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White House Backs Bankruptcy Option for Some Student Debt
Wall Street Journal ^ | July 20, 2012 | By JOSH MITCHELL

Posted on 07/20/2012 4:01:31 PM PDT by Oldeconomybuyer

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.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Government; News/Current Events; Politics/Elections
KEYWORDS: doddfrank; obamanomics; studentloans
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Another bribe for votes.
1 posted on 07/20/2012 4:01:42 PM PDT by Oldeconomybuyer
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To: Oldeconomybuyer

Yes, and as 0bama goes around touting this as a good thing on the campaign trail, he’ll let the young adults believe it applies to ALL student loan debt, tell them it is just fair that they should not have to pay it, etc., etc., while we are letting rich people keep some of their money. And no one in the media will dispute it.


2 posted on 07/20/2012 4:06:20 PM PDT by NEMDF
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To: Oldeconomybuyer
Call it what you want, but when Congress decided to remove bankruptcy from those loans, the interests rates should have dropped to record lows.

They didn't.

So, why protect the lenders to any greater degree than other loans they make at the same rates.

3 posted on 07/20/2012 4:07:57 PM PDT by muawiyah
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To: Oldeconomybuyer

Student loan debt should not be treated any differently than any other debt in bankruptcy court.

No lender should have a “guarantee” that their loans will be repaid, else they begin to lend without concern for risk.

O M G! ! ! !

Did I just agree with something coming from the white house?


4 posted on 07/20/2012 4:08:13 PM PDT by Repeal The 17th (We have met the enemy and he is us.)
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To: Oldeconomybuyer

This guy has absolutely no shame.


5 posted on 07/20/2012 4:10:02 PM PDT by kempster
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To: Oldeconomybuyer
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.

Mr. Messiah, you are going to have to do better than that to win reelection.

6 posted on 07/20/2012 4:10:22 PM PDT by EGPWS (Trust in God, question everyone else)
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To: Oldeconomybuyer

Yeah, maybe in certain extreme conditions, I can see some relief, but come on, I had to work my A$$ off to pay mine off, so everyone else should too.


7 posted on 07/20/2012 4:10:35 PM PDT by Nowhere Man (June 28th, 2012, the Day America Jumped The Shark.)
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To: Oldeconomybuyer
Sure!

You spent $120k for a degree in Art History, of course I should pay when you can't find a job worth your station in life.

Maybe, just maybe, parking cars IS your station in life.

To quote Rahm: quit whining!

Pay your own damn bills.

8 posted on 07/20/2012 4:12:08 PM PDT by Mikey_1962 (Obama: The Affirmative Action President.)
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To: Repeal The 17th

The government has taken over the student loan program so the taxpayers will be the ones who take the risk and lose whatever debt is excused. Thew government is now the main lender.


9 posted on 07/20/2012 4:14:16 PM PDT by kabar
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To: Repeal The 17th

The private lenders who made these loans knew they were not dischargable in bankruptcy. The Kenyan wants to retroactively change that law, which will make new private sector student loans impossible to get — making the GOVERNMENT the only source for these loans.

So banks will no longer be responsible for bad student loans, YOU ARE.


10 posted on 07/20/2012 4:17:19 PM PDT by Oldeconomybuyer (The problem with socialism is that you eventually run out of other people's money.)
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To: muawiyah
Private lenders warn that the suggested change could drive up interest rates, since the risk of losses would increase. They argue that bankruptcy provides too big a temptation for students to walk away from their debt obligations because, unlike homeowners, for example, many students lack major assets.

The net effect and probably the objective of this WH is to kill off the private lenders and let the federal government assume all of the lending responsibility, thereby increasing federal control over our lives even more.

11 posted on 07/20/2012 4:18:35 PM PDT by kabar
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To: Oldeconomybuyer

Slick way to redistribute by another name.


12 posted on 07/20/2012 4:18:52 PM PDT by ntnychik
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To: Repeal The 17th; Oldeconomybuyer

How many loans do you think banks would have given out to 17 and 18 year olds if they weren’t guaranteed ?


13 posted on 07/20/2012 4:19:07 PM PDT by PMAS
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To: Repeal The 17th

Did I just agree with something coming from the white house?


Fear not.. your safe. Zero only wants to allow them to file on non-public student loan debt.

IE Obama still gets his cut.

Here is the money quote

“. 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.”


14 posted on 07/20/2012 4:21:21 PM PDT by cableguymn (For the first time in my life. I fear my country's government.)
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To: Oldeconomybuyer

It has to be for all or none. the obama plan is to force out private business an make them thralls to the government loans.

It should be they are dischargable after 5 years and the university has to give the money back.


15 posted on 07/20/2012 4:22:00 PM PDT by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: Repeal The 17th

“Student loan debt should not be treated any differently than any other debt in bankruptcy court.”

If applied to existing debt, it would be a form of legal theft. If the new rules applies only to new debt, there will be no more private debt, and all student loans will be managed by the federal government (which is just what Obama wants).

The reason that student loan debt is not dischargeable in bankruptcy is that in a free market no private lender would offer student loans at a reasonable rate if the 22-year old graduates could borrow as much as they want and immediately file for bankruptcy afterwards.


16 posted on 07/20/2012 4:24:43 PM PDT by Stat-boy
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To: Stat-boy

Bingo. That was exactly what was happening before the law exempting student loans from bankruptcy .... and yes, you guessed it, LAWYERS were in the lead of previously bankrupting out of student loans. No one forces anyone to take these loans ... just a lot of lazy, I deserve it spoiled children.


17 posted on 07/20/2012 4:31:15 PM PDT by RetiredTexasVet (Skittle pooping unicorns are more common than progressives with honor & integrity.)
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To: PMAS
How many loans do you think banks would have given out to 17 and 18 year olds if they weren’t guaranteed?

Zero, zip, nada. I did paygo through college and my wife's parents signed for her nominal loans. Obama wants "free" government healthcare, condoms, and college.

18 posted on 07/20/2012 4:33:48 PM PDT by Oldeconomybuyer (The problem with socialism is that you eventually run out of other people's money.)
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To: Repeal The 17th

I somewhat agree with your “moral hazard” argument. Even federal taxes are dischargeable in bankruptcy, provided the debt is more than 3 years old, the returns were filed on time, the assessments were made timely, no offer in compromise was made, etc.

How about this idea: the Department of Education accepting offers in compromise regarding student debts, just as the IRS does with tax debts.


19 posted on 07/20/2012 4:42:26 PM PDT by Unknowing (Now is the time for all good men to come to the aid of their country.)
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To: muawiyah
Call it what you want, but when Congress decided to remove bankruptcy from those loans, the interests rates should have dropped to record lows. They didn't. So, why protect the lenders to any greater degree than other loans they make at the same rates.

Just because the loans can't be discharged in bankruptcy doesn't mean that borrowers actually make good on the loans. That's why interest rates haven't fallen much. However, the fact that these loans can't be discharged in bankruptcy is why student loan interest rates remain far below credit card rates despite the fact that these types of loans have one key feature in common - neither is backed by physical collateral that can be seized to cover the remaining loan balance.

20 posted on 07/20/2012 4:47:10 PM PDT by Zhang Fei (Let us pray that peace be now restored to the world and that God will preserve it always.)
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