Student Loan Debt Skyrockets : Taxpayers to Pay The Bill

Did you ever wonder why Mr Obama took over the student loan business from the banks? Wonder no longer - what a great way to drive students into inescapable debt and thereby assuring millions of students that will have no choice but to vote for more democrat handouts in the form of student debt reforms.

The student loan debt now is more then $1.4 trillion and growing. Democrats have no problem with this. The more students become indebted, the better grip the progressives will have on them to do their bidding.

In the end the taxpayer will have to pay for the democrat votes which is a 'plan that comes together' for the progressive socialists. Actually it's a two for one situation, not only driving the taxpayer into heaver debt but also causing havoc in the domestic economy. A plank in the progressive democrat platform for "fundamental change".

Amass Student Debt and Dump it on Taxpayers?
Source: George Leef, "Actually, You Can Discharge Student Debts and the Feds Want to Make It Easier," John William Pope Center, September 30, 2015.

October 7, 2015

It is common knowledge that students who have amassed large college debt burdens cannot discharge those debts through bankruptcy. That "knowledge," however, is not really the case -- the laws are written to permit discharge of student loan debts in some cases. The federal government is pushing for broader interpretations of those laws, incentivizing students to amass debt and then dump it on taxpayers.

• Analysis of 35 adversary proceedings in 2012 where the debtor sought discharge of student loans, the debtor won full discharge in 47 percent and received some reduction or more favorably repayment terms in another 33 percent.
• Many of the successful debtors did not have legal counsel; they represented themselves.
• The Department of Education recently released a "guidance letter" pertaining to undue hardship discharge cases. The letter tilts the scales more in favor of students who are petitioning for bankruptcy discharge.

Pressure from the Department of Education to relax efforts at making student debtors pay their obligations is consistent with the general approach of the Obama administration. The president's program calculates payments based on earnings and forgives balances after 20 years -- 10 years for those who find jobs in "public service." Those policies will appeal to students, but they encourage them to keep amassing debts in pursuit of costly credentials.

Congress can and should clean up the mess by restoring the bankruptcy code to its pre-1977 terms, removing the distinction between kinds of debt. That would make private lenders far more circumspect about their education loans. Many students might be turned down, but for the good reason that their educational "investment" looks like a bad one.

Congress ought to change federal loan policy to require the schools that have received Title IV loan money bear some responsibility if the student defaults on the payments. Having "skin in the game" would compel universities to evaluate the risk of enrolling any student.