We have all heard about the pending legislation to increase student loan interest rates on new student loans, however, there is an even more important bill pending in Congress which may actually help people with their student loan debt.
The bill is the Fairness for Struggling Students Act of 2013, Senate Bill 114, and it will allow private student loans to be discharged in bankruptcy. Currently, the bankruptcy code excludes both private and government student loans from discharge in bankruptcy except in very rare circumstances. Private student loans are those student loans which are credit based, have a market based interest rate which is not government regulated and are generally considered the sub-prime loans of the college world.
A 2012 Consumer Protection Bureau report found that although private student loans make up about 7% of the student loans originated between 2011 and 2012, however 42% of undergraduates at for-profit colleges used a private student loan, compared to just 14% of undergraduates overall.