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**DISCLAIMER: All characters and scenarios in this post are fictional.**
Consider these two students’ financial paths through college, and consider what the “Fairness for Struggling Students Act” (FSSA) would do for both of them. The act, now before Congress, would allow people with college loans from private lenders to get out from under those loans in bankruptcy. Currently, college loans are not dischargeable even if the borrower declares bankruptcy.
Katrina’s parents worked hard all their lives, and although they were very well off, they always encouraged her to earn her privileges through hard work and dedication. She has never gotten a handout or “freebie” from her parents—she started working when she was sixteen, bought her own car,
and worked hard at everything she put her mind to. When it came time for Katrina to go to college, her
parents told her that they wanted to pay for her four years in full. Since they had the financial ability to, they wanted to give their daughter the peace of mind that comes with graduating with zero debt. Katrina realized that this is an enormous gift that required sacrifice, and she was incredibly grateful.
Emily was also raised with the value of maintaining a strong work ethic. Unlike Katrina, however, she wasn’t raised in a home that had the financial capacity to pay her tuition at an expensive private college, largely due to the fact that she had three younger siblings. They were willing to send her to junior college, but they could not afford more. Despite her parents’ inability to pay for her first-choice school, she was determined to find a way to make it work at any cost. She applied to many grants, but she didn’t qualify for any federal or private need-based scholarships because her parents’ joint income was just barely above the required threshold. After much difficulty, Emily decided to take on $150,000 in debt to a private lender in order to go to the school of her dreams.
Both girls graduated school with honors. Katrina was overcome with gratitude for her parents’ gift of a college degree, and decided to further her education with graduate school. As Emily crossed the podium, she looked forward to starting work at a non-profit agency.
Five years later, Katrina had successfully attained a Master’s degree and was settled into a career. Emily,
however, had been unable to keep up on her loan payments, and found herself deep in debt. Facing no
other alternative, she filed for bankruptcy.
If the Fairness for Struggling Students Act were to pass, Emily’s college loans would be forgiven when
she declared bankruptcy. Is this fair to taxpayers and families like Katrina’s? Did Emily essentially make a
poor investment choice by taking out so many loans, in effect robbing taxpayers of thousands of dollars?
Are Katrina’s parents essentially being punished for being successful? Alternatively, Emily did everything
“right,” except for opting for a cheaper education. Is this act the only way that an honest, hardworking student like Emily can find justice in an extremely flawed system?