Editorials & Other Articles
In reply to the discussion: Should Student Loans be Dischargeable in Bankruptcy ? [View all]handmade34
(22,756 posts)"...Legislative History of Student Loans in Bankruptcy. Prior to 1976, educational debt was dischargeable in bankruptcy.14 In 1970, Congress established the Commission on the Bankruptcy Laws of the United States (Commission) to analyze the bankruptcysystemandtomakerecommendationsforreform.15 In1973,theCommission issued its report and recommended prohibiting student loan discharge of governmental loans until five years had passed after the beginning of the repayment period, except in cases in which it would cause undue hardship16 for the debtors or their dependents.17 In 1976, Congress adopted these recommendations when it amended the Higher Education Act of 1965 by adding Section 439A, which included an amendment to the bankruptcy laws with governmental student loans being nondischargeable.18..."
http://www.policyarchive.org/handle/10207/bitstreams/19283.pdf
"...Rationales for Making Student Loans Nondischargeable. The reason most often cited for making student loans nondischargeable is to prevent fraud. The legislative history of the 1978 Bankruptcy Reform Act contains warnings that making student loans dischargeable would be almost specifically designed to encourage fraud.32 There was the fear that students would discharge their debt and then be able to spend their earnings on other items instead of paying off what they owed.33
Another argument is that student loans are different from other loans, and as such, should be treated differently.34 Under this view, a college degree is an asset which should bar debtors from discharging loans that were used to procure it.35 Also under this view, student loan recipients are generally younger and will have more working years to repay their debts.36..."
I don't believe there were substantial abuses of the bankruptcy laws but just enough and enough fear on the parts of lending institutions and Congress...
The problem we have in not the bankruptcy laws per se but the entire corrupt and unreasonable way we educate and then pay for that education (as a society)...