Letters to the Editor

No, bankruptcy shouldn't relieve student debt

As a retired credit executive in banking and industry, two ideas in the same sentence make me cringe: student debt and bankruptcy.

In response to Alan Collinge's "A right to debt relief for American students" (March 20), the idea that a student loan could be discharged in a bankruptcy proceeding is wholly without merit and completely irresponsible financial management.

Bankruptcy is the occasional end result of an otherwise responsible and structured lending process. If the loan applicant is found to be credit worthy and/or the loan is secured by third parties -- who have also been properly vetted -- then the loan is granted and documented accordingly. Later, if the wheels fall off, bankruptcy is often a legitimate and acceptable basis for rehabilitation.

By contrast, the student lending process is more of a veiled entitlement involving superficial vetting and guarantor creditworthy standards. After all, we are talking about a "student" without any credit or work history at all! The best that could be said about this type of "loan" is that it involved a procedure but not a structurally responsible lending process. Adding the option of bankruptcy to such a procedure is farcical!

Education is a prize won through hard, dedicated and sustained work. Those who want to continue their education but do not have the financial resources to pay must persevere as necessary by working their way through school, living with no frills, etc.

Once completed, this group is truly said to be people of character who understand the virtues of "tough love." Moreover, the entire financial system is spared the burden of billions in defaulted student debt, which is ordinarily paid by American taxpayers.