Why Student Loan Debt Has Become a Crisis in North Carolina
Student loan debt is a big problem across the U.S., and North Carolina is no different. Thousands of people are struggling to pay their loans — and it’s not just young students anymore.
Here in Wilmington, New Bern, and nearby towns, we hear from:
Retirees still paying off loans they co-signed for their children
Parents with Parent PLUS-style private loans who can’t keep up
Many borrowers feel trapped. They’re behind on payments, facing collections, and don’t know where to turn. Now, a new law could offer some hope.
What Is the Student Loan Bankruptcy Fairness Act of 2025?
In January 2025, a new bill called the Student Loan Bankruptcy Fairness Act was introduced in Congress as H.R. 423.
What this bill does:
Makes it easier to erase private student loans through bankruptcy
Treats private student loans like credit card or medical debt
Removes the need to prove “undue hardship” to discharge these loans
Important: This law applies only to private student loans — not federal student loans. If you’re unsure which type you have, a qualified attorney can help review your records.
What This Could Mean for NC Borrowers
If the law passes, people in North Carolina may get faster help with private loan debt. Here’s who could benefit:
Older borrowers who are still making payments long after graduating
Military families managing debt from private lenders
Retired couples who co-signed loans years ago and are now on fixed incomes
Bankruptcy might be a better option than income-driven repayment in many cases — especially if the loans are private and the borrower has no realistic way to repay them.
What Hasn’t Changed: Federal Student Loans and the Brunner Test
Even if this law passes, federal loans still require a special legal process called the Brunner test to be discharged in bankruptcy.
That said, the Department of Justice made updates in 2023 that made it easier to pass this test. More borrowers are now able to qualify — especially if they:
Can’t afford basic living expenses
Have tried repayment plans
Don’t expect their financial situation to improve soon
Our office helps people with both private and federal student loan cases. We explain the difference and help you understand what’s possible — and what’s not.
Who Might Benefit Most If This Law Passes?
Many borrowers across North Carolina may finally get relief.
You may also benefit if:
You’re behind on private loan payments
You’re a co-signer stuck with someone else’s debt
You’re dealing with collection threats, lawsuits, or wage garnishment
What You Can Do Right Now
1. Talk to a Local Debt Attorney
We’ll help you look at your loans, your income, and your legal options — no pressure.
2. Know What Kind of Loan You Have
Federal loans are backed by the U.S. government
Private loans are from banks, schools, or other lenders
You may have both. We’ll help you figure that out.
3. Explore Current Bankruptcy Protections
Bankruptcy may already help you:
Stop wage garnishments
Pause lawsuits and collection calls
Consolidate debt into a manageable plan (Chapter 13)
Talk to a North Carolina Debt Attorney About Your Student Loan Options
If you’re overwhelmed by student loan debt, you’re not alone — and you don’t have to wait to take action.
Cape Fear Debt Relief works with borrowers in Wilmington, New Bern, Jacksonville, and nearby communities. We help you understand what kind of loan you have and whether bankruptcy, settlement, or another option fits your needs.
Consultations are free. There’s no obligation — just answers.
Call today or fill out our online form to schedule your free consultation.
