Scammed students could benefit from bankruptcy

On Behalf of | Aug 28, 2019 | Bankruptcy

It is no secret that there is a student loan crisis in the United States. Both current and former college students in Connecticut may feel desperate to find a way to repay those loans, but rising tuition costs and stagnant wages have made it nearly impossible for many people. Unfortunately, thousands of students have claimed that they were scammed into student loans by their schools. These individuals and other people may not have considered that bankruptcy could be a more effective strategy for dealing with this type of debt.

A significant number of scam allegations involve for-profit colleges that promised students things they simply could not deliver. The U.S. Department of Education has a program that is supposed to help affected students erase their student loans, but it is not working very well. Over 239,930 people have applied to the program, 179,377 of which are still pending.

Although most people expect government agencies to process information and applications at slower paces, this program appears to have stalled altogether. As of June 2018, the Department had approved a total of 47,942 applications. There have been no new approvals or denials since the end of June 2018, despite approximately 74,000 new applications rolling in since that time.

It is clear that students in Connecticut need help managing their student loans, especially those who were scammed by for-profit institutions. However, these individuals do not have the time to wait around for help. As many people continue to struggle to pay bills and fall further and further into delinquency, bankruptcy could be an effective solution to their financial troubles. Even though student loans usually cannot be discharged through either Chapter 7 or Chapter 13 bankruptcy, getting rid of other debts can make it easier to repay those student loans.