Remember that student debt is not forgiven in personal bankruptcy, whether you have a government or private loan. When Congress enabled student loans, they put in the provision that they would not be discharged in bankruptcy, and bank lobbyists got them to add private loans to this exception. A 2018 Philadelphia Inquirer article notes that some students can leave school burdened by “crushing debt.” Since this debt is considered when applying for other loans, outstanding student loans have substantially depressed homeownership and new business formation according to the Inquirer. Most experts blame the skyrocketing cost of college education for this explosion of student debt. College education costs have increased 400% over the last 30 years. In addition, public universities have seen their state support decline by double digits.
Figure 8.4. Biden Tuition-Free College Plan by Georgetown University Center on Education and the Workforce is used under a CC BY-NC 4.0 License.