Hi kids.  I am sure you have heard about the petition going around trying to drum up support for bankruptcy protection for student debtors.  But who does that help?  Is that really the answer?  I am going to put in my two cents before I leave it to the gang to discuss.

Essentially I don’t think it’s the answer.  Here’s why.  At the end of the day the man gets his money and lawyers ruin everything.   Here’s what I mean.  Collectors collect.  We as a group lost bankruptcy protection when newly minted lawyers declared bankruptcy, discharged their loans and then went on to lucrative careers with the inconvenience of paying a higher interest rate on credit cards and mortgages.  If bankruptcy protection returns, these people will game the system again and collectors will simply find some other way to get their money.  One way could be to astronomically increase interest rates on student loans.  Another way would be to demand parent cosigners for student loans (thereby eliminating bankruptcy as an option if you care about your family).  The point is, we’re not slick compared to the man.  The man will get his money.

Read on as I finish my thought and the gang ways in

But let’s take a look at bankruptcy law for a minute.  Would this help the AVERAGE student debtor?  I don’t think so.  If you are employed at all you probably possess too many assets to declare bankruptcy.  If you have substantial savings, own a house, have another source of income, own a business, etc bankruptcy probably isn’t an option for you.  Basically bankruptcy only helps folks like me who have been unemployed for a longtime and have moved back in with family.  If I could declare bankruptcy I would, take a DEEP breath, try and get a job, live at home for seven more years until my credit becomes respectable again, and maybe I could find and marry a shy second grade teacher, buy a little house and try and have a normal life starting at age 40.  Hey, it could happen.

However, putting my own personal self-interest aside, I still have to say that the President’s approach, capping maximum student loan payments at 10% of income for 20 years, 10 if you enter public service, is the best approach.  Now under that system I could stand to do worse, particularly if I found a job immediately after declaring bankruptcy, but the President’s approach would help ALL student debtors, even Mike Triforce who, though he’d hate to admit it, still pays more than 10% of his income each month to student loans, and wouldn’t be anywhere NEAR close to paying them off in twenty years paying his minimum payments.  Now let’s leave it to the gang.

This might sound like I am trying to have my cake and eat it too, but can’t we do both?  I too agree with the President’s plan but I feel that students who can show undue hardship deserve to have their loan discharged like any other.  I think we have to remember that being deeply in debt for an education that has proofed useless is VERY psychologically damaging.  We owe students their sanity and their dignity.

I’m against it.  Bankruptcy protection will cause students to borrow even more irresponsibly and reward failures who will have their debt load carried by the rest of us in the form of higher interest rates.  I am not completely sold on the President’s plan.  Ten percent for twenty years is still plenty of time for banks to sponge off people and it simultaneously sends the message to students that these loans aren’t for life.  What we NEED is to control the cost of education at every level and make laws against institutions, public and private, gouging people.

I personally don’t understand why there simply can’t be a law stating that you can’t declare bankruptcy to discharge student loans until five years after you graduate.  I think that closes the loophole on scummy lawyers who have ruined it for the rest of us.  Or heck, make a law that says law students/lawyers can’t declare bankruptcy period.

As someone on the borrowing instead of the paying side of this whole equation I am against this and anything else that might stop the flow of essentially free money into my pocket.  To me, bankruptcy isn’t some complicated legal thing, it’s a state of being.  If I don’t have the money, the bill ain’t getting paid.  I don’t mind changing my phone number, recycling debt notices and using my mother’s credit card.  Now don’t get me wrong, if someone gives me another free pass I will take it and save a few trees but hey at the end of the day I don’t want ANYTHING spooking these banks.

Declaring bankruptcy amounts to pissing in the cupped hands of a dehydrated man in the middle of the desert.  Student debtors need a well and a path out of the wilderness.  Otherwise you are simply arbitrarily changing the location of a generation’s worth of bare, bleached bones.