Should Student Loans be Dischargeable in Bankruptcy?

[Slyfox696]

Student loans to "everybody" simply jacks up tuition

It certainly plays a substantial part. But so does athletic and academic scholarships, so do football coaches making millions of dollars, paying professors who are only there to publish to better the name of the university, etc.

There are many things which can be worked on to lower tuition.

while realizing that quite a few are never going to either graduate or repay the loans.

You cannot discharge student loan debt. And if one goes through life long enough to die without paying back student loans, then it can be reasonably assumed that, after interest, the student has MORE than paid back the original loan amount. That's just math.

 

[ALiberalModerate]

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?

It wouldn't do anything to interest rates because the loans are secured by the U.S. taxpayer.

 

[phattonez]

Because that would work to prevent lower class citizens from having the opportunity to better their lives?

For the majority of the poor, it's not doing that. Rather, for most, it's getting the youth in an even worse situation than their parents.

Why?

Why?

Because under our current situation, people are paying off these debts for decades. They can't get rid of the debt, and they can't do things like buy homes or cars, or start families because of these financial obligations. The social cost of this debt is enormous, and the increased availability of the credit hasn't made young people better off than their parents. Rather, they financially worse off. The only ones who win with our current setup are the universities.

There already is. *shrug*

Only because the loans cannot be discharged in bankruptcy.

As would the effectiveness, as would the ability of a lower class citizen to better their socio-economic status.

Things don't exist in a vacuum.

You're right, we would see a much lower cost of tuition, but also far fewer going to college. We don't need nearly every young person going to college like we have today.

 

[phattonez]

It wouldn't do anything to interest rates because the loans are secured by the U.S. taxpayer.

I understand that. I was talking more about a hypothetical situation where you have private student loans without any kind of guarantee from the government.

 

[gdgyva]

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?

i think the real slaves our history would look down on your use of that term

slaves dont have choices

people that take out loans are making a choice....good or bad, their choice

 

[phattonez]

i think the real slaves our history would look down on your use of that term

slaves dont have choices

people that take out loans are making a choice....good or bad, their choice

You don't consider indentured servants slaves?

 

[ALiberalModerate]

I understand that. I was talking more about a hypothetical situation where you have private student loans without any kind of guarantee from the government.

That's not going to happen. How on earth is an 18 to 22 year old kid going to have the credit established to qualify for a student loan?

 

[What if...?]

Even if it doesn't transform into that more explicit form of it, we already have indentured servitude today. That's exactly the situation for those who are stuck with these loans.

Yeah, but it isn't.

A corporation would almost certainly require regular exercise, proper diet, no smoking, little or no alcohol, regular drug testing.

Better return on their investment that way.

And you'd go live where they told you to.

Good chance it'd be company housing and company store and all the joys associated.

Set it up so if you only work and go home, spend no money on entertainment or luxuries, no dates, you might finish you indenture at the contractual end but if you don't you could die under indenture. Poorhouse, company town bull****.

 

[phattonez]

That's not going to happen. How on earth is an 18 to 22 year old kid going to have the credit established to qualify for a student loan?

They won't. Demand for college would necessarily plummet, and so would tuition.

 

[phattonez]

Yeah, but it isn't.

A corporation would almost certainly require regular exercise, proper diet, no smoking, little or no alcohol, regular drug testing.

Better return on their investment that way.

And you'd go live where they told you to.

Good chance it'd be company housing and company store and all the joys associated.

Set it up so if you only work and go home, spend no money on entertainment or luxuries, no dates, you might finish you indenture at the contractual end but if you don't you could die under indenture. Poorhouse, company town bull****.

This is a difference only in how the slaves are managed. I'd imagine there would be a revolution long before we got to that point.

 

[Slyfox696]

For the majority of the poor, it's not doing that.

Then that's the choice of those students. The point is that it is giving them the opportunity to.

See the difference?

Rather, for most, it's getting the youth in an even worse situation than their parents.

Many times yes.

Because under our current situation, people are paying off these debts for decades. They can't get rid of the debt

They can't get rid of the debt because the terms of the loan are/have been ridiculous. While it has changed some in the last few years, until 2013-2014, the interest rate on an unsubsidized Stafford loan was 6.80%. That's just absurd.

If, however, the interest rate was at the current inflation rate of 2.2%, borrowing $60,000 over a ten year loan means you would save nearly $16,000 over that ten year period. That's significant.

The only ones who win with our current setup are the universities.

Not the universities themselves, just certain people in the university.

Only because the loans cannot be discharged in bankruptcy.

I'm not certain that applies to private loans, only government loans. But I could be mistaken and would welcome information either way.

You're right, we would see a much lower cost of tuition, but also far fewer going to college. We don't need nearly every young person going to college like we have today.

No, not every young person NEEDS to go to college, but every young person should have the opportunity to go to college.

 

[What if...?]

This is a difference only in how the slaves are managed. I'd imagine there would be a revolution long before we got to that point.

We've gotten there before without a revolution.

 

[phattonez]

Then that's the choice of those students. The point is that it is giving them the opportunity to.

See the difference?

It works for a few, but for most it's putting them into insurmountable debt. Is this really better than the alternative where no loans are given out at all?

They can't get rid of the debt because the terms of the loan are/have been ridiculous. While it has changed some in the last few years, until 2013-2014, the interest rate on an unsubsidized Stafford loan was 6.80%. That's just absurd.

If, however, the interest rate was at the current inflation rate of 2.2%, borrowing $60,000 over a ten year loan means you would save nearly $16,000 over that ten year period. That's significant.

Many today still have that debt. And yes, a rate of 2.2% is far better, but the $550 per month you'd have to pay even for that situation is quite significant. We still ought to allow bankruptcy.

Not the universities themselves, just certain people in the university.

The universities themselves. Look at the building sprees!

I'm not certain that applies to private loans, only government loans. But I could be mistaken and would welcome information either way.

As far as I'm aware all student loans are guaranteed by the federal government.

No, not every young person NEEDS to go to college, but every young person should have the opportunity to go to college.

And it was far easier to do so in the past when tuition was much more reasonable and you really could work your way through college. And besides, isn't this what the public universities were supposed to do?

 

[ALiberalModerate]

They won't. Demand for college would necessarily plummet, and so would tuition.

This kind of nonsense is exactly why libertarians can't even manage to get elected to road kill removal.

 

[phattonez]

This kind of nonsense is exactly why libertarians can't even manage to get elected to road kill removal.

You act as if the status quo is not nonsense. Student loan debt alone is more than 7% of GDP. Homeownership among young adults is at record lows, while those living at home are at record highs. We need a radical change.

 

[Slyfox696]

It works for a few, but for most it's putting them into insurmountable debt. Is this really better than the alternative where no loans are given out at all?

It doesn't have to be an either/or. Isn't that what I've been saying?

Many today still have that debt. And yes, a rate of 2.2% is far better, but the $550 per month you'd have to pay even for that situation is quite significant.

And yet, nearly 20% less than you'd have to pay at 6.8%. That's not insignificant.

We still ought to allow bankruptcy.

I disagree with regards to government loans. Government loans are taxpayer loans, taxpayers should have the right to expect their money isn't being wasted (relatively speaking, of course).

The universities themselves. Look at the building sprees!

Fair point.

As far as I'm aware all student loans are guaranteed by the federal government.

That has not been my impression, but, again, I could be wrong.

And besides, isn't this what the public universities were supposed to do?

No one is arguing the cost of attending college isn't too high. I think higher education should be more affordable. But I think there are better ways than allowing students to rack up debt and never paying it off.

 

[phattonez]

It doesn't have to be an either/or. Isn't that what I've been saying?

It would be better to have no loans at all. That's my point.

And yet, nearly 20% less than you'd have to pay at 6.8%. That's not insignificant.

What you suggest is a big improvement to the current situation, but I think that we can do better.

I disagree with regards to government loans. Government loans are taxpayer loans, taxpayers should have the right to expect their money isn't being wasted (relatively speaking, of course).

I don't see why slavery is okay when it's the government doing the enslaving. Governments ought to be able to take a loss, and we ought to expel from power those who are responsible for those losses.

No one is arguing the cost of attending college isn't too high. I think higher education should be more affordable. But I think there are better ways than allowing students to rack up debt and never paying it off.

My solution is to make student debt dischargeable and to get the government out of the business of guaranteeing student loans.

 

[antiquity]

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.

Worthless degrees? You mean get a student loan for Nigerian basket weaving?

 

[Cephus]

My wife worked throughout her college years. She didn't go to parties, nor was she getting laid. She's still saddled with tens of thousands in debt. But please, continue to tell me how lazy she is. I really appreciate it.

Sure, if it will make you feel better. :roll:

 

[Cephus]

And watch as we see mostly poor, black kids become slaves. But hey, they chose it for themselves so it's okay, right?

:roll:

 

[Cephus]

Worthless degrees? You mean get a student loan for Nigerian basket weaving?

I mean things like gender studies. Things for which there isn't an actual career with hiring jobs waiting for you.

 

[Superfly]

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.

I am an undergrad. I see ridiculous charges every semester on my tuition bill. Charges that I will never find of any use. I pay upwards of $200 or more for books (each) that I will never use again, and will not be able to sell back to the bookstore. I will be starting grad school in the fall, and I am not looking forward to those charges, book fees, etc.

College needs to be made cheaper, so discharging in bankruptcy wouldn't even be needed.

Sorry, luv. Tried not to go off topic, but someone else did it first. :lol:

 

[phattonez]

I am an undergrad. I see ridiculous charges every semester on my tuition bill. Charges that I will never find of any use. I pay upwards of $200 or more for books (each) that I will never use again, and will not be able to sell back to the bookstore. I will be starting grad school in the fall, and I am not looking forward to those charges, book fees, etc.

College needs to be made cheaper, so discharging in bankruptcy wouldn't even be needed.

Sorry, luv. Tried not to go off topic, but someone else did it first. :lol:

Get out while you still can.

 

[Superfly]

So you're against bankruptcy law?

Actually, yes. I don't think anyone should be able to avoid paying their legal debts that were entered into knowingly.

I know someone who isn't - the leader of our country uses bankruptcy laws to his advantage. I think he even said brilliantly.

Not meaning to bring politics into the thread, but if the lords can use bankruptcy to their advantage, why should the serfs not be able to use it to get themselves out of unsurpassable debt?

 

[Superfly]

Which is why the government shouldn't be funding education. The reason the cost is so high is because the government has a blank checkbook and is willing to write a check to anyone and not willing to go after them when they default.

Hogwash. The government does go after you for defaulted debt on a student loan. The first step is seizing your tax refund (if you get any). They can attach your wages also, as well as freeze your bank account.