The student loan system has receiving its fair share of criticism as mountain frustration with both the economy and the government has manifested itself in social movements like Occupy Wall Street. Now some critics are demanding change to a system they feel preys on those seeking student loans and provides incentives for companies to allow the loans to fall into default.

Cincinnati Chapter 7 bankruptcy lawyers note that the current student loan system can quickly turn against those taking government loan money if they later find themselves unable to make their monthly payments. Unlike other forms of debt, student loans are not dischargeable during bankruptcy. In addition, student loans are exempt from statutes of limitations and other refinancing options that other forms of debt can benefit from.

In addition, the system is set up to reward the guarantors of the loan -- those intended to police the lenders -- when loans default. Some critics consider this to be a conflict of interest and unfair to consumers. Some organizations -- including the U.S. Department of Education -- receive revenues off of each loan that defaults.

The result is a system that piles up fees and charges on past-due student loans without regard for the deepening hole in which it places consumers. Because lenders have few restrictions placed on them, they know consumers will be forced to pay the loan and the lenders will benefit more off defaulted loans than student loans paid off on time.

Opponents of the current system are demanding reform to the student loan industry to provide more protections for consumers and create a credit structure similar to how credit operates with other types of lending.

Source: Forbes "Should Student Loans be Dischargeable in Bankruptcy?" Dec. 29, 2011