RE: Bill in Congress to allow discharge of college loan in bankruptcy

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Bill in Congress to allow discharge of college loan in bankruptcy

in finance •  8 years ago 

Well, the obvious next step would be to revise the credit score guidelines to lower the penalty for a student loan-related bankruptcy, right?

I don't see those individuals having any easier time getting credit with a massive, unpaid student loan on their credit profile.

At the end of the day, someone has to foot the bill for excessive student lending for college. Clearly, the lendees don't have the money to pay them back, so your choices are:

A) Lenders (via default or forgiveness)
B) Taxpayers (via a massive bailout)

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With the Federal government guaranteeing most of the student loan debt, wouldn't option A be the same as option B?

Probably, but when you make the rules you can also rewrite the rules.

The dollar amount is large enough, that I would think the risk would be spread out amongst multiple parties in attempt to avoid collapse in either the government or the financial sector.