Unlock the debtor’s prison of student loans

Earlier this year, a judge denounced the myth that student loans can’t be erased in bankruptcy court as she excused a Navy veteran from having to pay $221,000 in education debt. Bankruptcy judge Cecelia G. Morris’ decision garnered plenty of headlines, along with speculation that the ruling might make such discharges easier.

The battle isn’t over, though. A few days later, Morris’ ruling was appealed by the Education Credit Management Corporation, a nonprofit company that guarantees and services federal student loans for the U.S. Department of Education.

In my latest for the Associated Press, what the American Bankruptcy Institute’s Commission on Consumer Bankruptcy recommends to begin freeing borrowers from their loans.

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  1. Jimmy Masterlock says

    I love your slogan “Get Smart with Your Money”, but then your article is all about how someone who made their own decisions in racking up $220K in student loan debt by investing in themselves should allow the taxpayers to pick up the tab. Can we get the person to disgorge themselves of their degrees? Why do people like me have to forgo my financial well-being and pay more in taxes because someone didn’t use the education that they should be paying for. It isn’t my fault.

    • Liz Weston says

      Taxpayers will be picking up the tab either way, since the debt isn’t going to be repaid.