Student debt is not dischargeable in bankruptcy. Other debt is. Frankly, it seems patently unfair to me that Donald Trump can declare bankruptcy four times, run a university into the ground while creating a $25 million liability, while students are stuck for life with debt they incurred when they weren’t even old enough to drink. But I suppose it’s easy to understand: students don’t have lobbyists.
We now have about $1.5 trillion of student debt and the outstanding balance is rising. As is the default rate. The debt is serving as a drag on the economy and will impact lives adversely for decades to come.
I was heartened today, however, to hear the new chairman of the Federal Reserve Bank address the issue. When asked why student debt isn’t dischargeable in bankruptcy, Mr. Powell said, “I’d be at a loss to explain why that should be the case.” Clearly, it’s an issue that deserves attention in Mr. Powell’s opinion.
Colleges and universities are particularly culpable. They benefit immensely from the current system. And they don’t bat an eyelash while students submerge themselves in oceans of debt. But others are to blame too, including politicians who make it easy for students to borrow more than is prudent, as well as parents and schools who have failed miserably in educating our kids about financial matters.
But we’re way beyond the point of ascribing blame. It’s time to address this problem.