Bankruptcy Shift to Allow Discharge of Student Loans – Would it make a big difference?

The short answer is no. Here’s why… If laws are changed to what they are considering it would only affect private student loans. 85% of student loans are government student loans meaning that they would not be discharged anyways. So then 15% of student loans could be discharged? Not quite.

Many private student loans, are parent co-signers or some other person as a co-signer. That means that not only the student, but also the person whom co-signed for the loan, would have to file bankruptcy in order for the loans to be discharged. The chances of both people filing bankruptcy to get rid of the debt is unlikely. Therefore, the only result would be students who have private loans that are not co-signed by anyone else. That pool of people is drastically smaller than originally suspected.