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Reports Morally Bankrupt: How the Student Loan Industry Stole a Generation’s Right to Debt Relief

Morally Bankrupt: How the Student Loan Industry Stole a Generation’s Right to Debt Relief

This report investigates a decades-long scheme by the student loan industry to rob borrowers of their right to debt relief on many types of private student loans. Despite industry-perpetuated misconceptions, only a specific subset of private student loans face heightened scrutiny in bankruptcy. Loans that do not fall within this specific category are presumptively dischargeable in bankruptcy, just like a credit card or a personal loan.

The report outlines how private student loan companies developed and deployed a wide-ranging set of tools to mislead borrowers into thinking that their private student loans were not dischargeable when, in fact, they were. These tactics include continuing to illegally collect on borrowers who had already been through bankruptcy. The report identifies more than 2.6 million people took on $50 billion in these types of dischargeable student debts during the boom in predatory private lending that started in the mid-2000s, an amount equal to a third of outstanding private student loan debt. Finally, the report reviews the authorities that law enforcement at every level can and must use to hold industry accountable for this historic fraud.


Read the Report: Morally Bankrupt: How the Student Loan Industry Stole a Generation’s Right to Debt Relief

Read the Press Release: SBPC Investigation Uncovers Decades-Long Student Loan Industry Scheme to Deprive Millions of Private Student Loan Borrowers of Bankruptcy Rights

Read a blog post outlining the findings of the report: An Industry-Wide, $50 Billion Scheme Stole Private Student Loan Borrowers’ Bankruptcy Rights

To learn more about the SBPC’s work related to shadow student debt, click here.

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