Referring to student loan debt as the “indentured servitude of the 21st century” may seem like a joke to some. For those facing this overwhelming debt, however, that assessment is not far off the mark. 

The federal government supplies most students’ loans. Research by the College Board, a not-for-profit providing greater access to higher education, finds that federal loans account for nearly 90% of all student loans. 

People who consider filing for Chapter 7 or Chapter 13 bankruptcy have most likely defaulted on these loans already. A loan in default has seen no payment for over nine months. However, defaulting on federal loans can be even riskier than ignoring other types of debt. 

The federal government can collect mercilessly. A person in default may have their wages garnished with no hope of a tax return. It can even place liens on properties and bank accounts. Without the statute of limitations that most lenders must adhere to, the federal government has no restrictions on how demanding it can be. 

Difficult to discharge, but not impossible 

Most people believe it is hopeless to try to find relief through bankruptcy unless they have a qualifying exception. The courts most often discharge loans in cases where the debtor suffers severe medical or economic hardship. In some instances, a judge may grant a reprieve to someone who has reached retirement age without paying off his or her debt. 

But research indicates that a simple lack of trying may be the main factor. According to a study published by the Social Science Research Network, only 0.1% of those filing for bankruptcy try to have their student loans discharged at all.