The student loan crisis that can’t be gotten rid of
You have probably mentally cataloged the student loan crisis alongside all the other looming trillion-dollar crises busy imperiling civilization but also enrich the already rich.
But it is different from those crises in a few significant ways, starting with the fact that the entire loan business is arguably unconstitutional. You don’t have to take it from me: A pre-eminent bankruptcy scholar made precisely this argument under oath before Congress. In December 1975, when Congress was debating the first law that made student loans non-dischargeable in bankruptcy, University of Connecticut law professor Philip Shuchman testified that students: “should not be singled out for special and discriminatory treatment. I have the further very literal feeling that this is almost a denial of their right to equal protection of the laws … Nor do I think has any evidence been presented that these people, these young people just beginning their years on the whole should be singled out for special and as I view it discriminatory treatment. I suggest to you that this may at least in spirit be a denial of their right to equal protection with the virtual pole star of our constitutional ambit.”
The thing is, though, discrimination was kind of the whole idea. Stagflation was sending an unprecedented number of Silent Majority members into bankruptcy, and the bank lobby was fighting back with a propaganda assault that scapegoated counterculture student delinquents who were allegedly taking loans with no goal of paying them. As Shuchman and others explained in hearings, only about 4 percent of people who filed for bankruptcy protection in 1975 had student loans on their balance sheets, and of those, fewer than one-fifth did not have substantial other debts motivating them to file. Read more