Bankruptcy Option for Lenders

Reuters has just reported that the student lender MRU Holdings, Inc. has filed for chapter 7 bankruptcy.

Moreover, laws cutting subsidies to such lenders has left these companies struggling for existence.

These companies existed largely because of government subsidies that they in turn kept as profits and large salaries for the senior management instead of low fixed rate loans for borrowers. During the Bush administration, the subsidies were cut, and now the companies are filing for bankruptcy.

The debt collectors may not go after the directors of MRU, but they will without a doubt continue to pursue any students who defaulted private loans that MRU issued.