Private Student Loans + Bankruptcy Reform = Unemployment
Chuck told me today that he can’t buy a house because of his private student loans. Fed Chairman Janet Yellen says he’s not alone–and that student loan debt is holding back jobs and the economic recovery.
Federal Reserve Chairman Janet Yellen says student loans may be holding down the housing recovery.
In her testimony to Congress yesterday, Fed Chairman Janet Yellen said student loan debt may be holding down recovery in the housing industry. You can read about her comments here, in the Washington Examiner.
Just today I talked to a guy who how can’t buy a house because of student loans. Chuck had low income for a couple years after grad school. Now he’s doing OK. His Federal student loans worked with him while his income was low. But his private student loan put him in default.
He’s made monthly payments for two years on the private loans, but they still report him ad delinquent–so he can’t get approved to buy a house. (The Federal loans have always been current.)
Before 2005, bankruptcy could clean up private student loans–now it can’t. One of the purposes of bankruptcy is to help people get back to good credit–so they can buy the things that other people make–and create jobs that benefit everybody.
When Congress made bankruptcy harder and more expensive, they forgot about that. And all of us are paying a price for that in today’s jobless economic recovery.