Our friends at www.zerohedge.com have another interesting article. There is a bill in Congress to allow college loan debt to be discharged in bankruptcy.
The far reaching future consequences if this bill passes would be that a large portion of the population that the government is relying on to stimulate the economy would suddenly have a bankruptcy on their credit report for the next 10 years. (Unlike many other negative credit experiences that drop off your credit report sooner, bankruptcy shows up for 10 years.
The new credit reporting guidelines beginning July of this year, where tax liens and civil judgments will be removed from credit reports, will increase the credit score of many by 20- 40 points. This will create even a larger gap in credit unworthiness for the college attendees to overcome.
What could possibly go wrong?
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)
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
With the Federal government guaranteeing most of the student loan debt, wouldn't option A be the same as option B?
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
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.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
If students are able to get rid of college debt via bankruptcy, the private college bubble bursts. I can't see the powers that be letting it happen.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit