Former bankruptcy judge Sarah Sharer Curley has a prediction about President Donald Trump's student loan overhaul, and it is not a cheerful one: more people heading to bankruptcy court.

Curley, who retired in 2014 after nearly three decades on the bench, discussed the law in an interview about her new book, "The Price of Forgiveness: Debt, Bankruptcy, and the Future of Fairness in America," according to a CNBC report. Her core argument is that strict bankruptcy laws can make student loans nearly impossible to discharge.

Caps Could Mean Pricier Loans

Curley said the law, passed in July 2025, set federal loan caps she called unrealistic. The practical effect, in her view, is that students get pushed toward private lenders that charge higher interest. "The rate of bankruptcy filings will most likely increase," she said.

She offered a concrete example: a medical school borrower who needs $300,000 and has a lower credit score could face a 16% rate. That works out to payments of $5,017 a month over 10 years, with $302,040 in interest.

The new federal rules, which apply to loans first disbursed on or after July 1, set a $257,500 lifetime borrowing limit and cap Parent PLUS loans at $20,000 a year and $65,000 per student.

Sarah Austin, a policy analyst at the National Association of Student Financial Aid Administrators, has said some students will face funding gaps they would not have faced under the previous rules.

Settlements Get Harder

There is another wrinkle. Curley said the Education Department previously worked out repayment plans and could agree to forgive part of loans. But after it was gutted in 2025, few employees remained to approve such modifications, making settlements harder to reach.

Filings Up Nearly 50%

The backdrop here is not pretty. More than half a million personal bankruptcy cases were filed in 2025, an almost 50% rise from three years earlier, according to the Administrative Office of the U.S. Courts.

Curley also pointed to medical debt, noting that only debt owed at the start of a bankruptcy case can be discharged while chronic illness costs keep mounting.

Her conclusion is that the law needs to change. Individuals, she argues, deserve the same break given to large financial institutions and corporations.