What is the student debt bomb?

America’s student loan debt continues to spiral out of control, a ticking time bomb for our nation’s financial future. At the end of 2018, student loan debt hit over $1.5 trillion, tripling in size since 2006.

Tuition costs grew exponentially as state and federal funding of higher education diminished. At the same time, college education became a prerequisite for starting a career. Students took out these loans in good faith, only to be faced with unprecedented debt burdens as they try to find their first jobs.

These new grads find themselves in so much debt that they cannot hope to achieve milestones of adulthood that previous generations took for granted, like buying a home, starting a family, or otherwise investing in the American dream. Without those investments, the growing student debt becomes a ticking time bomb that, if not defused, will trigger another major recession.

At the same time, what little leverage borrowers had when bankruptcy relief was available was stripped away. Bankruptcy relief dwindled as student debt soared. While bankruptcy is a last resort, as the possibility eroded, student lenders and collectors were no longer motivated to create programs to create meaningful relief to borrowers.

But it wasn’t always this way. Until the 70s, student loans were treated like any other debt when it came to declaring bankruptcy.


For the over 44 million Americans with student debt, there was no hope for relief if they ever found themselves in a situation where they could not pay back their loans. Until now.

In May 2019, the Student Borrower Bankruptcy Relief Act was introduced to set things right. If approved, student debt would once again be treated like medical debt or credit cards in bankruptcy.

For borrowers who truly cannot afford to pay their student loans, they would be able to wipe the loans out in bankruptcy. Filing bankruptcy not taken lightly: bankruptcy courts evaluate each case closely.

Even borrowers who don’t file for bankruptcy will benefit from a system that gives borrowers leverage again. Student lenders will be incentivized to make sure that repayment options are affordable and functional. Government forgiveness and repayment programs will better be able to better achieve their original goal of encouraging graduates to work in public service.

But we need your help to make sure that this bill passes. Click here to learn how you can help get this bill into law.