One of the more vexing problems in my student loan practice arises from questions about private student loan debt. In my view, private student loans are just about the worst type of debt imaginable. With very limited exception, you cannot discharge them in bankruptcy and collection agencies often use very aggressive collection tactics.

Often collection agencies act even more aggressively than they would for general unsecured debt like credit cards because the bankruptcy option is most likely not available.

Generally student loan borrowers only turn to private student loans when they have exhausted their federal student loan money. When I speak to high school students and their parents I point out that if they are considering private loans to pay for college, that is a sign that the college they are considering is too expensive or not a practical choice because of the negatives associated with private loans. These negatives are magnified even further if the private student loan lender demanded a co-debtor, like a parent, spouse or sibling.

As far as what to do if you have private student loans, there are not many good options. One possibility is to use a bankruptcy filing to buy time and to eliminate other debts. Often times this means changing your standard of living by downsizing your house, car or other big ticket purchases to free up cash to pay for private student loans.

The other option is to refinance. Web sites like studentloanhero.com or sofi.com offer refinance options. In some cases you may be able to get a lower interest rate or better terms, but refinancing doesn’t solve the problem it just puts you into a fresh loan that you still have to pay.

There has been some talk in Congress about amending the bankruptcy code to offer less protection to private student loans but so far that is just talk. If you are so inclined, contact your elected representative to support legislation that helps private student loan borrowers.

Because student loans generally cannot be discharged in bankruptcy, lenders – both the federal government and private lenders – have little incentive to insist that borrowers show credit worthiness. Because higher education funds are freely available, colleges and universities have basically no incentive to keep costs under control. As the parent of college age children I see numerous instances where a young person borrows tens of thousands of dollars pursuing a field of study that will not result in a salary that can support his student loan burden. Unfortunately a 17 or 18 year old who is excited about attending his dream school is not likely to think much about how to pay back those loans.

In my view the public policy of making higher education more widely available has resulted in out-of-control tuition and out-of-control debt burdens for graduates.