Judge Sarah Sharer Curley, who retired from the U.S. Bankruptcy Court for the District of Arizona in 2014, has published a book examining the intersection of debt, bankruptcy, and the American financial system. She recently discussed her perspective on bankruptcy trends and student loan policy with CNBC.
According to data from the Administrative Office of the U.S. Courts, personal bankruptcy filings exceeded half a million in 2025, representing nearly a 50% increase over the prior three-year period. Curley noted that individuals who file for bankruptcy often face unexpected life circumstances rather than attempting fraud. Common triggers include job loss, chronic illness with substantial medical expenses, and educational debt. Many filers are employed but living paycheck to paycheck, working as independent contractors with minimal benefits or holding multiple jobs with insufficient wages.
Curley highlighted concerns about federal student loan policy, particularly regarding a bill that passed in July 2025. She characterized the legislation as harmful to borrowers, arguing that it imposed unrealistic caps on federal loans. This restriction forces students to seek private financing at higher interest rates, particularly those with lower credit scores. Curley provided an example where a medical student borrowing $300,000 with a lower credit score could face a 16% interest rate, resulting in monthly payments of approximately $5,017 and total interest payments exceeding $300,000 over a decade-long repayment period.
Curley also addressed shifts in the federal government’s approach to student debt relief. Under the previous administration, the Department of Education reportedly worked to establish alternative repayment arrangements and pursue partial loan forgiveness. However, following changes to the department in 2025, fewer employees remained to approve debt modifications through available programs, making settlements with the Department of Education more difficult to achieve. Curley anticipates that bankruptcy filing rates will increase as a result of these policy changes.
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