New Legislation Introduced to Allow Discharge of Private Student Debt

February 14, 2013

The Consumer Financial Protection Bureau reported in 2012 that U.S. borrowers are burdened by more than $1 trillion in student debt, including over $150 billion of private student loans. According to TransUnion, a credit bureau, the average student debt each borrower carries rose 30% in the past 5 years and more than half of student loan accounts are in deferral status. During the same 5 year time span, FICO Labs, a unit of Fair Isaac Corp., which publishes consumer credit scores, found that delinquencies increased by 22%. In an attempt to defuse the next potential “debt bomb,” Sens. Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I.) and Jack Reed (D-Ill.) co-sponsored the Fairness for Struggling Students Act (“S. 114”) in the Senate, and Congressmen Steve Cohen (D-Tenn.) and Danny Davis (D-Ill.) introduced the Private Student Loan Bankruptcy Fairness Act in the House.

Read “New Legislation Introduced to Allow Discharge of Private Student Debt.”