Is it For Real? Bill Introduced Allowing Cancellation Of Over $1 Trillion In Student Debt Through Bankruptcy

Since the financial collapse of nearly a decade ago, two new bubbles were aggressively inflated by the Federal Reserve and Federal Government. Looking at the chart below, mission accomplished.

With student loans eclipsing $1.4 trillion and delinquencies skyrocketing, Bloomberg reports, “the possibility that the federal government eventually will forgive a large chunk of student debt is worrying a lot of people on Wall Street and in Washington. The Trump administration is so concerned about the fiscal threat loan forgiveness programs pose to the U.S. budget that it wants to slash them and make them less generous “to help put the nation on a more sustainable fiscal path,” budget documents show. But the latest projections from the Education Department suggest that the government’s loan forgiveness programs aren’t really meant to forgive debt; rather, they’re meant to help borrowers weather tough times by simply extending the amount of time they have to pay off what they owe.”

Despite the push of the Trump Administration, a new bill has just been introduced into Congress.

Congressman John K. Delaney (MD-6) has filed legislation to help address Americans struggling with student loan debt. The Discharge Student Loans in Bankruptcy Act (H.R. 449) would make student loans dischargeable under bankruptcy. Under current law, student loan debt is treated differently than other forms of debt and cannot be discharged.

As Zerohedge reports, “Bankruptcy is like the ultimate get out of jail free card. You just get to wipe the slate clean, and even though your credit score and ability to borrow might suffer, you are free from all your previous obligations. But student loans have long been exempted from being erased by bankruptcy.”

“If this bill passes Congress however, hundreds of billions of currently delinquent student loans, potentially as much as $1.4 trillion worth of student loan debt will be extinguished.”

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