As university tuition has skyrocketed and bond-holders have become more and more reliant on student loan payments for a source of reliable passive income, successive US presidential administrations have taken it upon themselves to shore up those bonds by making it nearly impossible to escape from crushing student debt.
Student loans are the only debts that can be taken out of Social Security checks, and bankruptcy courts almost never allow people to discharge their student loans in bankruptcy.
Most recently, attorneys for the Department of Education intervened in the bankruptcy of 65 year old Robert Murphy of Massachusetts, saying that his situation didn't rise to the "certainty of hopelessness" standard for student loan bankruptcies. The lawyers said that the broke, retirement aged man whose house had just been foreclosed upon might somehow find himself wealthy in the future and in a position to pay back the student loans he took out for his children.
Murphy lost his $165,000-a-year job as president of a manufacturing company in 2002. While looking for work in the past 13 years, he's dried up his retirement savings and his home was recently foreclosed. Murphy estimates if he were to find a $50,000-a-year job now and pay until he turns 77, the balance of his loans would still grow to $500,000 with interest.
Court records show Murphy took out twelve loans between 2001 and 2007, totaling $220,765.
The Department of Education's filing stands in sharp contrast to the Obama administration's previous support for bankruptcy protection for those with private student loans, in direct opposition to part of a 2005 law championed by Vice President Joe Biden.
Obama Administration Urges No Bankruptcy Relief for Student Debt
[By Amy R. Connolly/UPI]
(via Naked Capitalism)
