It is not fair that SBA loans are dischargeable in bankruptcy, but student loans are not. SBA loans are made to small business owners, which are essential to the economy. Student loans are made to students, who are the future of the economy. It is unfair that students should be saddled with debt for the rest of their lives, while business owners can discharge their debt in bankruptcy.
A young person may have been misled by a college or university about the cost of their education. As a result, they may have taken out more loans than they could afford. A sophisticated business person, on the other hand, may have been more careful about their financial decisions.
A young person may have had a change in circumstances after graduating from college. For example, they may have gotten sick or lost their job. This could make it difficult for them to repay their student loans. A sophisticated business person, on the other hand, may be more likely to have a steady income and be able to repay their debts.
A young person may not have had the same financial education as a sophisticated business person. This could make it difficult for them to understand the terms of their student loans and make informed decisions about their repayment options. A sophisticated business person, on the other hand, is more likely to have a good understanding of financial matters.
It is inconsistent for a person to believe that student loan debts should not be discharged in a bankruptcy because it is unfair to taxpayers, but it is okay for SBA loans to be discharged. Both student loan debts and SBA loans are government-backed loans, and both can be discharged in bankruptcy. However, there is a double standard when it comes to these two types of loans.
Those who believe that student loan debts should not be discharged in bankruptcy often argue that it is unfair to taxpayers. They argue that taxpayers should not have to pay for the debts of others, especially when those debts were incurred voluntarily. However, this argument does not hold up when it comes to SBA loans. SBA loans are also government-backed loans, and they can also be discharged in bankruptcy. So, if it is okay for taxpayers to pay for the debts of SBA borrowers, why is it not okay for taxpayers to pay for the debts of student loan borrowers?
The answer is that there is a double standard when it comes to these two types of loans. Student loan borrowers are often seen as being less deserving of help than SBA borrowers. This double standard is unfair. It is unfair to student loan borrowers who are struggling to repay their debts. We need to change the way we think about student loan debt. We need to see student loan borrowers as being just as deserving of help as SBA borrowers.
What Can Student Borrowers Do?
The Department of Justice, in close coordination with the Department of Education, recently implemented a new process in which debtors may seek to discharge federal student loans in bankruptcy. While the bankruptcy judge makes the final decision whether to grant a discharge, the Justice Department can play an important role in that decision by supporting discharge in appropriate cases. The new process will help ensure transparent and consistent expectations for the discharge of student loan debt in bankruptcy; reduce the burden on debtors of pursuing such proceedings; and make it easier for Justice Department attorneys to identify cases where discharge is appropriate.
In my 20 years of bankruptcy practice, there has never been a better time to eliminate student loans in bankruptcy.
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