Discharging Private Student Loans Is CounterproductiveJohn Hupalo is the founder and CEO of Invite Education, LLC.
These are daunting times for many recent college graduates who incurred record levels of federal and private student loan debt before facing a recession and the worst job markets since the Great Depression. They need help.
Some legislators believe meaningful assistance lies in amending the Bankruptcy Code to permit the discharge of private student loans in bankruptcy. It doesn't. Turning bankruptcy courts into turnstiles for the discharge of the least common form of student loan debt may temporarily assist some distressed borrowers, but the overwhelming majority will not be helped. Worse, the most vulnerable graduates could be exposed to ominous long-term consequences, impairing their future ability to borrow.
Link to US News article: http://www.usnews.com/opinion/articles/2012/12/26/discharging-private-student-loans-is-counterproductive
Commenter Ben Over pretty much sums up my thoughts, so I will just credit him:
Ben Over: ".....And to go on and say, "the most vulnerable graduates could be exposed to ominous long-term consequences, impairing their future ability to borrow." Are you kiddin me? Any reasonable person would take a ten year bankruptcy on their credit report anyday over being hounded for the rest of their life trying to pay back a mountain of student loan debt that can never be repaid! What's worse? A "stain on your credit report" OR having wages garnished for life, liens placed on all properties, and bank accounts wiped out month after month for the rest of one's life! It is painfuly obvious that this clown of a journalist who works for "Invite Education" hasn't got a clue about this ever worsening student loan crisis and is only making it worse!"
I would only ad that many people filing bankruptcy go on to be successful. Basically its a healthy act to realize when a loan puts the borrower hopelessly in debt, and the debtor says, "I cannot pay. Let me put this behind me and move on." Bankruptcy was necessary in their case so they could move on, build businesses, find better jobs, or buy their first house. Since banks are in business to loan money there is no reason to believe that students filing bankruptcy will forever have a stained record. Most would be able to make large loans within seven years undoubtedly. Bankruptcy is so common that banks will probably drop the no-loan period to five years. Hopefully, students will simply decide not to borrow for unimportant purchases. Maybe the next trend in hipness will be paying with cash and not being in debt at all.
As I laid out in "A New Plan Of Action" write the Attorney Generals of your respective states. Student's constitutional rights to equality via uniformity of bankruptcy laws has been illegally taken away by Congress. These bankruptcy provisions violate the Constitution, Article 1, section 8. Don't stop writing them until they take action to restore the Constitution.
When the Constitution is restored then inevitably the worst colleges will fail as they won't be able to eat at the feed trough. The herd of colleges needs a culling of the diploma-mills.