A couple of weeks ago, the U.S. Department of Education announced they would be revisiting the guidelines for getting student debt discharged in bankruptcy. As it stands today, it is very difficult to have student debt discharged unless “undue hardship” is proven.
A recent LendEDU survey found that advanced degree graduates were the most supportive of such a reform. Overall 81 percent of borrowers support a more lenient policy that would make it easier to discharge student debt in bankruptcy. These, and other interesting findings, are discussed by Michael Brown a Research Analyst at LendEDU. LendEDU is an online marketplace for student loan refinancing.
Digital Journal: Thanks for the interview. How bad is student debt becoming?
Michael Brown: Student loan debt in the U.S. has been a worsening problem for quite some time now. The total outstanding student debt in this country grows year over year and now sits at $1.45 trillion. Student debt is now the second largest class of consumer debt in the U.S., second only to mortgage debt.
The student debt situation has gotten much worse when compared to five, even ten years ago. Coinciding with the rising cost of education, the total outstanding student loan debt in this country has skyrocketed to $1.45 trillion. In 2010, outstanding student loan debt in this country was near $800 billion.
DJ: DJ: What services does LendEDU offer?
Brown: LendEDU is a personal finance comparison marketplace. Providing our readers with unbiased reviews and data, we work to create transparency in various personal finance verticals. Visitors can come to LendEDU to see what offers they would qualify for and at what rate for various products like student loan refinance, private student loans, credit cards, and personal loans.
DJ: Why did you undertake your recent survey of students? What were the main findings?
Brown: The main findings from the study were that an overwhelming number of student borrowers are supportive of a change in the bankruptcy policy when it comes to student debt, graduate students were clearly the most supportive of such a change, and that the Department of Education and the Trump Administration would benefit from enacting such a change.
DJ: Which technologies did you use to conduct your survey?
Brown: To conduct this survey, LendEDU commissioned Pollfish, an online polling company, to run the survey. Pollfish has a user panel of over 300 million people that is used for these surveys.
DJ: Which policies need to change, in light of the results?
Brown: It would serve the Department of Education and the Trump Administration well to seriously review the student debt and bankruptcy policy. Right now, it is just about impossible to get student debt discharged in bankruptcy, a policy that could use some review.
DJ: What has the reaction been from students?
Brown: Students who participated in this survey were overwhelmingly in favor of loosing bankruptcy laws for student debt. This comes as no surprise, as many student borrowers understand the incredible burden that comes with repaying student loan debt.
DJ: Do you think government policy is likely to change?
Brown: I do not expect any major changes, but I could very well imagine a tweaking of the policy. They could make changes to the “undue hardship” policy that is currently in place. For example, student debtors would no longer have to prove undue hardship to get their student debt discharged, but rather something a bit less stringent.
