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Thanks for the correction. Is there not some kind of government guarantee underlying the massive student loans the press runs stories about? I thought that stud

Thanks for the correction. Is there not some kind of government guarantee underlying the massive student loans the press runs stories about? I thought that student debt was in a special class, where it could not be easily discharged (and was backed by government guarantees).

dragonwriter 8y ago
> Is there not some kind of government guarantee underlying the massive student loans the press runs stories about? Yes, the vast majority of that is federal debt or federally-guaranteed debt originating before the issuance of federally-guaranteed debt was restricted tomthe federal government, but the $15k annual limit proposed is above the limit for such debt. > I thought that student debt was in a special class, where it could not be easily discharged There is a higher bar for discharging student debt than other unsecured debt in bankruptcy, yes. But debt subject to that but not subject to the limit on federally guaranteed loans isn't a big share of the problem (nonfederal private student loan debt is less than 5% of outstanding student debt—$64 billion compared to $1.5 trillion in federal/federally-guaranteed student loan debt [0]), so there's not a lot of reason to believe a policy change that would limit the applicability of the restriction against discharge to a level higher than the limit on federally guaranteed loans would have a noticeable effect on the overall problem. It would further push private lenders out of the student loan market, but they aren't a big factor anyway. > (and was backed by government guarantees). Yes, most student debt is backed by government guarantees, but isn't in excess of $15k/student-year for undergraduate education. [0] https://www.nerdwallet.com/blog/loans/student-loans/student-loan-debt/ https://www.nerdwallet.com/blog/loans/student-loans/student-...

dragonwriter 8y ago

> Is there not some kind of government guarantee underlying the massive student loans the press runs stories about? Yes, the vast majority of that is federal debt or federally-guaranteed debt originating before the issuance of federally-guaranteed debt was restricted tomthe federal government, but the $15k annual limit proposed is above the limit for such debt. > I thought that student debt was in a special class, where it could not be easily discharged There is a higher bar for discharging student debt than other unsecured debt in bankruptcy, yes. But debt subject to that but not subject to the limit on federally guaranteed loans isn't a big share of the problem (nonfederal private student loan debt is less than 5% of outstanding student debt—$64 billion compared to $1.5 trillion in federal/federally-guaranteed student loan debt [0]), so there's not a lot of reason to believe a policy change that would limit the applicability of the restriction against discharge to a level higher than the limit on federally guaranteed loans would have a noticeable effect on the overall problem. It would further push private lenders out of the student loan market, but they aren't a big factor anyway. > (and was backed by government guarantees). Yes, most student debt is backed by government guarantees, but isn't in excess of $15k/student-year for undergraduate education. [0] https://www.nerdwallet.com/blog/loans/student-loans/student-loan-debt/ https://www.nerdwallet.com/blog/loans/student-loans/student-...