Student loan debt and forgiveness - Part 3

Posted On: Tuesday - October 29th 2019 9:43AM MST
In Topics: 
  University  Global Financial Stupidity  Economics

It's been a good while, but Peak Stupidity is nothing if not compulsive about finishing a series. (It CAN take a year or two, occasionally, so do keep reading with alacrity.) Here are Part 1 and Part 2.

Is it worth it for 4 or 5 years of this?

Tough call, I'll grant you.

We do not favor ANY type of forgiveness program on student loan debt, as it will screw over the more responsible, or just more thrifty, causing a further moral hazard. That is, these people will not be willing to play "fair" anymore with anything involving government or big organizations.

What's Peak Stupiidy's short-term solution to this mess?* The laws stating that these school loans cannot be discharged in bankruptcy were made a decade or more back. I don't think that they are Constitutional in the least. Bankruptcy is a State matter. Now, this may result in the same problem, assuming nobody really fears or worries about getting into the bankruptcy process. The easygoing chapters of bankruptcy law are scams often, especially the way Big-Biz uses it as a re-org tactic and to get rid of debts to the small guy.

(There are scams available for the ex-student debtor too, such as paying off the school loans with money extracted from other debt, such as credit cards, and then blowing off all the other debt in bankruptcy.)

Well, punk, was it worth it?

Oh, yeah, Dad, I mean Your Honor, absolutely!

Bankruptcy should be more of a financial-life-changing event than it is now, but even now, it still is something not everyone would like to go through. Let the students work as far as they can on paying off the loans and make personal bankruptcy mean something serious. That's, to me, the best way out of the short-term problem of how to handle the $1.6 Trillion debt already outstanding. It's not elegant, but it keeps things on the up and up.

* The long-term one is simple - get the US Gov't TFO of the loan-guarantee business.

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