This week in the War on Workers: So that's why student loans stick with you through bankruptcy

It's a weird one, right? Why does student loan debt stick with you no matter what, while all sorts of other loans are dischargeable through bankruptcy? It turns out that there's a solid historical reason for this: This was first put into law in the 1970s, and, Moe Tkacik explains, there was a campaign against dirty, drugged-out, hippie students who saw student loans as free money. (So when I say it's a "solid" reason I mean that in the sense of "discernible and demonstrated by evidence," not in the sense of "good.")

A typical syndicated dispatch on the surge in student deadbeats was the August 27, 1972 exposé by Los Angeles Times reporter Linda Mathews, which began with the personal anecdote of an anonymous "Washington banker" who purported to have once "handed a $1,500 check" for the year's tuition to a nameless "18-year-old college freshman" only to be insouciantly told, "Oh, I never intend to repay this loan." The anonymous banker -who had since joined "the staff of the American Banking sic Association" - helpfully explained to Mathews that the kid was, "acting on advice in underground newspapers urging students to use bankruptcy to avoid paying loans."

In fact, just four percent of people filing for bankruptcy had any student loans at all. But despite tons of evidence that this was all made up, a law was passed making student loans impossible to get rid of. And that's when they became really big business:

And as the loans became more steadily impervious to the usual laws of credit and debt, they became bigger and more profitable. In the years since the Bankruptcy Reform Act passed in 1978, the nominal price of college tuition has risen more than 900 percent. Over the same period the median male income - again, nominally - has risen 165 percent. And since the percentage of the workforce boasting a bachelor's degree has expanded from less than 20 percent to nearly a third, I don't have to convince you that the median de facto return on investment on those diplomas has diminished greatly over the same years. Which brings us to the second way in which the student debt bubble differs from all the others you've seen: It is legally impossible to pop. By law it can only grow very fast.

Read the whole piece. It's astonishing what an abusive scam the whole student loan business is.

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