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>allow bankruptcy and this problem literally can't exist. You're just creating a different problem. Back when school loans could be discharged, a new doctor c

by jasode 10y ago

>allow bankruptcy and this problem literally can't exist. You're just creating a different problem. Back when school loans could be discharged, a new doctor could declare bankruptcy immediately after medical school to wipe out the $200k in student debt. Well, if you allow that "moral hazard", it means the price (a.k.a. interest rates) for those loans must increase to account for the increase in defaults and worthless loans. It means poorer people can't go to school because the interest rates loans are too high. Tweak the economic game and you get a different problem instead of solving all problems. The doctor/lawyer/engineer wipes out the school loans but the banks can't take back the "education" in the graduates' brains. The graduates go on to earn a living and the banks get nothing. In other words, it's an unsecured loan. There are other unsecured loans that can be discharged such as credit cards. But their interest rates of 22% reflect the higher risks of nonpayment and no significant recovery of money when liquidating debtor's assets in bankruptcy court. Student loans are 6% instead of 22% interest rate[1][2]. They don't have to so high because they can't be discharged (easily) and they are guaranteed by the government. [1]https://studentaid.ed.gov/sa/about/announcements/interest-rate https://studentaid.ed.gov/sa/about/announcements/interest-ra... [2]http://www.valuepenguin.com/average-credit-card-interest-rates http://www.valuepenguin.com/average-credit-card-interest-rat...

dalke 10y ago
"A different problem" indeed, but ones that most other countries solve by not having an expensive medical program which requires students to acquire $200K of personal debt first. As an extreme case, Cuba uses "medical diplomacy" to train foreign students to be doctors, including students from the US who want to work in poor and rural areas in the US and don't want to be $100K+ in debt.
iofj 10y ago
> Student loans are 6% instead of 22% interest rate[1][2]. They don't have to so high because they can't be discharged and they are guaranteed by the government. Maybe we should allow people to sell themselves and their future families into eternal servitude for loans ? We could have 1% student loans ! Hurray ! This is effectively slavery, and it should be illegal.

by jasode 10y ago

dalke 10y ago

"A different problem" indeed, but ones that most other countries solve by not having an expensive medical program which requires students to acquire $200K of personal debt first. As an extreme case, Cuba uses "medical diplomacy" to train foreign students to be doctors, including students from the US who want to work in poor and rural areas in the US and don't want to be $100K+ in debt.

iofj 10y ago

> Student loans are 6% instead of 22% interest rate[1][2]. They don't have to so high because they can't be discharged and they are guaranteed by the government. Maybe we should allow people to sell themselves and their future families into eternal servitude for loans ? We could have 1% student loans ! Hurray ! This is effectively slavery, and it should be illegal.