Bad Loan

Secretary of Education Arne Duncan is rightly touting some long-overdue coordination between government agencies to help people access student aid.  About a decade ago a Brookings – PPI working group I was involved in was looking at the impact of various federal student aid programs and the lack of data simply because agencies didn’t/wouldn’t talk to each other was astounding.

But, a new and important ProPublica report shows just how far the student aid bureaucracy still has to go.  The story focuses on loan forgiveness for people who become disabled.  To be fair, there is fraud so the agency cannot be cavalier  but the process can certainly work a lot better than it does today.

One Reply to “Bad Loan”

  1. There has also been a disparity between the potential bankruptcy discharge of student loan obligations and almost all other debt since October 1998. Unless someone in bankruptcy can demonstrate “undue hardship,” the student-loan debt remains after bankruptcy. Even after the 2005 changes in bankruptcy law, you can discharge significant amounts of debt that’s not covered by five-year repayment under Chapter 13. That’s with considerable pain, but it can be discharged, including stuff you and I might find incredibly risky. Take out loans to be the first family member to go to college? You’ve got that obligation for life.

    (Credit goes to USF undergraduate Kyle Castello for helping me understand how this operates and the way key student-loan actors donate money to members of Congress in key committees.)

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