Student Loan Bankruptcy

Student loans can really force this.

What about student's loans?

Here's the problem, though: since student loan debt is one of the ONLY types is debt that is almost impossible to discharge through bankruptcy, banks and colleges have almost no incentive to do proper underwriting. They are pretty positive they'll get their pound of flesh, come hell or high water. If there were better rules around getting rid of these debts in bankruptcy ("You loaned 200k to someone who wanted to get an English degree at a low tier, private college? Then you, the

I think the original error was making them non-dischargeable in bankruptcy. People still take out private student loans to go to college. I think colleges would have raised rates even without government subsidization. 18 year olds are in an ideal situation to be sold the benefits of taking on large amounts of debt for their future.

Most of the student loan debt is owed to private creditors and it is the federal government that insures these loans. If a student doesn't make payments, the lender gets a guaranteed bailout by the government (no need for congress to step in like they did for the banks and auto companies). Basically, all the lenders are incentivized to give out as much money as possible, which incentivizes universities to raise tuitions, all because the US government decided to give lenders free money to pl

Maybe the federal government should get out of the loan business and make it legal to declare bankruptcy to escape student loan debt. Colleges have every incentive to enroll as many students as possible and charge whatever they want because the loans are guaranteed by wage garnishment.This draws parallels to the easy credit that was extended in the last housing collapse to people that shouldn't had mortgages for houses they can't afford in the first place.

Student loans are bailouts. The banks paid back their loans, why shouldn't students?

That's a problem with many federally-backed student loans out there. The government being in the job of backing student loans is inflating college costs, as there is no factor to stop price increases. They aren't available for bankruptcy. There is no risk analysis for the people being lent the money. There's no balancing between job prospects and the degrees people are earning.

Because students generally are poor and so don't have much to lose by declaring bankruptcy. They shrug off massive debts are left with an (ostensibly) valuable degree. Lenders are unable to secure the loan against the borrower's assets, as would generally be the case for a home, auto, or business loan. It's possible that if student loans were dischargeable in bankruptcy that, absent a government guarantee, the lender would need to charge a high enough interest rate where the stud

Student loans are a thing, unfortunately.