The Inescapable Nature of Student Loans

Student loans are the only debt you can't escape. Even bankruptcy won't save you.

Here's how that happened. Normally bankruptcy exists to give people a fresh start.

You declare you can't pay. Courts wipe out credit cards, medical bills,

even business loans. You take the credit hit and move on. Student loans were different from the

beginning. In the 1960s the government started backing them to make college accessible.

Banks would lend because taxpayers guaranteed the money. But in 1976 Congress changed the rules.

They decided student loans couldn't be discharged in bankruptcy unless you proved undue hardship.

The fear was simple. People would graduate, declare bankruptcy immediately, and walk away debt-free.