A NEW report determined millions of student loan borrowers are eligible to wipe out debts.
The Student Borrower Protection Center (SBPC) released a report on Thursday, January 20 identifying more than 2.6 million people who collectively owe around $50 billion.
These folks have been identified as being able to wipe out their debts through bankruptcy.
But companies are making it difficult for borrowers to be forgiven when it comes to their student loan debt.
“Through their misrepresentations, student loan companies have collected potentially hundreds of millions of dollars of payment on debt that borrowers did not—or did not have to—owe,” the report says.
One of the main issues is that private student loan debt is not defined in the bankruptcy code.
This can muddy the waters when it comes to what is forgivable and what isn’t.
The bankruptcy code does limit the dischargeability of “qualified education loans,” which, according to the report, only includes certain “private student loans.”
The report states that a “qualified education loan” is used only for higher education costs at certain accredited institutions.
Loans that do not meet the specific criteria are then not able to be discharged in bankruptcy.
The big issue at hand is the classification of private student loans and the predatory tactics employed by big companies.
For example, Sallie Mae and Navient issued student loans to borrowers at schools that did were…
