THE WEEK: Why students should be able to kill their college debt

Career College Central Summary:

  • This week, the Obama administration made a bold move in the ongoing saga over the country's $1.2 trillion student debt crisis.
  • Back in April, Corinthian Colleges Inc., one of the biggest names in the for-profit college industry, collapsed after a long investigation into bogus advertising of job prospects and illegal debt-collection tactics. That left a few thousands students in the lurch, and thus eligible to have their debt forgiven. But this week's announcement expanded the offering to 350,000 former Corinthian students, if they can prove malfeasance on the part of the college when it recruited them. That could dispose of as much as $3.5 billion in student debt — the biggest such forgiveness in U.S. history.
  • And the specific mechanics of the plan go even further, offering debt forgiveness to any student from any for-profit and nonprofit institution who can demonstrate harm.
  • Unfortunately, we need to go further still. For one thing, the plan's details are pretty labyrinthine. But the deeper problem is this: It's basically impossible to get rid of student debt by filing for bankruptcy.
  • Technically, you can do it. But the federal government has introduced so many hurdles and hoops and delays that student debt is effectively un-killable. If the activists looking to do something about student debt want a big fish to fry, rewriting the bankruptcy code so it treats that debt like all other debt is as worthwhile a goal as any.
  • There's a buried assumption in the White House's plan that the debt that deserves forgiveness is the debt that was incurred thanks to criminal deceit. The unspoken corollary of that, of course, is that debt that's legally above-board should always be paid off.

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THE WEEK

 

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