White House takes first steps in allowing a bankruptcy option for student debt. $1.2 trillion in student debt outstanding.
It truly is absurd when you hear people moralizing that people should pay their student debt when virtually every other debt class can be discharged through bankruptcy. You can go to Las Vegas, run up $50,000 in credit card debt for a wild night, and if you are unable to pay it back, no problem. Sure, your credit is ruined but no one is going to garnish your wages. Can’t pay your mortgage? Foreclosure. Can’t pay your auto loan? Repossession. Can’t pay your student debt? Lifelong debtors’ prison for you. Student debt is the largest non-housing related debt class in the US. It makes sense that bankruptcy should be an option here. There is one problem, however. Most of the debt is government backed meaning the bill is going to be taken on by the government (aka the people). This is something that should have been done over a decade ago when total student debt was $200 billion, not $1.2 trillion like it is today. However, rising delinquencies show something needs to be done here.
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