Following on "Larry Summers Says Student Loan Debt Relief Is Inflationary".
From Fortune, August 23:
Top economist Larry Summers recommends a way for Biden to forgive trillions in student debt—and it echoes what Sen. Elizabeth Warren says
A day after criticizing any effort by the Biden Administration to forgive student loan debt, former Treasury Secretary Larry Summers has offered an alternative.
“I think the best way to relieve student debt would be to allow it to be discharged in bankruptcy,” he wrote Tuesday on Twitter. “I’d support this reform.”
That means that people with student debt could discharge it by successfully filing for personal bankruptcy. Currently legal under chapters 7 and 13 of the U.S. Bankruptcy Code, insolvent individuals can restructure their debts, albeit at some personal cost, such as suffering a hit to their credit scores.
Summers added that bankruptcy “would also penalize other private creditors, unlike government debt relief that would in part subsidize them.”
President Joe Biden is expected to announce his student loan debt relief plan Wednesday that could forgive $10,000 of student debt per borrower for those who make less than $125,000 annually. Changes to enforcement of the Bankruptcy Code is unlikely to be included in the plan.
Summers, a former Treasury Secretary under Bill Clinton and a top economic advisor to Barack Obama, has been a vocal critic of the Biden Administration. Just yesterday, on Twitter, he warned that student debt relief could contribute to inflation.
Summers has no official role in the Biden Administration. But he is said to have helped save the president’s climate change and health agenda by swaying a key senator to support the Inflation Reduction Act.
Summers, now a Harvard University economics professor, isn’t the only person who’s advocated for student-loan cancellation through the bankruptcy process. There’s also his former Harvard colleague, Sen. Elizabeth Warren....
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