Pro’s and Con’s of discharging student debt in bankruptcy

Throughout this presidential election cycle two presidential candidates have come out in strong support of free or at least partial government subsidization of college tuition. These two candidates are Hillary Clinton (Democrat) and Bernard (Bernie) Sanders (“Democratic” Socialist.) The argument of the Left is that people shouldn’t have to worry about paying for college so that they can transition into work life without worrying about repaying that debt. People on the Right disagree with this stance sighting the fact that a college education is a choice and it is not the role of government to subsidize a person’s decisions. As per any argument there are two sides, but more importantly there are the Pro’s and the Con’s. Each side represents some pro’s and some con’s. Allowing student debt to be discharged through bankruptcy would elicit the following pro’s. Former students would obviously not have to worry about repaying their tuition debt thus allowing them to focus on other parts of their financial responsibilities and in really beginning to live independently. People would be more free to begin to purchase other things, for example: cars and homes. This would also serve to generally improve the happiness of people who are indebted as a result of student loans. It offers a way out for people who are being strangled by student loans and are incapable of paying them back due to their economic situation.  There, however, is the other side of the spectrum which in includes the con’s of allowing bankruptcy to discharge student loans. Allowing people to discharge student loans through bankruptcy would essentially force the tax payers to foot the bill which is not only unfair but its an over reach of government. Allowing this would also send the message that “you don’t have to pay back your loans” essentially declaring it free money. This system is also unfair to those who repaid their loans in their entirety. It would raise the question in some people’s minds who seek to take advantage, “Why don’t I just declare bankruptcy and I can get rid of it without paying it off?” As absurd as that sound there is no doubt that people would try to take advantage of this system. I would also argue that since there is no perfect system there would be people who would successfully take advantage of it. As said by Winston Churchill “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” This quote is relevant to this topic because tax payers would be forced to foot the bill for these bankruptcy cases, which means taxes would, of course, go up. In a nation with 20 Trillion dollars in debt, and sluggish job growth (1% GDP) we can not afford to subsidize a person’s personal decision. Not only is it irresponsible as a nation its also grossly expensive. In conclusion I do not believe that we should allow the dismissal of student loans through bankruptcy. It will elicit less benefit than it is worth.

 

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