I don’t think you can default on a student loan if it is Federally insured. Screw everybody else but the government is going to get their money.
No, you can't discharge a student loan debt in bankruptcy. You can and many do default on it by failing to make repayments. You can't squeeze blood out of a turnip. If they don't have the money and don't have wages to garnish it's the govt. that takes the hit. That's all federally insured means now.
Actually, borrowers default all the time. There are no guarantees on these government “direct” loans. When a borrower defaults on a direct loan, the borrowers tax refunds, including EITC, are withheld by the IRS until the debt is paid in full. In addition, the borrower’s credit score is dinged with a loan default notice that never leaves the borrowers record. That turns out to be pretty crippling when the borrower wants to buy a car or a house on credit at some future point.
One of his programs — called “income-driven repayment” but nicknamed “Obama student loan forgiveness” — allows borrowers to not make payments when their income falls below a specific threshold, then caps payments as a percentage of total family income. Any debt left over at the end of 25 years is forgiven
And yes, it can be forgiven in bankruptcy for many. Don’t believe what the media tells us.