The Examiners on Student Loan Debt: What Our Readers Thought

Last week, our Examiners took on the controversial issue of student loan debt and bankruptcy. And the group came down on both sides as to whether student loan debt should be dischargeable in bankruptcy, with arguments for a change to the bankruptcy code, for preserving the status quo and for a more nuanced approach.

It should be no surprise that the commentary spurred equally thoughtful and passionate responses from readers on Twitter and in the comments section.

Some of those Twitter responses advocated strongly and simply for a change in the bankruptcy code.

@WSJBankruptcy #studentloans = trap in which too many are caught. ALL private loans shld b dischargeable. Govt loans after reasonable time.

— Lee J. Davis (@Shokupanmanbo) May 7, 2015

Lenders v. students. Ask yourself: Who needs protection? Lenders who are prepared to pay enormous fines for… http://t.co/WpXBcI1wp6

— Markus Jander (@MarkusJander) May 12, 2015

Although many readers seemed to agree that bankruptcy reform was needed in the area of student loan debt, some offered other solutions or echoed the arguments of some alternative approaches advocated by Examiners. To address the issue that students can borrow great amounts of money, some argued for a reasonable cap on the loans.

Commenter Ben R, who said he is a university employee, wrote that the limits on student loans for graduate school “are non-existent.”  He advocated for lower borrowing limits, saying,

“I am a financial aid advisor and have seen students amass over $600,000 in loans by doing back to back or even concurrent Master’s degrees due to this lack of oversight.”

Ben R also likened the government’s Income Based Repayment to chapter 13 bankruptcy, a branch of the law that allows borrowers to set up a payment plan to repay their debts.

“This restructuring is virtually the same thing as a chapter 13 case and while great for the student and the school, encourages abuse and is not great for the taxpayer.”

Another commenter in favor of lower borrowing limits, called Reform Federal Student Loans, said,

“Law schools in particular are against the ropes due to sky-high faculty salaries and administrative bloat in a time of dramatically decreasing enrollment. Don’t prop them up; let low performing schools die a natural death.”

Dan Joyner, a professor at University of Alabama, agreed with Adam Levitin’s approach on allowing only private student loans to be discharged.

I have long thought this: “Discharge Private Student Loans, But Federal Loans Have Safety Net” http://t.co/lwgqOA8oPQ

— Dan Joyner (@DanJoyner1) May 15, 2015

Finally, readers with personal stories shared their experiences in the comments section.

Commenter Mike DiGiacomo shared his experiences at two for-profit colleges and asked,

“If someone can get a loan in Vegas and declare bankruptcy after blowing it, why can’t a student who made a smart gamble on their future and lost? Why can someone buy a house that is too expensive for them and be able to walk away from it if it doesn’t work out? Why can’t the same courteously be shown to students?”

Loui Ville argued for a second chance for students that might have made poor borrowing decisions at young ages. Already having paid $50,000 in interest on the debt and with another 20 years of payments ahead, the commenter said that no 19-year-old student should be allowed to incur such debt.

“I used 90% on anything other than school. Vacations, toys, cars. A HUGE mistake that has changed my life since. People grow, people learn, I have lived buried in this long enough. Shouldn’t people be given a second chance?”

We are glad the Examiners’ commentary spurred such strong but thoughtful debate. The Examiners will be off in June but will return with a new topic in July.  Until then, is there a topic you think they should tackle? Tweet it to us @WSJBankruptcy