Essay Title: 

Student Loans Leading to Bankruptcy.

March 22, 2016 | Author: | Posted in education, teacher's career

Student loans leading to bankruptcy

It is found that many students in the countries such as Canada and the USA are taking loans , which they are not able to repay due to their poor economic conditions . Such bad financial position of the students compels them to resort to apply for bankruptcy although there are legal complications involved in such actions

It has been argued by Schwartz (1999 ) that all Canadian students do not suffer from the problem of repayment of loans . He has suggested that students do not repay loans because they [banner_entry_middle]

cannot repay the loans , and not because they do not want to pay . The author argues that students consider bankruptcy as the last resort , which is used only when it is impossible for the students , due to bad financial situation , to repay their loans

Those students who obtain fulltime jobs do not face any problem in repaying their debt . However , there is no guarantee that post secondary education provides jobs to all graduates , resulting in unemployment of some people , which do not allow them to repay their loans . Students since 1990s , have been facing the problem of increasing education cost due to federal cuts , which have forced the students to increase their dependence on student loans . However , apart from student debt , they also take other loans such as credit cards , car loan , and housing loan . This prevents them from paying the loans , leading to their bankruptcy when they are not able repay these loans . However , this is found in the case of only a few students , who do not obtain jobs . In this study , the author has argued that .inability to pay is the most important cause of default (Schwartz 1999 ,

. 318

Many minority students who work in less paid jobs are not able to repay loans , leading to their bankruptcy . The author has argued that students do not repay loans due to their inability to pay the debt (Schwartz 1999

In the year 1998 , the government introduced a law which made student loans non-dischargeable , which implied that students could not take protection under bankruptcy laws , unless they showed that student loans imposed great economic hardship on them . In 2005 , even the private student loans were also given the same status as those of federal loans implying that even the private loans could not be discharged based on bankruptcy rules (LexisNexis Martindale-Hubbel 2006

However , the students can consolidate their student loans along with other loans and request for new repayment plan covering 3 to 5 years However , this article suggests that It is almost impossible to show an undue hardship unless you are physically unable to work and chances of your obtaining any type of gainful employment in the future are non existent (LexisNexis Martindale-Hubbel 2006 para 2 ) This shows that students find it difficult to default their loans as bankruptcy laws do not allow the students to default loans . The students declaring bankruptcy are supposed to appear before the bankruptcy judge and prove their undue… [banner_entry_footer]

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