Bill Introduced Allowing Cancellation of Over $1 Trillion in Student Debt Through Bankruptcy

A Convenient Way to Cancel a Trillion Dollars of Debt

What happened:

Bankruptcy is like the ultimate get out of jail free card. You just get to wipe the slate clean, and even though your credit score and ability to borrow might suffer, you are free from all your previous obligations. But student loans have long been exempted from being erased by bankruptcy.

If this bill passes Congress however, hundreds of billions of currently delinquent student loans, potentially as much as $1.4 trillion worth of student loan debt…

…. would be eligible to be wiped out by declaring bankruptcy.

As the number of those defaulting on their student loans grows, this provision could be widely used by those seeking to escape their college debt.

What this means:

The government has helped raise the costs of college and basically scam people into accepting their loans, so it is easy to be sympathetic towards those with student loans. But still, it is messed up to allow people to discharge debts they agreed to pay.

There might be a little piece in most of us that doesn’t mind seeing what we consider a predatory lender get screwed and be left with the bill.

But apart from the overall immorality of failing to pay your debts, since the government owns most of the student loans, it would basically be the taxpayers getting screwed over once again. What a surprise.

Basically if massive amounts of debt were erased, it would be another bubble bursting, which would send the U.S. into a fresh round of economic instability.

The economy would spiral downward in relation to how many people took advantage of their get out of jail free card.

Read More Stories More…