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 ...
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.
They didn't.
So, why protect the lenders to any greater degree than other loans they make at the same rates.
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?
This guy has absolutely no shame.
Mr. Messiah, you are going to have to do better than that to win reelection.
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.
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.
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.
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.
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.
Slick way to redistribute by another name.
How many loans do you think banks would have given out to 17 and 18 year olds if they weren’t guaranteed ?
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.”
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.
“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.
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.
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.
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.
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.
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