It is not uncommon for people in New Jersey today to fund at least a part of their college education via student loans. For many decades, in fact, the amount of student loan debt across the United States has been on the rise. According to the Institute for College Access and Success, the average person with student loan debt owed approximately $33,000 in 2018. Among all borrowers, one out of every four is said to be either in default or behind on their payments.
For almost 20 years now, student loans have all but been non-dischargeable via bankruptcy. This comes after some time when borrowers had to wait either five years or seven years before pursuing bankruptcy relief for their student loans. The only way for a consumer to have a student loan debt discharged today is to prove that it puts them under an undue hardship. As CNBC explains, the definition of undue hardship is quite ambiguous and seems to result in an uneven application of the law.
A group of lawmakers are trying to level the playing field and make it easier for borrowers to get out from under a mound of unmanageable student loan debt. A new bill, dubbed the Student Borrower Bankruptcy Relief Act of 2019, has now been introduced into Congress. The goal of the bill is to have student loans treated similarly to other types of consumer debt in a bankruptcy.
If the bill becomes law, it is possible that many more consumers could get help reducing their debt load by having student loans discharged via a bankruptcy.
