Private Student Loans in the United States have grown to over a trillion dollars over the past decade, the highest amount of private student debt in American history. Colleges steer students to easily sold loans which are paid immediately to the school but repaid over decades to lenders at exorbitant sums.
Consequently, financial institutions are unwilling to account for student hardship or devalued educations when negotiating repayment plans.
The solution is to dramatically reduce the threshold for clearing private student loans in bankruptcy. Banks will be more willing to negotiate with students and families when there is an alternative open to citizens. More Americans will have money to invest in the economy and banks will negotiate bankruptcy alternatives as they already do.