Trump's student loan overhaul could lead to more bankruptcy filings, former judge says

01Summary

1. 01Sarah Sharer Curley, a former bankruptcy judge, says the 2025 law created unrealistic federal loan caps that may drive students to private loans with interest rates up to 16%.
2. 02Over half a million personal bankruptcy cases were filed in 2025, a nearly 50% rise from three years prior, according to the Administrative Office of the U.S. Courts.
3. 03Curley recounts a case of a 73-year-old woman with a $584,000 student loan from the 1970s, who lived on Social Security and could not discharge the debt due to strict bankruptcy laws.
4. 04The Department of Education was gutted in 2025, reducing staff who could approve debt modifications and making settlements harder for borrowers.
5. 05Curley notes that many bankruptcy filers are employed but live paycheck to paycheck, often as independent contractors with few benefits.