Beware of student loan bankruptcy

"Fundamentally broken." This is how A. Wayne Johnson, the Trump administration official who resigned on October 24, described the student debt system he once ran. Johnson also called for the forgiveness of the student loans in a complete break with his former boss Betsey DeVos who ridiculed the Democrats' plans to do just that.

Johnson is right when he says that the student loans as we know them are punitive and unsustainable. And it's much deeper and more complex than even the $1.6 trillion in loans. Families who aspire to send their children to college start working to their unattainable promises, archaic ideas and tough demands very early in their lives together and expect the tension to last long after the children leave their homes.

I saw this clearly in conversations I had with parents and middle-class students for my book, "Debt": How Families Make College Work at Any Cost. Middle-class parents feel compelled to send their children to college, but the only way to give them that opportunity is to pay for it, and the price is high. This demand propels them into a bewildering maze of financial policies and programs run by the government, financial firms, and universities. The road is so convoluted that I felt it needed a new name: the "student finance complex."

The complex of student loans it attracts middle-class families first, by offering them the carrot of investment. The moment your child receives a Social Security number, the federal and state governments and financial companies unite to tell families to save in accounts known as 529 plans that they say will grow in mutual fund offerings. from the same companies.

The existence of these plans provides an early, hard lesson for the student financial complex: Responsible parents save for the cost of college; the act of trying is how they can show they are doing the right thing. It doesn't matter that no one can predict how much college will cost in eighteen years. Or that few are able to save money.

Read More: 3 Ways You Can Get Student Loan Debt Forgiven

According to a study by the Government Accountability Office, only a small fraction of US families – less than 5 percent – invest in 529 accounts. It should come as no surprise that those who do are far wealthier than most, nor that the other 95 percent end up feeling like they're failing.

Even those few middle-class families who make the effort and manage to save for college feel like they haven't done enough. This daunting feeling often comes at the next step in the student financial complex: filing the Free Application for Federal Student Aid. The FAFSA, as all families applying for student aid call it, is the gateway to financial support from the federal government, state governments, and schools.

Critically, the information families provide on the FAFSA generates the "expected family contribution," the amount the federal government says a family can pay for college and for student loans.