Bankruptcy should be an option for some student loans: Report

Tim Goral's picture

Congress should create new classifications for both federal and private student loans, and open them up for discharge in bankruptcy, the Center for American Progress has argued in a report released Tuesday.

Under existing law, student loans are practically impossible to discharge in bankruptcy, but a new report from the Center for American Progress, a liberal think tank in Washington, D.C., explained a way to change that and potentially to create more transparency for borrowers.

The report calls for the classification of "Qualified Student Loans," essentially loans that would remain protected from bankruptcy but would offer reasonable repayment terms for students in college programs with positive employment outcomes.

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