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September 15, 2015

International Business Times: Joe Biden Backed Bills To Make It Harder For Americans To Reduce Their Student Debt

“Jennifer Ryan did not love the idea of taking on debt, but she figured she was investing in her future. Eager to further her teaching career, she took out loans to gain certification and later pursued an advanced degree. But her studies came at a massive cost, leaving her confronting $192,000 in student loan debt.

“It’s overwhelming,” Ryan told International Business Times of her debts. “I can’t pay it back on the schedule the lenders have demanded.”

“In the past, debtors in her position could have used bankruptcy court to shield them from some of their creditors. But a provision slipped into federal law in 2005 effectively bars most Americans from accessing bankruptcy protections for their private student loans.”

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“The lenders have put constant pressure on Congress to exempt as much as possible from being discharged in bankruptcy over the years, and they succeeded by creating the caricature of a deadbeat who knowingly runs up debt rather than the reality of hardworking students reaching for the American dream but unable to find jobs when they graduate,” Dennis Kelleher, a former Democratic senate aide who now runs the Wall Street watchdog group Better Markets, told IBT”

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“Meanwhile, critics say changes in higher education financing mean that Biden’s bankruptcy reforms have even more pronounced consequences now.

“Many of these bankruptcy laws were made in a world where most of college financing came from grants and a small percentage comes from loans, but that’s now flipped,” Kelleher, of Wall Street watchdog Better Markets, said. The combination of decreasing public funding for higher education, spiking tuition rates and the rise of for-profit colleges “should cause policymakers to give people back the ability to have bankruptcy courts treat their student debts like any other debt,” Kelleher said.”

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Read the full International Business Times article by David Sirota here.

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