If nothing else, this seems like an argument for permitting the recipient of this particular kind of windfall to break it up across a few years, possibly retroactively.
Further, I’d argue that the borrower isn’t the main beneficiary of these student loan programs. Rather they are intended to, and do, enable monstrous cost growth in private de facto for-profit universities.
Don't let history repeat itself
You can make loans dischargeable, but doing so will drastically change who loans are made available to in the first place.
If you suddenly made that allowed again there's be a bunch of initial bankruptcies because of pent up demand and the market racing toward equilibrium but it would almost certainly revert to somewhere near the level it was originally.
1. Tuitions were much lower when loans first started to be non-dischargeable.
2. The provision to exempt them from bankruptcy was based on concerns that people were already ruthlessly defaulting on them.
As this article notes: the current disposition of college financing is part of a package of policy changes geared at drastically expanding access to college, and that package is generally viewed as being successful on its own terms.
Not allowing defaulting on student loans was a huge driver in why tuitions are so high without any added value from the universities.
I suspect that leads to outcomes that are uncomfortable for universities though.
BK's on your undergrad also would make it harder to take out loans for post graduate courses.
This is in line with the “total and permanent disability” escape method which has minimal impact on the larger student loan market. https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancell...
https://studentaid.ed.gov/sa/repay-loans/understand/servicer...
> In some cases, ED needs to transfer loans from one servicer to another servicer on the federal loan servicer team. ED transfers loans as part of its efforts to ensure that all borrowers are provided with customer service and repayment support. If ED needs to transfer your federal student loans from your assigned servicer to another servicer, your loans will still be owned by ED. The “transfer” to another servicer on ED’s federal loan servicer team simply means that a new servicer will provide the support you need to fully repay your loans.
There was a change as a rider to the 2010 affordable care act. But, older federally backed student loans are sold and resold.
Either way loans go back 4+ years before graduation and people take 15+ years to pay them back. So I assume quite a few of these loans are out there even if the remaining balance is not that huge.
In 2010 the policy changed, however plenty of older federally backed student loans are still being sold and resold. https://www.investopedia.com/articles/personal-finance/08121...
Roughly 1/3 of all borrowers drop out, implying (I think?) that the majority of debt is held by people who complete degrees, a substantial minority of whom obtain graduate degrees.
If the student debt crisis is about rescuing people for whom college was of no benefit (for instance, because they attended a for-profit school and didn't obtain a bachelor's degree --- the overwhelming majority of low and middle SES quartile students at for-profit colleges do not), the intervention needed to solve that problem is radically different and less expensive than "forgiving all student debt".