Supporters of the bankruptcy reform proposal say giving unemployed and struggling Americans a chance to start fresh will have little downside. Since interest rates didn't drop when the law was changed in lenders' favor in 2005, there's no justification for them to jump if the law is changed back, the supporters argue. The Institute for College Access and Success noted, for example, that Sallie Mae's profit margin on private student loans increased every year from 2003 through 2007—before and after the law change. TICAS president Lauren Asher noted that lenders can wipe their own books clean of bad debts by simply writing them off. But then the banks sell those bad debts to collection agencies, who don't give students the same kind of chance to start fresh. "People who borrowed for college and played by the rules deserve basic consumer protections and fair treatment when they hit hard times," she says.
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