New Student Loan & Consolidation Bill Hits Middle Class Again
The most recent bill increasing federal student loan amounts and lowering interest rates has been criticized as a blow to the middle class. There is yet another bill waiting in the wings that could possibly make it even harder for students who do not qualify for the need based assistance to get the student & consolidation loans that they need to complete their education.
This new bill sponsored by Sen. Richard Durbin, D-Ill., could make it more difficult for students that do not qualify for the need based assistance to get loans. It could also make it more difficult for students to get the loans they need to complete their education even if they do qualify for need based programs. It is common knowledge that Stafford Loans, Pell Grants's and other guaranteed student loan programs are most often not enough and they are used in conjunction with private loans.
This new bill would allow people to discharge student loans when they declare bankruptcy. Normally I am all for debt forgiveness programs and the easing of the requirements to file bankruptcy in this case I feel the bad outweighs the good for several reasons.
The bill set to be in front of George Bush soon and expected to pass has already hit the middle class hard enough by taking the money to increase need based student loan programs from private lender subsidies. In other words private loans become less profitable so naturally the credit requirements will go up. In addition as the pool of available cash is diminished the gross amounts of loans will diminish as well. All of this equals to working students or middle class students not getting enough money to finish college.
In my opinion we don't need to mess with this market any more in this manner. While I agree that there needs to be an out for a borrower who can prove hardship, I also realize that this is not the only way. I do not believe that lumping student loan debt with other debt is the answer. I would prefer a specific debt relief program designed to deal with student loans that has some assurances for the lender and at the same time provides relief to the borrower. One could place regulations on the amount and methods of debt collection by lenders and provide a comprehensive system and procedure for student loan debt relief similar to the federal student loan rehabilitation program but much more robust and complete.
