Certain Senators Think Pesky Student Loan Debt Is Getting in the Way of Home Debt, So Let's Just Discharge It
You know, if you can't afford your student loans, you probably can't afford a mortgage or kids either. According to Illinois Senator Dick Durbin, the solution is to allow you to discharge your private student loans in bankruptcy so you can get on with "buying" that house you can't afford. Only a politician would think that's a good idea.
The Fairness for Struggling Students Act of 2015 [PDF] would amend the current bankruptcy code, restoring the availability of bankruptcy relief for private student loans.This news comes at the same time President Obama is trying to make the federal student loan repayment process "easier" for borrowers.
The act, which was introduced by Illinois Senator Dick Durbin, and co-sponsored by senators Sheldon Whitehouse (RI), Al Franken (MN), Richard Blumenthal (CT), Patty Murray (WA), Jack Reed (RI), Elizabeth Warren (MA), Ron Wyden (OR), Barbara Boxer (CA), Tim Kaine (VA), Brian Schatz (HI), Kirsten Gillibrand (NY) and Mazie Hirono (HI), aims to address the current student debt crisis, which has propelled student loan debt to more than $1.2 trillion.
Currently, student loan debt averages $29,000 for borrowers leaving school with a Bachelor’s degree.
“Too many Americans are carrying around mortgage-sized student loan debt that forces them to put off major life decisions like buying a home or starting a family,” Durbin says in a statement. “It’s not only young people facing this crisis, it is parents, siblings and even grandparents who co-signed private loans long ago and are still making payments decades later. It’s time for action. We can no longer sit by while this student debt bomb keeps ticking.”
The president's memorandum -- Student Aid Bill of Rights -- explains thusly:
College remains an excellent investment, and student loans enable many who could not otherwise do so to access further education. However, there is more work to do to help students repay their loans responsibly. In 2013, college graduates owed an average of $28,400 in Federal and private loans. More than one in eight Federal borrowers default on their loans within 3 years of leaving school. My Administration has already put in place significant protections that ensure borrowers with credit cards and mortgages are treated fairly. We can and should do much more to give students affordable ways to meet their responsibilities and repay their loans.Now, I'm all for reasonable consumer protection. But at what point does it become the government's job to protect the consumer from his or herself?
If you default on your loan 3 years after leaving school, student loans are the least of your problems and no intervention on the part of your nanny government can help you.
Back to the Fairness for Struggling Students Act of 2015, which likely won't even make it out of committee. Durbin has tried this before and it didn't work then so why would it work now? How is it fair for someone else to eat the cost of your education? Debt doesn't magically disappear with the swipe of a hand. Unlike vehicles that can be repossessed if the borrower doesn't make their payments, there's no recouping an asset in the case of student loan default.
Perhaps instead of trying to vaporize the debt, we should address why it costs so damn much to get a degree nowadays anyway. If student loan debt tops $1.2 trillion, that seems to be the bigger issue. Otherwise you're just encouraging people to take on more student loan debt than they can manage because who cares, it'll just disappear anyway later if you can't afford it. SOUND FAMILIAR?
I don't feel sorry for people like the Corinthian 15, who went to "colleges" advertised during Maury Show commercial breaks, FFS. You enrolled in that bullshit school. You applied for the loans. You are responsible. I bought my car from a shady dealer and have awful payments but guess what, I read the contract and knew what my final payoff would be for an $18,000 car. No one put a gun to my head and said YOU BETTER BUY THIS CAR OR ELSE.
Are there predatory loan outfits out there? Sure. But -- forgive me for this crazy idea -- maybe we should understand what we sign before we sign it instead of needing the government to get us out of it later.