The answer to this question is probably “Yes.” You should be able to discharge student loans in bankruptcy during most situations. However, under the current law you cannot discharge student loans in bankruptcy with almost no exceptions. Many strongly argue that the legislation which culminated in the complete banning of student loan bankruptcy in 2005 is immoral and biased. The legislation was clearly motivated by private business interests. It has created a “student loan debt crisis,” a new hot topic of interest and debate. Some say this “crisis” is next “melting point” our economy will face.
But, more importantly, what about the moral perspective? From a moral perspective, you SHOULD be able to discharge student loans in bankruptcy. But why?
Student loan lending is clearly oppressive and should be against public policy. The student loan industry has quickly transformed education into an “industry” as well. Higher education should never be allowed to grow into a profit-driven industry. Education should be affordable or free: it should always be about the students or society as a whole. Higher education in the past was promoted and controlled by churches, charities, and true non-for-profit organizations. Higher education should be a mainstay of freedom. Higher education should remain untainted by corporate greed and economic oppression.
Higher education has grown into a monster funded by never ending student loan funding. Astronomical building projects, sports programs, and other non-necessary ventures dominate the higher education world. This money-raking beast has replaced previous higher education system. The old system was focused on the students, the welfare of society, and higher ideals.
Students are charged astronomical rates to attend classes. These 18-19 year old students are told not to worry: just sign the loans documents. However, most of these students have never had a job or a loan in the past. The students have no concept of the oppressive debts they quickly assign to themselves so early in life.
What do the students get in return? Many times absolutely nothing. In fact, many places of “higher” education are so devoted to a profit model that they accept almost anyone with no regard to their drop-out rates. Other schools are slightly more dignified, but almost the entire system has been corrupted by this student loan legislation. A good part of these problems can be eliminated over time with a single law change: the full discharge of student loans in bankruptcy.
The Trojan Horse was simple: some people were filing bankruptcy to immorally discharge their student loans. However, these minor immoral occurrences were showcased intentionally to get law changes passed that were clearly against common sense public policy. Student loans became the norm: this far greater evil quickly seeped into our entire higher education system.
By intention, the real question at hand was improperly phrased: should the government allow and support a large student loan industry? By progressively disallowing the discharge of student loans in bankruptcy, two new industries for profit developed. The “big” education and the “big” student loan industries. Both of these industries are very bad for society. They should have never been allowed to develop. Education was once considered a “sacred” institution. Can such a claim of sacredness still apply after the changes “big” business has made?
The non-dischargeability of debts is oppressive in any case. Obviously, it is very oppressive for the government to support non-dischargeable loans for young students who have no proper financial understanding. When educational debts were forbidden for discharge, many undesirable, profit-driven aspects began to be woven into our higher education system.
Therefore, should student loan debts be discharged in most bankruptcy cases? The answer this question is probably “yes” for obvious societal reasons. Current legislation forbids student loan discharge. Hopefully, the future will see the need to change this law after the full effects of our altered education system become apparent.
PERSONAL NOTE: I write to support law change. Student loans should be discharged like any other form of debt. This is not due to personal reasons: I have no student loan debts. Instead, I have seen this immoral system and it’s result “up-close.” My experience as a Bankruptcy attorney and with higher education have clearly revealed all the abuses that are taking place under the current legal system.