Consumer Bankruptcy Attorneys Issue “Student Loan Debt Bomb” Report

Yesterday, the National Association of Consumer Bankruptcy Attorneys (NACBA) released a report we wanted to bring to your attention, “The Student Loan Debt Bomb: America’s Next Mortgage-Style Economic Crisis?”

The report consists of a survey of NACBA members indicating an increase in student debt issues among those seeking counsel on bankruptcy matters. It also includes policy recommendations, such as returning bankruptcy discharge to private student loans immediately, restoring the discharge for federal student loans after a five-year window for a “good faith” effort at repayment, and establishing a “reasonable statute of limitations” for the collection of student loan debt.

The phrase “student loan debt bomb” in the title has caught the attention of the media and the release of this report may result in increased attention for the private student loan bankruptcy legislation currently circulating in Congress, but it remains highly unlikely that either bill (H.R. 2028 or S. 1102) will pass this year.

One sponsor of the private student discharge legislation, Rep. Steve Cohen (D-TN), participated in press calls related to the NACBA study yesterday. Neither Cohen’s bill, nor its Senate counterpart (S. 1102, sponsored by Sen. Dick Durbin (D-IL)), restore bankruptcy discharge for federal student loans.

Additional information on the NACBA report is available online: http://www.nacba.org/Legislative/StudentLoanDebt.aspx