Mr. Trump failed to pay bankers and bondholders about $73 million that was due last Friday.

Mr. Trump said he had not yet decided whether to pay bondholders, even though he emphasized his ability to do so.

But the bill does not spell out who pays bondholders if the school defaults.

He is willing to pay bondholders more than the market price of their holdings to entice them to go along with his plan quickly.

These pay bondholders a fixed rate plus the change in the Consumer Price Index.

That measure would provide cash advances to municipalities unable to pay bondholders and would offer federal guarantees on future debt.

The company pays bondholders in common stock.

The state would then use about $6.5 billion worth of future revenue from the tobacco settlement to pay bondholders.

"What we are doing is taking money out of wages that have not changed in 30 years to pay bondholders in Europe and Asia," he said.

"And even if Argentina grows at 5 percent in the next years, there still won't be that much money left over to pay bondholders."