[schimmy_changa]

I'm guessing that possibility kept a lid on predatory lending, especially by for-profit colleges. For instance, if you know that your students have an option to discharge, then you'll make sure not to charge them enough that they see that discharge and stain of bankruptcy as better than just paying off the loan. It was a (dramatic, drastic, and undesired) weapon that consumers had in their back pocket.

Get rid of the safety valve, and then see what happens as the colleges realize there's no balance of power... you get the current situation.

[thathndude]

This is also a salient point. When these lenders know that they can lend out money, it will be back completely by the federal government, and it can’t be discharged in bankruptcy, they have very little incentive not to lend. That completely destroys the standard economics and considerations behind any type of credit

[dragonwriter]

> When these lenders know that they can lend out money, it will be back completely by the federal government,

Even with nondischargeability for student loans in general, only loans participating in specific federal programs (which have limits, both as to institutions and amounts) were eligible for federal guarantees, and the part of those programs that lenders other than the federal government itself participated in was ended in 2010.

[datavirtue]

You can't just file for bankruptcy if you are making money. I guess the mass numbers of people filing where not making any money. That is the real issue. Why weren't they making enough to at least get forced into a repayment plan?