I don't know how i feel about this. I mean, shouldn't the individual be able to clean up their balance sheet the same way a corporate entity can when filing for bankruptcy? Wouldn't that make lenders think twice about easy student loans if they realize that they may lose out? Therefore bringing skyrocketing tuition costs down? AND, it should be extended to federal loans also. http://online.wsj.com/article/SB10000872396390444097904577537390098445700.html#articleTabs=article The Obama administration urged Congress to make it easier for people to discharge a portion of certain student debt by filing for bankruptcy protection. The recommendation, in a report by the Education Department and the Consumer Financial Protection Bureau, wouldn't affect the vast majority of student debt, which is issued by the federal government. It would apply only to the roughly $150 billion, or 15% of total outstanding student debt, issued by private lenders such as SLM Corp.'s Sallie Mae and Wells Fargo & Co. Consumer bureau chief Richard Cordray said Congress should consider modifying a 2005 law that, except in rare circumstances, prohibits discharging private student loans through bankruptcy.
Put yourself in the shoes of a 22 y.o. graduate...rack up 100k in student debt then either slave to repay or declare bankruptcy and your FICO is 700 by your thirties. No brainer.
Allow student debt to be discharged in bankruptcy and no one in their right mind will make these loans unless they are backed by the government. Of course, that would be Obama's objective. It's not just the private loans that are a problem though. In fact, they are a small part of the problem. I do believe it's a bit unfair that students were encouraged by the government and avaricious universities to take on this debt. Now that Obama has desroyed the economy, they can't get the high paying jobs they had every reason to expect those degrees in AA studies, women's studies, fine arts and education were going to provide. It's all very unfair. Luckily I have a solution. Transfer funds from research grants to universities, the vast majority of which fund useless, make-work type "research" , to pay off the loans, at least in part. That way the universities, which are to blame for running up costs unconscionably and which run what amounts to a cartel, share in the solution. It's like their favorite president said, we have to have shared sacrifice, and I can't think of a more deserving group to suffer than the people running universities.