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Rolling back the Bush-era provisions that make private student loans non-dischargable in bankruptcy would do wonders in putting downward pressure on tuition. F

by a-dub 11y ago

Rolling back the Bush-era provisions that make private student loans non-dischargable in bankruptcy would do wonders in putting downward pressure on tuition. Federal loans are capped at around $50k which seems to me like a perfectly reasonable number for educational debt, especially considering the wealth of options available for adjusting terms when there's trouble making payments. (as opposed to private loans, which just sail right on into default)

Shivetya 11y ago
the loans should not be able to be discharged in bankruptcy court. what the government needs to do is what it did to the medical industry, assign costs to books, classes, and such, that it will reimburse through the loan process and no more. Then require the same costs to be offered to those who are not using government loads. school costs are not high because you cannot discharge your loans, they are high because colleges know you will try to get the loans and its not the schools responsibility to deliver affordable classes. simply make it part of federal law, if you accept any federal funds you will adopt the a federally prescribed costs structure for an education. if you want your students to have access to federal funds the same rules also apply
rhino369 11y ago
You can go well over 50k on Federal loans with graduate programs. I had about 264k in all federal loans before I refi'd with SOFI.
dragonwriter 11y ago
> Rolling back the Bush-era provisions that make private student loans non-dischargable in bankruptcy would do wonders in putting downward pressure on tuition. Would it? I was under the impression that private student loan lending collapsed shortly after the 2009 crash and hadn't really recovered, though its risen slightly since the crash. If private student loans were the main driver of tuition, it should have collapsed after the 2009 crash as well.
- a-dub 11y ago
  Interesting. You're right. It halved in 2009 and dropped even further to about 40% of its previous high, although it appears to be growing again... [1] I still think that it would be wise to structure the marketplace such that there is even less private lending. I think this ultimately gives the Federal government more policy levers that can be used to push back on tuition. I do agree with the original piece that the peek-a-boo games that college's play with their financial aid packages are silly. The pricing should be clear and simple, discounts for low-income students should be stated up front. Today's "Let's make a deal" games are just dumb... [1] http://trends.collegeboard.org/student-aid/figures-tables/total-federa-nonfederal-loans-time http://trends.collegeboard.org/student-aid/figures-tables/to...
ntkachov 11y ago
Not sure this will work out as planned. Theres no collateral against a college degree. If I buy a house, default on my mortgage, the bank owns the title and it can sell my house and I lose out in any value the house had. If my student loans were discharged during bankruptcy, I would still retail the value of the degree. Even if they revoke the actual degree, I still hold the knowledge. The result is that I basically hold all the value while someone else holds all the risk. Thats how you get colleges raising rates to cover risks instead of lowering them.

by a-dub 11y ago

Shivetya 11y ago

the loans should not be able to be discharged in bankruptcy court. what the government needs to do is what it did to the medical industry, assign costs to books, classes, and such, that it will reimburse through the loan process and no more. Then require the same costs to be offered to those who are not using government loads. school costs are not high because you cannot discharge your loans, they are high because colleges know you will try to get the loans and its not the schools responsibility to deliver affordable classes. simply make it part of federal law, if you accept any federal funds you will adopt the a federally prescribed costs structure for an education. if you want your students to have access to federal funds the same rules also apply

rhino369 11y ago

You can go well over 50k on Federal loans with graduate programs. I had about 264k in all federal loans before I refi'd with SOFI.

dragonwriter 11y ago

> Rolling back the Bush-era provisions that make private student loans non-dischargable in bankruptcy would do wonders in putting downward pressure on tuition. Would it? I was under the impression that private student loan lending collapsed shortly after the 2009 crash and hadn't really recovered, though its risen slightly since the crash. If private student loans were the main driver of tuition, it should have collapsed after the 2009 crash as well.

a-dub 11y ago
Interesting. You're right. It halved in 2009 and dropped even further to about 40% of its previous high, although it appears to be growing again... [1] I still think that it would be wise to structure the marketplace such that there is even less private lending. I think this ultimately gives the Federal government more policy levers that can be used to push back on tuition. I do agree with the original piece that the peek-a-boo games that college's play with their financial aid packages are silly. The pricing should be clear and simple, discounts for low-income students should be stated up front. Today's "Let's make a deal" games are just dumb... [1] http://trends.collegeboard.org/student-aid/figures-tables/total-federa-nonfederal-loans-time http://trends.collegeboard.org/student-aid/figures-tables/to...

ntkachov 11y ago

Not sure this will work out as planned. Theres no collateral against a college degree. If I buy a house, default on my mortgage, the bank owns the title and it can sell my house and I lose out in any value the house had. If my student loans were discharged during bankruptcy, I would still retail the value of the degree. Even if they revoke the actual degree, I still hold the knowledge. The result is that I basically hold all the value while someone else holds all the risk. Thats how you get colleges raising rates to cover risks instead of lowering them.