That said, I don’t think it will lead to bailout. Debt forgiveness is a rare but standard practice in trying to rebuild credit scores, is my understanding, and a way of getting some return rather than the zilch you’d get from a personal bankruptcy. It’s just that bankruptcy doesn’t affect student loans in the US, so folks are absolutely stuck there...
I mean, in theory (wink), you could always pay off your student loan debt using other forms of debt, and then go bankrupt.
If this is constituted as a preferential payment, the clawback period is 90 days, if it's considered fraud, it would be longer. However, if someone lets you borrow money unsecured and you use it to pay a non-dischargeable debt, and you can't make the payments on the new debt, that's most likely the new lender's poor judgement.
Of course, there is no lender who is going to give a an unsecured loan the size of your substantial student debt to someone with said loans and no other assets, for obvious reasons.
Because it's fraud. Taking on big debts you never intend to pay right before a bankruptcy will get you in a lot of trouble.