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Senate to debate student loan debt relief bill

Kentucky residents will likely be aware that student loan debt has become a major issue as the 2016 presidential election draws closer. Democratic candidate Bernie Sanders has proposed a that a college education should be free for all Americans, and several other candidates from both sides of the aisle have criticized some of the practices of for-profit financial institutions. Student debt in the United States has now reached $1.2 trillion, and many economists believe that this is hurting the U.S. economy be preventing young people from buying homes or making significant purchases.

In a speech made at Syracuse University on Feb. 15, Sen. Charles Schumer of New York indicated that he believes action should be taken before the votes are counted in November. The three-term senator told his audience that he had introduced a student debt relief bill that contains some of the provisions proposed by Sen. Sanders.

If passed, the Reducing Educational Debt Act would allow students to earn a two-year community college degree without paying tuition, and it would also allow those struggling with student loans to refinance their educational debt at more attractive interest rates. The community college provision alone would save students almost $4,000 per year in tuition fees. Research indicates that approximately 40 million Americans, including almost three-quarters of bachelor's graduates, have student loan obligations.

The relationship between bankruptcy laws and student loan debt is in flux. While the law may make a discharge of these obligations difficult, there are situations that would allow educational debt to be included in a bankruptcy filing, including a showing that repayment would cause extreme hardship. Attorneys with experience in this area could assess the situations of those struggling with unmanageable bills and explain the advantages and drawbacks of the various debt relief options available.

Source: Market Watch, "America's growing student-loan-debt crisis", Jillian Berman, Jan. 19, 2016

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