Michael: “lawmakers have yet to allow loans to be discharged in bankruptcy.”
Psycho: If people could discharge their student loans, there would be absolutely no reason to charge tuition at colleges. Higher education would be free.
Me: If people could discharge their student loans, in the near term a lot of lenders (not the schools) would be left holding the bag.
In the longer term, assuming that the gubmint no longer uses our money to make the lenders whole for these defaults, the surviving lenders will eventually get the idea that they should make more sensible loans, and no longer conspire with the ripoff trade schools. It would probably drive down the cost of both university and tradeschool education, which (as we all know) have been the engine driving up costs and tuitions over the past generation at least.
student loans were dischargable in bankruptcy.
The problem is that non-dischargability has created a “worthless degree” industry.
What is needed is a non-dischargability window. If after 5 years there is no viable job openings, THEN loans become dischargable.
Remember some states offer STUDENT LOAN forgivness programs for every year you work in the government.
This would also be a way to deal with runaway university costs. Since universities have no risk for basket weaving degrees, they can charge as much as possible based on just issuing a degree.