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Politics & Government

Student Loan Crisis Advocate Continues Fighting as Bankruptcy Bill Loses Traction in Congress

Scott Willis

A Washington D.C.-based advocate for addressing the growing student loan crisis says Congressmember John Katko is the lone remaining republican who has sponsored legislation to reinstate minimum bankruptcy protections.  Alan Collinge stopped in Syracuse Friday to urge Katko to follow through.

Collinge is founder of, and has been researching and writing about the issue for 12 years.  He admits he’s in a strange position…

“Bankruptcy is a horrible thing to have to fight for, right? Nobody wants to file, it’s very stigmatizing, it’s very unpleasant and it harms your credit record for many years.”

But, he says, it can be a way out for the 27 million people, or 63 percent of those with student debt who are unable to pay down their loans.  9.5 million of them defaulted.

“The student loan crisis is rooted in the removal of consumer protections like bankruptcy, statutes of limitations, and other core consumer protections that exist for every other type of loan except for student loans.”

Collinge goes into detail about the history of bankruptcy in the United States and why it's an important system that can help countless people.

Congressmember Katko co-sponsored a bill last session to restore those protections. 

Collinge says when they were in place, far less than one percent of loans were discharged through bankruptcy. So, he says while the premise for removal was flawed, he thinks he knows the real reason why the protections won’t be reinstated for the 1.5 trillion dollars of outstanding loans…

“Since 2009, the biggest beneficiary of this hasn’t been the lenders or the collection industry, although they’ve benefited tremendously, it’s actually the federal government. So, the Department of Education profits somewhere between 50 and – I’m going to say - 70 billion dollars a year on interest alone!”

Collinge says that’s not to mention profits on defaulted loans, something no other lender for any other type of loan can claim.  He says returning the option of bankruptcy is only fair, and can have far reaching effects. 

"It will lower the price of college. It will compel the federal government to crack the whip on the schools to increase their quality, lower their price, and - I might add – lower the amount of time it takes for students to graduate.”

Collinge says the student loan issue has gotten more attention, especially in the recent presidential election.  But he worries Washington theatrics will continue to dominate mainstream media coverage and push the matter aside once again.