Student Loan Debt Relief

Posted: July 27, 2012 in Philosophy

Okay, I think that student loans are not discharged in bankruptcy because the only collateral offered is future earnings.  There is no house, no boat or car that can be repossessed.  People offer themselves as collateral.   It is a bad deal, but the banks won’t let go if they think you will declare bankruptcy, discharge your debts and then get a good paying job.  I imagine they got fed up with a few students taking loans, declaring bankruptcy at age 30, and then making 6 figures a few years later.

Banks should work with local communities and get these lawyers and other graduates into the public service arena, where they can practice their craft, earn experience, and serve the community and resource-poor charitable nonprofit organizations locally.  The banks could get a write off some of which could be shared with the debtor.  The local advocacy groups could get legal and other professional level services.  The poor would get representation and better opportunity.  And the debt could be discharged on an hourly basis at a slightly discounted rate to what the person’s training would be earning otherwise.

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