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My idea for discharging student debt

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    My idea for discharging student debt

    With Elizabeth Warren coming out with her "student debt jubilee", I thought I'd come up with a way to do this that still makes the process onerous enough so as to avoid the obvious problem of "moral hazard".

    The main idea is to create a new chapter that is akin to Chapter 13 (call it Chapter 13-A) that is more or less run like the current Chapter 13 - i.e., where a trustee will determine after thoroughly digging into the filer's finances - but for a longer period of time, such as 20 years, and such that at the end, the student debt is discharged. Of course, a regular Chapter 13, or even the quicker Chapter 7, would be done concurrently so that after the end of the standard bankruptcy, there would be nothing left but secured & student debt. The folks that are angry at Warren's jubilee plan would not be so as much, as folks would only get discharged after a very long process, with no assets.

    #2
    The solution is to make student loans bankruptable like other debts.

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      #3
      While I think it should be easier to put student loans in Ch13/7, the issue is the loans are relatively easy to get and they’re not fully understood by the people taking them out. To truly solve the Student Loan crisis, much more needs to happen, besides making them easier to forgive. Below would be my solution.

      The amount borrowed should only be for the school’s tuition and the cost of books. Students should be given a credit card type card and only transactions involving tuition costs and book costs only at the same university’s bookstore. Laptops, snacks, etc could not be purchased.

      Only schools with “reasonable” tuition would be eligible for student loans. If your family doesn’t have the means to send someone to the private school they want to go to, too bad. If private schools wants to be in the student loan game, they can lower their tuition costs.

      Loans have a 1.5% interest rate that only starts accumulating after graduation/withdrawal.

      Students must take a student loan responsibility course before taking out the student loan(s). This would include costs, possible scenarios, etc

      Only doing something similar to this, will help out the future generations. For those that already took out, well who knows.

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