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You can't discharge a student loan in bankruptcy. This makes sense. If you borrow money to purchase a car or a home the lender always has the option of reposs
by Happydayz 11y ago
You can't discharge a student loan in bankruptcy. This makes sense. If you borrow money to purchase a car or a home the lender always has the option of repossessing the goods as a last resort.
You cannot legally repossess someone's human capital. So the current law is set to avoid the moral hazard of someone borrowing $100k in student loans and then declaring bankruptcy right after graduation.
- analog31 11y agoBut it promotes the moral hazard of the bank offering you a loan when they know that the human capital is likely to be worthless.
- dragonwriter 11y ago> You can't discharge a student loan in bankruptcy. This makes sense. If you borrow money to purchase a car or a home the lender always has the option of repossessing the goods as a last resort. Non-secured debt of other kinds are generally dischargeable in bankruptcy, so that principal isn't generally applied outside of student loans.