Anonymous
Anonymous asked in Politics & GovernmentPolitics · 9 years ago

Why cant you claim student loans in bankruptcy?

Maybe I'm ignorant to the bankruptcy policies, but something seems seriously wrong here when the federal government will spend billions of dollars bailing out major corporations that fail, but can't offer forgiveness for the millions of students that can't afford to pay back their student loans because they cant find a job. Can someone justify this for me ?

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  • Anonymous
    9 years ago
    Favorite Answer

    People need to learn that whenever they get the government to help out, they will eventually lose. At first the government puts in laws that appear to help. This is known as "the camel putting its nose in the tent". The helpful laws always eventually morph into oppressive laws. Today it is not uncommon for people to commit suicide to get out of student debt. Ron Paul wants to get rid of the Dept of Education so people do not get in this mess.

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  • 9 years ago

    The federal student loan program was designed to allow people to get loans for college who would otherwise never be able to borrow the needed amounts. The problem is that no lender in their right mind would make a loan of tens of thousand $'s to a person with no job, no credit rating and no assets. But.... these are the very people who need financing for college. The government backs the loans and protects the lenders who supply the cash. The price for getting such a loan is that you have to pay it back, no matter what. The government simply does not have enough money to forgive all the existing loans. If it did so the very first consequence would be to punish those who worked hard to pay their loans back and reward those who foolishly borrowed money they could never pay back.

    The real problem with student loans is that they were a government subsidy to higher education and like all subsidies inflated the cost. Without the student loan program, college tuition would probably be a fraction of what it is today. Another example of the government screwing things up by trying to regulate a free market.

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  • 9 years ago

    Because most student loans come from Government backed lenders (Fannie Mae, etc.), thus making the Government lose money on such loans if allowed in bankruptcy.

    How to solve the cost of higher education? Get rid of Government backed loans. Less people would be able to afford the high prices of college -> colleges need student's tuition ->colleges would lower student tuition in order to compete for students.

    And "bail out" for banks and companies is a misnomer. I do not believe that the government should be able to pick winners and losers (undermines the free market) however it wasn't a bail out. It was a loan, these banks and companies had to pay back the money they borrow, just like students need to pay back the money they borrowed.

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  • 9 years ago

    At least get the facts right Fannie Mae has nothing to do with student loans. Sally Mae does.

    2nd if you take out a loan you are responsible to pay it back.

    It goes back to my neighborhood days if you can't do the time don't do the crime.

    I would like to see a study of those loans in forfeiture how many were in liberal arts degree's, vs how many in technical degree's. Liberal arts degrees are pretty useless in our highly technological society those that pursue them and then could not find a job shouldn't be surprised.

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  • Anonymous
    9 years ago

    So you want them to not pay back the bank loans and for the banks to fail and have to get bailed out again?

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  • Romeo
    Lv 7
    9 years ago

    Because the government is above the law.

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  • John G
    Lv 5
    9 years ago

    The government owns you, nuff said.

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  • Anonymous
    9 years ago

    too many would claim it

    blame it on the universitys-staff is way overpaid

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  • 9 years ago

    It's the law

    Something Liberals don't respect

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  • Anonymous
    9 years ago

    Govt. Corruption.

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