Should student loan debt be discharged in bankruptcy filings?

Last month on our blog that discusses debt relief, we discussed how many students in California and throughout the entire country are discovering after they graduate from college, law school or medical school that they can barely afford to make their monthly student loan payments let alone pay for rent and groceries. The job market is extremely competitive, forcing many recent graduates to accept jobs at lower pay rates or positions outside of their field of study.
Student loan debt is certainly forcing many Californians to live paycheck by paycheck or to rely on their credit cards, but this debt is also preventing many recent graduates from being able to contribute to the growth of our economy by purchasing homes or investing in stocks. To make matters worse, no matter how unmanageable one’s student loan debt may be, San Diego residents and other U.S. consumers currently cannot have this¬†burdensome debt¬†discharged by filing for bankruptcy protection.
Economists and financial experts have warned that student loan debt could be the next crisis to hit the U.S., having similar effects on the economy as the mortgage meltdown in 2008 and 2009. Between 2009 and 2010, the average amount students owed in student loan debt increased by 5 percent. During 2010, students borrowed more than $100 billion to pay for tuition, room and board and other educational expenses.
With the reality that many students are graduating with debt that they cannot afford, some bankruptcy attorneys have suggested that laws be changed to allow students to discharge this debt in bankruptcy proceedings. Of course, another solution would be to regulate tuition hikes but many do not see that happening anytime in the near future.
By 2011, the total amount students and graduates owed in student loan debt exceeded $1 trillion.

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