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Allowing student debt to be canceled during bankruptcy would be a good first step (possibly even better than canceling student debt across the board). To your

by cj 8mo ago

Allowing student debt to be canceled during bankruptcy would be a good first step (possibly even better than canceling student debt across the board). To your point, making it easy to cancel debt teaches borrowers that debt isn’t a serious thing. Requiring someone go through bankruptcy (and all of the associated negatives on your credit score, etc) seems like a good tradeoff. Allows you to get out from under the debt (the entire purpose of bankruptcy in the first place..) while not letting everyone pretend the debt never existed (need to live with the impact of bankruptcy on your ability to borrow in the future) I don’t know why we don’t hear more people lobbying for this. I guess it’s because the sound bite isn’t as sexy.

SpicyLemonZest 8mo ago
People who start lobbying for it quickly discover that 87% of people who petition for their student debt to be cancelled in bankruptcy get it (https://www.cnbc.com/2025/12/29/bankruptcy-student-loan-borrowers.html https://www.cnbc.com/2025/12/29/bankruptcy-student-loan-borr...). I support removing the special treatment entirely, but ultimately most student debt holders don’t go bankrupt.
- isleyaardvark 8mo ago
  > Still, few people pursue the option because of a “pervasive” myth that the loans can’t be included in the proceeding It also says nothing about whether the person actually goes bankrupt, just which debts are discharged, which is one of the key parts of the bankruptcy process. Certain debts are discharged because the person can’t pay them back, which is the point of going into bankruptcy court.
AnthonyMouse 8mo ago
Bankruptcy affects your credit score for 7-10 years. Someone who graduates from college in their early 20s with six figures in debt could file for bankruptcy immediately and have it be off their credit history by the time they've saved up a down payment and want to get a mortgage. There is also the obvious drawback that if more people can discharge the debt, the interest rate goes up, and then everyone else has to pay for the people who took out loans they didn't pay back.
- cj 8mo ago
  Imagine a world where lenders charged different interest rates depending on the risk profile of each school. Lower interest rates for schools where graduates repay their debt, higher interest for schools where many people default. Assuming it wouldn’t disproportionately affect disadvantaged populations, that could be an interesting way to incentivize schools to get their shit together and prepare students for starting their career
  - AnthonyMouse 8mo ago
    That effect would be drowned out by all the people defaulting en masse because getting out of a six figure unsecured debt is worth more than a temporary hit to your credit score.
    - cj 8mo ago
      If that’s true, why isn’t everyone already doing it? Especially if 87% of student loans are forgiven during bankruptcy - maybe people just aren’t aware it’s possible.
      - AnthonyMouse 8mo ago
        "Possible" and "easy" are two different things. 87% is of the people who applied for it, but they would be the ones most likely to have it granted because there is little reason to pay lawyers to file a form which is likely to be rejected. But the more you relax the requirements, the more people do it, which is of course the problem.
  - LorenPechtel 8mo ago
    I've suggested a very different approach: Don't have a dollar amount that you repay. Rather, your student loan payment is x% of (your income minus the average rate for those with a high school diploma) for y years. Forgiveness programs for certain fields go away--instead, the tab gets picked up perhaps with a multiplier. Disability, death? Irrelevant--a dead person generally makes nothing, the amount owed is $0. (Generally makes nothing because there can be ongoing income from something they produced. That would be subject to the loan repayment.)

by cj 8mo ago

SpicyLemonZest 8mo ago

People who start lobbying for it quickly discover that 87% of people who petition for their student debt to be cancelled in bankruptcy get it (https://www.cnbc.com/2025/12/29/bankruptcy-student-loan-borrowers.html https://www.cnbc.com/2025/12/29/bankruptcy-student-loan-borr...). I support removing the special treatment entirely, but ultimately most student debt holders don’t go bankrupt.

isleyaardvark 8mo ago
> Still, few people pursue the option because of a “pervasive” myth that the loans can’t be included in the proceeding It also says nothing about whether the person actually goes bankrupt, just which debts are discharged, which is one of the key parts of the bankruptcy process. Certain debts are discharged because the person can’t pay them back, which is the point of going into bankruptcy court.

AnthonyMouse 8mo ago

Bankruptcy affects your credit score for 7-10 years. Someone who graduates from college in their early 20s with six figures in debt could file for bankruptcy immediately and have it be off their credit history by the time they've saved up a down payment and want to get a mortgage. There is also the obvious drawback that if more people can discharge the debt, the interest rate goes up, and then everyone else has to pay for the people who took out loans they didn't pay back.

cj 8mo ago
Imagine a world where lenders charged different interest rates depending on the risk profile of each school. Lower interest rates for schools where graduates repay their debt, higher interest for schools where many people default. Assuming it wouldn’t disproportionately affect disadvantaged populations, that could be an interesting way to incentivize schools to get their shit together and prepare students for starting their career
- AnthonyMouse 8mo ago
  That effect would be drowned out by all the people defaulting en masse because getting out of a six figure unsecured debt is worth more than a temporary hit to your credit score.
  - cj 8mo ago
    If that’s true, why isn’t everyone already doing it? Especially if 87% of student loans are forgiven during bankruptcy - maybe people just aren’t aware it’s possible.
    - AnthonyMouse 8mo ago
      "Possible" and "easy" are two different things. 87% is of the people who applied for it, but they would be the ones most likely to have it granted because there is little reason to pay lawyers to file a form which is likely to be rejected. But the more you relax the requirements, the more people do it, which is of course the problem.
- LorenPechtel 8mo ago
  I've suggested a very different approach: Don't have a dollar amount that you repay. Rather, your student loan payment is x% of (your income minus the average rate for those with a high school diploma) for y years. Forgiveness programs for certain fields go away--instead, the tab gets picked up perhaps with a multiplier. Disability, death? Irrelevant--a dead person generally makes nothing, the amount owed is $0. (Generally makes nothing because there can be ongoing income from something they produced. That would be subject to the loan repayment.)