The Wall Street Journal posted an article online today entitled, “You Don’t Owe That.”
The article reports:
We’ll have to wait until Friday to see how slowly the U.S. economy expanded in the second quarter. But today Team Obama will tell Congress about its latest proposals to spread the wealth around—specifically from private lenders to the people who owe them money on student loans. The goal is to create new ways for borrowers to avoid repayment.
The government is focusing of ways to allow students to default on their loans. There are about $1 trillion in student loans outstanding; close to $900 billion are federal loans. About 90 percent of recent student loans are held by the government.
The article states:
The new report (by the Consumer Financial Protection Bureau) says that Congress should consider letting borrowers discharge their private student loans through bankruptcy. This would reverse a hard lesson learned during the 1970s. After a surge in former students declaring bankruptcy to avoid repaying their loans, Congress acted to protect lenders beginning in 1977. First it limited the ability of borrowers with government loans to use bankruptcy as a bailout ramp, and later the ban was applied to all student loans (with some exceptions for hardship cases).This reform also protected future borrowers.
Credit miraculously becomes more available when lenders believe they might be repaid.
You would think that the government might want to teach future leaders of American that when you sign a paper saying you will pay something back, you are supposed to mean it.