Former bankruptcy judge Sarah Sharer Curley warns that recent changes to student loan policies, particularly under former President Donald Trump’s 2025 reform, could trigger a surge in personal bankruptcy filings. Curley, who served nearly 30 years on the bench and authored “The Price of Forgiveness: Debt, Bankruptcy, and the Future of Fairness in America,” highlights how the new law imposes harsh loan caps and permits private lenders to charge steep interest rates. This creates unsustainable repayment burdens for borrowers, especially those pursuing advanced degrees who often rely on large loans.

Curley describes the bankruptcy system as heavily skewed in favor of creditors, making it extremely difficult for individuals to discharge student loan debt. She recounts heartbreaking cases, including a woman in her 70s with a student loan balance exceeding $584,000, whose efforts to obtain relief were thwarted by inflexible laws and aggressive federal law firms. Curley emphasizes how the legal environment treats education debt unfairly compared to risks taken by financial markets, leaving borrowers trapped despite financial hardship.

The former judge also notes that bankruptcy isn't just a result of unemployment but often reflects chronic issues like medical debt or underemployment, with many workers forced into precarious jobs lacking benefits or livable wages. She points out that despite a rise in wage statistics, many people live paycheck to paycheck. The complex and stressful bankruptcy process further compounds the trauma for individuals, who often feel moral shame and failure when forced to seek debt relief.

Curley stresses that the bankruptcy laws need reform to balance protections between large creditors and individuals. She explains that after 2025, it became more difficult for borrowers to negotiate adjustments or forgiveness with the U.S. Department of Education due to staff cuts, leaving many stuck with overwhelming debt. Given these factors, Curley predicts the Trump-era overhaul will likely contribute to a notable rise in personal bankruptcy cases going forward.