Opinion: Student Loans Should NOT Be Discharged in Bankruptcy

bankruptcy laws, with provisions explicitly designed by the bill’s Congressional sponsors to make it more difficult for people to file for bankruptcy.Those who want to file must jump through a variety of hoops, including mandatory credit counseling and a means test based on a comparison of their monthly income versus the median income in their state. And remember, filing for bankruptcy costs money in the form of legal fees, court costs and other expenses–which must be paid even if the bankruptcy filing is rejected.

Finally, here’s an unpopular and inconvenient truth: While there are many who have been legitimately unable to keep up with student loan payments, I suspect that there at least as many people who just did not make such payments a priority, even after they gained employment. I had student loans to repay when I graduated from college back in 1983, which also happened to be during a recession. (My mother, a single parent of four dependent on public assistance, was unable to contribute anything toward my college costs.) After graduation, I slept on a sofa bed in my mother’s living room during the four months it took me to find two low-paying, part-time jobs. When I finally landed a full-time entry-level job in Brooklyn, N.Y., I shared an apartment with a college classmate who also went unemployed for 6 months after graduation. I went without furniture (sleeping on a mattress on the floor and later securing second-hand furniture donated by a relative), relied on public transportation, bought no new clothes for nearly two years and rarely spent money at restaurants, clubs or the movies.

My goal: To pay back my student loans as quickly as possible. My motivation: I’d worked hard to earn my degree, and I wanted to own it outright. Â I knew up front that a college education is not free–that’s why I pursued scholarships, applied for financial aid and took out student loans in the first place. After rent, utilities and food, paying off my student loan was my top priority. (Some months, it came ahead of spending on food). As a result, I did just that in less than three years (saving a bundle on interest), despite never earning more than $15,000 annually during that time and with no help from my parents or other family members. To me it was a no-brainer. I had no wife, no kids, no mortgage, no car note, no other major obligations–just me. Why shouldn’t I be able to pay back the loan once I started working?

Though it’s important to borrow as little money as possible to toward college financing, if there is any kind of debt to be stuck with, it’s student loan debt. It’s called good debt for a reason: you still have a better chance of gaining employment and earning more money during the course of your working life with a college degree than without one. The catch is, once you get that degree and start generating income, you have to start paying that money back as soon as you can, even if you have to make painful sacrifices to do it. Unfortunately, too many recent newly minted graduates put establishing a lifestyle ahead of paying their student loans after finding employment.

Americans struggling with student loan debt definitely need relief, including banks, the government, the private sector, and colleges and universities working together to come up with more creative ways for people to pay off their student loan debt. God knows, as a parent of a college graduate struggling with student loan debt and three other children in various stages of college, I need all the help I can get–we all do. However, bankruptcy is not the answer.

What’s your opinion on the Private Student Loan Bankruptcy Fairness Act of 2010? Is bankruptcy relief the answer? Leave your comments below.

Alfred Edmond Jr. is the editor-at-large of Black Enterprise.