• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Should Student Loans be Dischargeable in Bankruptcy? (1 Viewer)

Should Student Loans be Dischargeable in Bankruptcy?

  • Yes

    Votes: 25 62.5%

  • No

    Votes: 15 37.5%
  • Total voters
    40
phattonez

phattonez

Catholic
DP Veteran
Joined
Jun 3, 2009
Messages
30,870
Reaction score
4,246
Gender
Male
Political Leaning
Very Conservative
Set aside your opinions on whether college should be free, whether the government should provide any assistance at all, or your views on college at all. Currently, student loans cannot be discharged in bankruptcy. You can get rid of credit card debt and other types of debt, but you are forever stuck with student loans until you pay them off. Given that more and more are going into default on their loans and that the debt itself is massive, ought we allow student loans to be discharged in bankruptcy?
 
In my opinion, there is no good reason to prevent people from discharging student debt. All types of debt ought to be eligible in bankruptcy court.

What gets me upset more than anything is that the federal government is the direct lender for a majority of the debt, charges interest, and on top of that prevents you from ever being able to discharge the debt until it's paid off. It's indentured servitude.
 
phattonez said:
In my opinion, there is no good reason to prevent people from discharging student debt. All types of debt ought to be eligible in bankruptcy court.

What gets me upset more than anything is that the federal government is the direct lender for a majority of the debt, charges interest, and on top of that prevents you from ever being able to discharge the debt until it's paid off. It's indentured servitude.
Click to expand...

Which is exactly why you can't discharge it.

I agree - I think it should be dischargeable. (Trying so hard to set my opinions aside on the rest, but will do so because it's not the topic of the thread :lol:)
 
Superfly said:
Which is exactly why you can't discharge it.

I agree - I think it should be dischargeable. (Trying so hard to set my opinions aside on the rest, but will do so because it's not the topic of the thread :lol:)
Click to expand...

I wanted to set aside all of the other issues because I think that this is something that both sides can agree on, but I'm curious if anyone is going to make the case as to why it shouldn't be dischargeable.
 
phattonez said:
Set aside your opinions on whether college should be free, whether the government should provide any assistance at all, or your views on college at all. Currently, student loans cannot be discharged in bankruptcy. You can get rid of credit card debt and other types of debt, but you are forever stuck with student loans until you pay them off. Given that more and more are going into default on their loans and that the debt itself is massive, ought we allow student loans to be discharged in bankruptcy?
Click to expand...

No because, unlike those other loans, student loans are subsidized by, insured by and/or granted directly from public funds such that by defaulting you are defaulting to turn that loan into a gift from the taxpayers to yourself. Its not like a credit card default where the taxpayer is not obligated to make the lender whole on your behalf or defaulting on a secured loan where the lender can collect on the sale of the securing asset(s).
 
ttwtt78640 said:
No because, unlike those other loans, student loans are subsidized by and/or granted directly from public funds such that by defaulting you are defaulting to turn that loan into a gift from the taxpayers to yourself.
Click to expand...

When I default on credit card debt, do I not in some sense turn the bank's loan into a gift from the bank to myself?

Its not like a credit card default where the taxpayer is not obligated to make the lender whole on your behalf or defaulting on a secured loan where the lender can collect on the sale of the securing asset(s).
Click to expand...

How are you going to collect if the funds were spent on things like luxury vacations, food, etc.?
 
I think a side effect of allowing you to discharge student loan debt in bankruptcies would be even more students either dropping out or getting economically worthless degrees.
 
phattonez said:
1) When I default on credit card debt, do I not in some sense turn the bank's loan into a gift from the bank to myself?



2) How are you going to collect if the funds were spent on things like luxury vacations, food, etc.?
Click to expand...

1) Yes, but the taxpayers are not affected in the least - only other bank customers are. Paying taxes is mandatory while using that particular bank (for credit or loans) is optional which is a huge difference.

2) Those (unsecured loan) amounts are not collectable. Banks that issue unsecured (personal) loans with higher default rates, naturally, must charge much higher interest rates to negate those default losses. Your personal credit rating/risk is taken into account (as well as that of all others) to establish a more realistic actuarial risk based interest rate.
 
SouthernDemocrat said:
I think a side effect of allowing you to discharge student loan debt in bankruptcies would be even more students either dropping out or getting economically worthless degrees.
Click to expand...

Worse yet, it would make anyone getting them less likely.
 
college is a privilege

if you decide to go...do you work your way through....have parents help you....or go into debt

or maybe a combination of all three

student debt shouldnt be dis chargeable....why

it should be treated the same as IRS debt....which is also always owed

you dig yourself into a hole, you need to be able to dig yourself out

now...i would have zero issue with every student being counselled on the issues of debt before signing those papers also

this isnt a game....and if you sign for 30k, 50k, or 100k in someone elses money....you need to understand what it will take to pay it back
 
ttwtt78640 said:
1) Yes, but the taxpayers are not affected in the least - only other bank customers are. Paying taxes is mandatory while using that particular bank (for credit or loans) is optional which is a huge difference.
Click to expand...

What does default do to interest rates?

2) Those (unsecured loan) amounts are not collectable. Banks that issue unsecured (personal) loans with higher default rates, naturally, must charge much higher interest rates to negate those default losses. Your personal credit rating/risk is taken into account (as well as that of all others) to establish a more realistic actuarial risk based interest rate.
Click to expand...

Ah, so tell me, why is the government charging interest on a loan that, since it cannot be discharged in bankruptcy, necessarily collectible?
 
I'd vote no even though I think we need to figure out ways to make college cheaper/free.

The reason is that when people graduate from college they tend to have little to nothing in terms of value or property to their name. It would be very benificial to someone if they could get a hundred thousand in education and then write if off in exchange for bad credit for alittle while. They don't have a house to lose or anything like that so why wouldn't you. This in turn would make education lending more expensive/cost prohibitive and result in fewer being able to qualify for loans.

I think a better plan would be to make the loans a tiny bit more restrictive and make the student sit down with a counselor before taking any loans on the reality of ever paying them back. So that someone can sit down and see that if they spend 150,000 on an out of state degree in early american history they are going to start out making 35,000 a year (or whatever it actually is) and give them an idea of actual pay schedules for that field. I think alot of kids have no idea how hard it will be to get a job with a degree that's not in demand or that's not a stem field.
 
SouthernDemocrat said:
I think a side effect of allowing you to discharge student loan debt in bankruptcies would be even more students either dropping out or getting economically worthless degrees.
Click to expand...

If default rates increased significantly, what would that do to interest rates? Do you think that people would still be going to college en masse if interest rates were much higher?
 
phattonez said:
1) What does default do to interest rates?



2) Ah, so tell me, why is the government charging interest on a loan that, since it cannot be discharged in bankruptcy, necessarily collectible?
Click to expand...

1) I thought that I made that clear before. The higher the default rate is then the higher the interest rate must be in order for the lender to not to go broke making those riskier loans.

2) Because of the time value of money.

https://www.investopedia.com/terms/t/timevalueofmoney.asp
 
I am not in favor of making it any easier to get out from under one’s financial responsibilities. Getting ‘higher education’ cannot be seen as ‘indentured servitude.’ Buy it, pay for it.....
 
ttwtt78640 said:
1) I thought that I made that clear before. The higher the default rate is then the higher the interest rate must be in order for the lender to not to go broke making those riskier loans.
Click to expand...

Exactly, so the bank already has a way of dealing with the potential for default. That is what the interest rate is supposed to offset. So, since the government has no default risk from the borrower, what is the justification for charging interest? Or, if you are going to charge interest, why not allow the debtor to discharge the debt?

2) Because of the time value of money.

https://www.investopedia.com/terms/t/timevalueofmoney.asp
Click to expand...

Given the kind of interest rates that the government can borrow with, what is the justification for charging an interest rate higher than that?
 
Student debt alone is currently more than 7% of GDP for this country. I don't think that people realize how big this problem is, and how insurmountable the debt is for many people. It's almost as if the people here want no bankruptcy for anything at all. You do all realize that without the possibility of bankruptcy, that taking on debt at interest is indentured servitude.
 
phattonez said:
Exactly, so the bank already has a way of dealing with the potential for default. That is what the interest rate is supposed to offset. So, since the government has no default risk from the borrower, what is the justification for charging interest? Or, if you are going to charge interest, why not allow the debtor to discharge the debt?



Given the kind of interest rates that the government can borrow with, what is the justification for charging an interest rate higher than that?
Click to expand...

You obviously did not read (or comprehend) the TVM link that I provided. Would you lend me $10K today if I promised to pay you back $10K within ten years?
 
phattonez said:
Student debt alone is currently more than 7% of GDP for this country. I don't think that people realize how big this problem is, and how insurmountable the debt is for many people. It's almost as if the people here want no bankruptcy for anything at all. You do all realize that without the possibility of bankruptcy, that taking on debt at interest is indentured servitude.
Click to expand...

Then they should have gotten better degrees that gave them better jobs, shouldn't they?
 
phattonez said:
Student debt alone is currently more than 7% of GDP for this country. I don't think that people realize how big this problem is, and how insurmountable the debt is for many people. It's almost as if the people here want no bankruptcy for anything at all. You do all realize that without the possibility of bankruptcy, that taking on debt at interest is indentured servitude.
Click to expand...

The solution is simple - don't borrow money that you can't pay back.
 
ttwtt78640 said:
You obviously did not read (or comprehend) the TVM link that I provided. Would you lend me $10K today if I promised to pay you back $10K within ten years?
Click to expand...

No. I don't have $10K to loan you, nor do I know you.

If I had that, would I make that loan to one of my children? Absolutely.
 
Cephus said:
Then they should have gotten better degrees that gave them better jobs, shouldn't they?
Click to expand...

So because they didn't they're going to be our slaves until they pay us back? Do you find this to be a defensible position?
 
You must log in or register to reply here.

Users who are viewing this thread

Total: 2 (members: 0, guests: 2)
Back
Top Bottom