A Plan of Reform for the Student Loan Mess

Student-loan borrowers protest for debt forgiveness near the White House, May 12.


Paul Morigi/Getty Images

Regarding Richard Shinder’s op-ed “Student Loan Relief Should Come in Bankruptcy Court” (May 11): I propose the following adjustments: The federal government stops making student loans. Congress amends the bankruptcy laws to allow the discharge of student loans. Thereafter, each college will finance all student loans out of its endowment.

This will serve at least two purposes. First, colleges will no longer be able to raise tuition by the amount of the government subsidy with impunity. Second, the ability of a student to discharge a loan should increase the due diligence on the part of a college when determining how much and at what rate to lend to a prospective student. Only when colleges suffer the consequences of their indiscriminate spending, and face the possibility of student default, will some sense of sanity return to the college cost structure.

Michael W. Keable

Harrisville, R.I.

The presumption of nondischargeability of student loans in bankruptcy dates to the 1976 amendments to the Higher Education Act, which first established the requirement in some cases that the borrower show “undue hardship” before being permitted to discharge the debts. The enactment of the 1978 bankruptcy code, which dramatically eased the requirements for filing bankruptcy, led to a wave of bankruptcy filings (especially by those with graduate degrees) and subsequent stiffening of the undue-hardship requirement to make it more difficult.

Mr. Shinder writes that amendments to the bankruptcy code in 2005 “materially increased the difficulty of discharging student loans in bankruptcy.” Not so. The primary effect of the 2005 amendments was to extend to private student-loan lenders the same protection against bankruptcy discharge as government guaranteed student loans. According to a 2021 report by MeasureOne consulting, private student loans constitute less than 10% of outstanding U.S. student-loan debt, a figure that has actually declined over time, hardly the explanation for Mr. Shinder’s concerns.


Todd J. Zywicki

George Mason Scalia Law School


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Appeared in the May 20, 2022, print edition.

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