I’m really not trying to start a debate, I just want to understand why there is a dilemma, and how exactly it would work if passed.
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there is one quirk that exists specifically for student debt in the US that doesnt exist for other kinds of debt: it cannot be discharged by bankruptcy procedures.
allowing this debt to be eliminated would start with removing this restriction to allow the debtors to restructure it in a more manageable form/liquidate it. As these loans are also governement backed the creditor that would lose money would primarly be the state.
there is resistence for this because, doing it this way means future student loans have to be much more discrminatory as to who actually needs them(which in turn placespressure on colleges as a whole ot lower tuition rate…this would be a good thing, if college wasnt such a massive business certain groups want ot protect)
Student loans are almost always backed a government bank (or a government + public bank) like Fannie Mae or Freddie Mac. The government can set some rules to have loans forgiven (or partially forgiven), such as an amount that has already been repaid (many student loans have paid in more than their principal but the fees and interest extend the loans).
The “dilemma” is that many politicians would rather spend money elsewhere than on helping students. Frequently they prefer to spend money by cutting taxes on certain people and businesses.
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