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CFPB, Obama Administration urges Congress to allow students to wipe out private student loans in bankruptcy


Student loans were given out just like sub prime loans yet once obama doesn’t want to go after the bankers instead he wants the poor saps whose pensions funds, etc are invested in this garbage to pay for it. He would like the taxpayers to pick up the rest of it but he has opposition.

 

Private Student Loans Work Like Subprime Mortgages

 

CFPB, Obama Administration urges Congress to allow students to wipe out private student loans in bankruptcy

 

Obama Administration Backs Bankruptcy Option for Some Student Debt

snip

 

The Obama administration urged Congress to make it easier for people to discharge a portion of certain student debt by filing for bankruptcy protection.

The recommendation, in a report by the Education Department and the Consumer Financial Protection Bureau, wouldn’t affect the vast majority of student debt, which is issued by the federal government. It would apply only to the roughly $150 billion, or 15% of total outstanding student debt, issued by private lenders such as SLM Corp.’s Sallie Mae and Wells Fargo & Co.

Consumer bureau chief Richard Cordray said Congress should consider modifying a 2005 law that, except in rare circumstances, prohibits discharging private student loans through bankruptcy.

“It would be prudent to consider whether they wish to modify the code in light of the impact on young borrowers in challenging labor-market conditions,” Mr. Cordray said. He added that the law doesn’t appear to have met its objectives of bringing down borrowing costs and expanding access to private loans.

Expanding the concept to federal loans would be politically controversial given that it would likely result in taxpayer losses, and Republicans have expressed reservations.

 

– LMAOLORI

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