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Should it be easier to wipe out student debt in bankruptcy?




Federal Reserve Board Chairman Jerome Powell testifies during a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill in Washington, DC, March 1, 2018.
Federal Reserve Board Chairman Jerome Powell testifies during a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill in Washington, DC, March 1, 2018.
SAUL LOEB/AFP/Getty Images

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More than 40 million Americans hold nearly $1.4 trillion in outstanding student loans, according to MarketWatch.

Last Thursday, the new chairman of the Federal Reserve questioned why struggling borrowers can’t discharge their student loans in bankruptcy. In a response to a question about whether high levels of student debt create a drag on the economy, Jerome Powell told members of the Senate Banking Committee that policymakers should foster the idea that Americans can borrow to invest in themselves and expressed concern about the treatment of student loans in bankruptcy.

Student loan discharge, some argue, may encourage entrepreneurship and boost the economy. Others say a discharge would allow borrowers to abuse the loan system and incite colleges to raise tuition. If the court discharges student loans, lenders will be stuck with the bill.

Would making student loans easier to forgive via bankruptcy help or weaken the economy? Call us at 866-893-5722.

Guest:

Richard K. Vedder, an economist and distinguished professor of economics emeritus at Ohio University and senior fellow at The Independent Institute