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Here is one fallacy that is being repeated even by conservative pundits.

“And, unlike a bad mortgage on an underwater house, Munna can’t simply walk away from her student loans, which cannot be expunged in a bankruptcy. She’s stuck in a financial trap.”

The Democrats have created an elaborate system of soft default options. Income contigent repayment is a form of soft default although Democrats wanted better options. Government and non profit employees get their student loan debts discharged after 10 years provided some conditions have been met. For everyone else, the discharge date is 15 or 20 years. In addition, Democrats have artificially reduced interest rates.

Disability is a much better option than these default options. The public is unaware that student loan debts can be discharged through a disability claim. Right now the Education Department controls disability claims for student loans. However, student interest groups are lobbying hard to move the disability claims to the Social Security Administration. Obtaining disability through the SSA is not difficult although paying a service for advice may be necessary. SSA disability claims are never reviewed after the claim is awarded. There are many soft disability claims that can easily be made by large numbers of former students.

We are headed for a tsunami of soft student loan defaults in the coming decade. These defaults will never appear on the government books. Democrats created took control over the student loan programs to increase the subsidies for higher education while arguing that government control saved $60 billion. Democrats greatly extended soft default options ensuring a wave of defaults.