Airline Miles Offered for Private Student Loans

I have an airline sponsored credit card I use to buy things.  Why not?  I earn airline miles and I don’t buy anything more than I would have with cash, debit card or check.  I pay the balance in full on the credit card each month and never pay any interest.

However, not everyone is as careful in the way they use credit cards as I am.  After nearly 30 years as a bankruptcy lawyer, I have a healthy respect for credit and use it carefully.  This wasn’t always the case.  Back in my student days, when money was tight, I would occasionally use my credit card less carefully and without paying attention to the cost of the credit.  I know that I bought things I would have passed up if I didn’t have easy access to credit.  Many of those “impulse purchases” would have been avoided if I had been required to wait until I could pay cash for the goods I bought.

Now the credit card companies are getting into the student loan business.  A recent online advertisement offered airline miles for student loans with this announcement:

“Earn 1 Mileage Plus mile for every $1 borrowed with a new Chase Private Student Loan. A Chase Private Student Loan can help pay for education-related expenses not covered by federal loans or other aid. Act now and earn 1,000 additional miles.” 

The ad included a toll free number and airline website location for more details.

Because I do not promote the lender, I have left out the details of this offer.  You can certainly find it if you go to the bank website.  But I do not recommend it.  There is very little, if any, government regulation of these private student loans.  In fact, the private loans are subject to all of the bad things about student loans in general and have none of the benefits of government sponsored loans.

First and foremost, The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 changed the law and expanded the rule against discharge of student loans in bankruptcy cases.  Now, all student loans, not just government sponsored student loans are left out of a bankruptcy discharge except in the most extreme of circumstances.  To see how extreme this can be, look at my recent article on the bankruptcy law network.