From the man who brought you the Durbin amendment:
A top Senate Democrat took aim at the private student-loan industry Tuesday, calling for new rules that would allow educational debts to be wiped away during bankruptcy.
Majority Whip Richard J. Durbin (D-Ill.) convened a Senate judiciary subcommittee hearing Tuesday to address what one consumer group has called the nation’s next potential “debt bomb.” Research by the Federal Reserve Bank of New York found that Americans owe about $870 billion in student loans -surpassing the amount of outstanding credit-card debt or auto loans. More than a quarter of borrowers had past-due balances, a figure higher than previously reported, the study found.
I don’t think I’m going out on a limb if I make the observation that Dick Durbin is no friend of the banking industry. (Remember when he recommended that Bank of America’s customers stage a run?) Now he has a new bill that would allow private student loans to be discharged n bankruptcy–but not (of course!) federal student loans. I’ve got a better idea: put colleges on the hook for their students’ unpaid loan balances. That should do wonders for tightening up admission standards and eliminating frivolous majors. . . .