September 19, 2008
Private student loan bankruptcy protetion removed from bill in Congress
An amendment by Rep. Davis (D -Illinois) which would have extended some bankruptcy protection to students holding private student loans has been removed from the Higher Education Act Reauthorization (HR 4137).
As you can guess, there was strong opposition from banks and financial institutions and this definitely affected the vote, I’m certain.
The bank’s argument against the bankruptcy protection amendment was that bankruptcy protection would ultimately make private student loans more expensive because lenders would have to increase interest rates and fees to cover loans that were in default and discharged in bankruptcy.