Debt Relief, student loan debt, Student Loans

Changes Coming in 2020 for Student Loan Borrowers

Student loan debt has reached an all-time high in this country with an estimated $1.6 trillion owed nationwide. Student loan debt is a major issue being discussed in the 2020 presidential race, and it is also an issue being addressed in the current legislative session. The U.S. Department of Education is also considering changes for student lending. No matter how you look at it, major changes are coming in 2020 for student loan borrowers.

These changes come at the height of the student loan debt crisis. According to a recent study from Politico/Morning Consult, more than half of American consumers consider student loan debt to be a major problem facing the country. In fact, student loan debt has now surpassed both credit card and auto debt. With the average college graduate walking away with $30,000 in student loans, which is up from $10,000 in the 1990s.

According to the Department of Education, 40 percent of borrowers who took out loans in 2004 will default on these obligations by 2023. With high balances, the first several years after graduation, half of borrowers are only paying on the debt’s interest, never even touching the principal, which can make the process even more frustrating.

Department of Education Secretary, Betsy DeVos believes that federal student loans should be run in an agency separate from the federal government. This week she made a statement before a conference of financial aid professionals that Congress never intended for the federal government to be a bank for student loan borrowers. However, many student loan experts believe this would be a major step towards privatization of loans.

Earlier this year, the Wall Street Journal reported that DeVos and the Department of Education are considering selling all or part of the total outstanding student loans owed to private investors. It is their intent to offer income-sharing agreements as a different method for student borrowers to pay back their loans. Unlike a traditional student loan, the borrower would not pay anything back until he or she gets a job after graduation. The borrower’s payment would be based then on a percentage of his or her income over a set amount of time.

Student loan reform activities argue that this plan is just another form of borrowing and argue that loan forgiveness is the answer to the debt crisis. Many presidential candidates have proposed plans of their own to wipe out the country’s $1.6 trillion in student loan debt. Senator Bernie Sanders is calling for a complete discharge of all student loan debts, while Senator Elizabeth Warren is calling for a forgiveness plan based on the borrower’s household income. Democratic presidential candidates are also calling for student loan interest rates to be cut, making it easier for borrowers to handle their debt and to pay off the balance quicker.

Lawmakers are also looking for ways to make it easier for borrowers to have their student loan debts discharged in the event they are not able to pay them. Currently, the undue hardship test that is required to discharge student loan debt in bankruptcy is very difficult to meet. However, lawmakers have submitted a bipartisan plan to put student loans in the same category as other unsecured debt in bankruptcy court, making it easier to discharge at the end of a bankruptcy case. This change could prove to be monumental in protecting the rights of student loan borrowers who are struggling to pay on their debts.

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For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at

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