Posted by Ka Lee Angel Lee
As tuition rate continues to grow, many students turn to private student loans to bridge the difference between federal student loans and school fees. This is a very risky way to pay for college. This is said to be similar to paying for tuition using a credit card.
Recently, federal bankruptcy law has adjusted bankruptcy code to provide private student loan borrowers fairer treatment during the bankruptcy process and an advantage over borrowers. This is done to protect students from financially riskier private student loans as well as predatory lending practices.
While the bankruptcy law forbids almost all borrowers from discharging their private student loan debt, student loans have fixed interest rates, flexible payment plans and consumer protections to make it easier for borrowers. This is very sensible since education is not like other consumer goods that can be repossessed or liquidated when the lender wants to collect the money lent. Knowledge and the degree earned can be reused and nobody can them away. Therefore guidelines for loans that can be discharged should be made very strict.
Recently, federal bankruptcy law has adjusted bankruptcy code to provide private student loan borrowers fairer treatment during the bankruptcy process and an advantage over borrowers. This is done to protect students from financially riskier private student loans as well as predatory lending practices.
While the bankruptcy law forbids almost all borrowers from discharging their private student loan debt, student loans have fixed interest rates, flexible payment plans and consumer protections to make it easier for borrowers. This is very sensible since education is not like other consumer goods that can be repossessed or liquidated when the lender wants to collect the money lent. Knowledge and the degree earned can be reused and nobody can them away. Therefore guidelines for loans that can be discharged should be made very strict.
Sources
This comment has been removed by the author.
ReplyDeleteThis is very smart of them to protect college kids especially because education can't be liquidated to pay back lenders.
ReplyDelete-Lindsey Connell