Will Programs Getting Rid of Student Loan Debt Survive a Trump Administration?

We believe that bankruptcy is becoming a major pathway to addressing student loan debt.  It offers a guardrail – and a penalty for those seeking debt relief; the borrower has to file bankruptcy.  Bankruptcy is outside the purview of ED requiring very little input from ED.  It is simple in that a borrower does not have to spend hours on hold with their loan servicer only to be hung up on, or told different answers.  A simple system run by an entity other than ED, apolitical, offering a guardrail and penalty for those seeking student loan debt relief fits the needs of a Trump administration.

Likewise, a borrower can benefit from having student loan debt addressed in bankruptcy.  It’s non-political.  You file an adversary action which ultimately results in a court order.  That court order offers certainty in very uncertain times.  There is no tax bomb for debt discharged in bankruptcy similar to that debt which is forgiven under the Public Service Loan Forgiveness program.  Partial or full discharge of debt, significantly lower interest rates and payments for private loans, protection of co-borrowers – these are avenues for relief that are either not available or highly questionable outside of bankruptcy.