Did you know that in 2015, college students graduated with an average of $35,000 in debt? According to the Wall Street Journal, the most recent graduating class was the most indebted in US history. From year to year, that number is growing and leaving many graduates with limited financial options. Thanks to the Bankruptcy Reform Act of 2005, it’s illegal to get rid of student debt through bankruptcy.
There are a few other types of debt that can’t be forgiven through bankruptcy. These include:
- Child support payments
- Criminal reparations
- Unpaid taxes
Given this information, it’s hard to understand why student debt is lumped in debt created by breaking the law. You may question what makes student debt much different than any other type of consumer debt. The truth is, well, it isn’t. The banks were just given a break in this reform.
The result is fewer dollars being circulated into our economy, and a dark cloud preventing recent college graduates from taking financial risks that could be beneficial. They’re often too far in debt to take out loans to start a business, buy a house, or even buy a car. Without the option of bankruptcy, graduates can spend up to 25 years in fear of making the wrong financial decision.
What are your thoughts on the Bankruptcy Reform Act of 2005? Should it be repealed?