WRT student loans: I am not clear why the law cannot change to allow them to be discharged in bankruptcy like every other debt. It seems to me that would make things better for everyone. I do not thing people w/huge student loans would all just a. immediately declare bankruptcy, and b. get their debt forgiven.
Federal student loans can’t, absent unusual circumstances, drive anyone into bankruptcy. The government offers income contingent payment plans. You only have to pay if you make enough income. The same thing that happens in a restructuring bankruptcy, which most people have to use after bankruptcy reform, already happens with student loans automatically.
This is also why it is so nuts to suspend payments for three years “because Covid.” Anyone that suffered financially already had their loan payments adjusted down and if you didn’t suffer financially why can’t you pay your loans?
Making student loans bankruptable has less to do with protecting students and more to do with 1.) reigning in tuition costs and 2.) forcing lenders to consider risk.
The fact that an 18 year old can get any amount of money, no questions asked, means that institutions have all the incentive to charge whatever they want - their customers will pay almost any price.
There are no lenders. That’s been gone since the Obama administration. It’s almost entirely direct government loans now. If you want them to consider risk or limit the lending amount you need to change the law.
Biden’s forgiveness notably does not come with any such legal change that would plausibly make the problem better in the future. It’s purely a one time sop to constituents.
