5 ms·

> Same reason we let people walk away from homes (or not walk away, simply not be able to afford them) Like I said in my comment, I recognize that there needs

> Same reason we let people walk away from homes (or not walk away, simply not be able to afford them) Like I said in my comment, I recognize that there needs to be some option for people who can't possibly repay their student loans. Defaulting on your mortgage is not consequence-free: you lose your home and hurt your credit. We don't let people just forgive their mortgages and keep their homes without hurting their credit, but that's what a lot of people are advocating for student loans. We should treat student loan debt like any other debt.

deegles 10y ago
How would one repossess an education? Isn't that the reason student loans are not dischargeable?
- morgante 10y ago
  Like toomuchtodo mentions, we could treat it like other unsecured debt (like credit card debt). Just because it's unsecured doesn't mean we shouldn't be able to discharge it with bankruptcy. Get the government out of the loan business and the market will correct itself. You won't be able to get a loan for a useless degree and if you end up being unable to pay off your loan you can go through normal bankruptcy proceedings and their consequences.
  - ChemicalWarfare 10y ago
    Upvoted. But. The argument against this could be that due to the unsecured nature of the six-figure (potentially) debt the free market rates will be insane effectively reducing access to higher ed for those who can't afford it without the loans. Then again, if less ppl could afford a degree in Queer Musicology (does exist - https://www.musicology.ucla.edu/mission-and-history-1 https://www.musicology.ucla.edu/mission-and-history-1) or let's say Environmental Studies etc maybe the supply and demand would even out so that'll be a good thing.
    - dragonwriter 10y ago
      > The argument against this could be that due to the unsecured nature of the six-figure (potentially) debt the free market rates will be insane effectively reducing access to higher ed for those who can't afford it without the loans. Given that federal loans have always had rates set by government policy (not market rates) and the fact that private participation in the program was ended in favor of exclusively direct loans in 2010, I'm not sure what the concern for "market rates" is -- there is no market involved.
      - ChemicalWarfare 10y ago
        see the comment I was replying to >>> "Get the government out of the loan business and the market will correct itself."
    - zanny 10y ago
      There is already plenty of movement, and in general close to ready availability, of free college in everyones home state at their state university or several other public universities funded by the state government. If you got rid of the insanity that is federal loans it would just increase demand for state schools and community college.
    - paulcole 10y ago
      >Environmental Studies God forbid.
      - ChemicalWarfare 10y ago
        in the "free market" student loan situation this would be an unsafe bet on the creditor's behalf.
        mywittyname 10y ago
        There's no such thing as "free market" lending because so much of it is tied to legal institutions. For example, is bankruptcy allowed in a free market? Indentured servitude? Seizure of assets? Absent a government, lending is a lose-lose situation. The lender has little recourse to compel the lendee to pay, and the lendee has no protection from the lender.
  - feklar 10y ago
    Would tuition also follow by being more affordable? The government guarantees loans for everybody so institutions jack up their fees accordingly it seems.
    - kbutler 10y ago
      Yes, government-backed loans reduce the apparent cost of higher education, increasing the amount people are willing to pay, driving up the costs, and reducing access to people who are unwilling to take the loans. http://www.economist.com/node/21559618 http://www.economist.com/node/21559618 quoting a research paper: "With all factors present, net tuition increases from $6,100 to $12,559. As column 4 demonstrates, the demand shocks — which consist mostly of changes in financial aid — account for the lion’s share of the higher tuition." And then: "so much of the subsidy is translated into higher tuition that enrollment doesn’t increase! What does happen is that students take on more debt, which many of them can’t pay."
  - rayiner 10y ago
    Poor minorities also won't be able to get student loans. That makes your proposal a total non-starter in a society that emphasizes education as the path to economic advancement for minorities.
    - morgante 10y ago
      That's an unproven assumption. If existing lenders aren't willing to loan to minorities, then there would be a fantastic opening to make a profit in loaning money to poor minorities with high test scores to study STEM.
      - rayiner 10y ago
        20% of African Americans have credit scores below 620 compared to 5% of non-Hispanic whites. On average, disadvantaged minorities don't do as well on standardized tests, and have worse graduation rates even when they attend the same colleges: http://mobile.nytimes.com/2014/05/18/magazine/who-gets-to-graduate.html http://mobile.nytimes.com/2014/05/18/magazine/who-gets-to-gr.... The US is very deeply invested in the idea that the way to overcome the disadvantages faced by members of certain minorities is education. But those same disadvantages make those students worse credit risks. A credit-based system looking to optimize return wouldn't give these students access to the same educational opportunities.
        morgante 10y ago
        A credit-based system looking to optimize return would reflect the likelihood of such students actually graduating and getting good jobs. If the problem is that minority students have difficulty achieving at the level of white students, let's focus on that. I don't think it's very helpful that we saddle these students up with loans but then they don't even end up graduating. Instead of forcing lenders to lend to bad credit risks, let's come up with ways to support minority students so they aren't credit risks. I personally would be happy to invest in minority students studying CS, for example. And yes, it will be somewhat painful in the short term. We'll have to confront the reality that lending to students with low SAT scores to study esoteric subjects is maybe not a good idea. Perhaps it would even encourage such students to not waste their time and money on bad degrees.
- trentmb 10y ago
  It's possible for colleges to rescind degrees, so if you wanted to be particularly evil you could go down that route.
  - gm-conspiracy 10y ago
    If the debtor completed their degree.
    - trentmb 10y ago
      You could prevent tranferring credits.
      - gm-conspiracy 10y ago
        You are assuming the debtor wants to complete their degree.
- dragonwriter 10y ago
  > How would one repossess an education? You can't. > Isn't that the reason student loans are not dischargeable? No. First, student loans are, in fact, dischargeable, though there is a higher bar to discharging them. So expalanations of why they are not dischargeable are unnecessary (and necessarily incorrect.) But, more to the point, unsecured loans in general are dischargeable without the heightened requirements that apply to student loans; not having something to repossess isn't a difference between student loans and other unsecured loans, so cannot explain the difference in treatment.
  - dpark 10y ago
    > First, student loans are, in fact, dischargeable, though there is a higher bar to discharging them. So expalanations of why they are not dischargeable are unnecessary (and necessarily incorrect.) Explanations of why they are more difficult to discharge is certainly necessary, though. I'm also curious how student loans can be discharged except via death of the lendee. It probably happens, but I don't personally know anyone who has discharged subsidized student loans in bankruptcy. (I do know people who have discharged unsubsidized private student loans in bankruptcy.)
    - dragonwriter 10y ago
      Regarding discharge, the standard in bankruptcy is "undue hardship": http://www.studentloanborrowerassistance.org/bankruptcy/ http://www.studentloanborrowerassistance.org/bankruptcy/ (Also, "borrower" is the more usual term, rather than "lendee".)
      - dpark 10y ago
        Thanks for the reference. I'm thankfully no longer carrying student loan debt, but it's good to see that we haven't completely blocked the ability to clear these debts via bankruptcy. (Also, agree on "borrower". It's late and I'm exhausted and all I could come up with was "lendee".)
    - undersuit 10y ago
      >I'm also curious how student loans can be discharged except via death of the lendee. I work in the industry, some of the ways you can have your student loans discharged are: False Certification (Ability to Benefit): For forgiving a borrower's loan based upon a false certification of the borrower's ability to receive benefits to attend college because he/she doesn't have a GED or high school diploma. False Certification (Disqualifying Status): For forgiving a borrower's loan based on the borrower's disqualifying condition(s) for the degree. False Certification (Unauthorized Signature/Unauthorized Payment): For forgiving a borrower's loan based upon endorsement or certification of the promissory note, disbursement, or application by an unauthorized person. School Closure: For forgiving a borrower's loan based upon a school closure that prevents the borrower from completing his/her degree or program. Unpaid Refund: For forgiving the borrower's loan because the borrower's school did not provide the correct refund to the borrower's lender. Teacher Loan Forgiveness Forbearance: For borrowers who are eligible for the Teacher Loan Forgiveness program and whose entire outstanding balance will be forgiven at the end of their fifth year of teaching in a qualifying school. Total and Permanent Disability: For borrowers who are unable to repay their Federal Family Loan Program student loans due to total and permanent disability (as defined by the U.S. Department of Education).
- GunboatDiplomat 10y ago
  Make them hand back their diploma, strip their name from all documentation of ever having gone to the school, bar them from referencing their degree in any way.
  - paulcole 10y ago
    Dunno why you're being downvoted for this. It makes a lot of sense, but is practically useless since fewer employers will care.
  - phs318u 10y ago
    If one of the broader benefits to society of an education is your contribution to the economy, then this would negate that benefit. Eg no one wins from having qualified doctors being unable to practice. It's punitive rather than correctional.
toomuchtodo 10y ago
> We should treat student loan debt like any other debt. We should! There's no asset to secure the debt, so just mark the trade line as unpaid/collections and have it be a black mark for 7 years. If Congress isn't going to fix this, Millenials can max out unsecured credit, pay off their student loans, and then go bankrupt on the unsecured debt; 7-10 years of bad credit is better than the federal government pursuing you for the rest of your life.* * Not legal advice. Confirm with an attorney first if you attempt such a feat to ensure you stay within the law by doing so.
- mattmanser 10y ago
  7 years for a bad decision made when you were 18? That seems incredibly harsh. Then again, you Americans really don't believe in rehabilitation do you.
  - q3r3qr3q 10y ago
    So you can't buy a house before you're 25? Wow, cry me a river.
  - DashRattlesnake 10y ago
    Do other countries allow people to declare bankruptcy and discharge their debt without consequences? The 7 year black mark is no one wanting to loan you money because you've shown you won't pay it back, and it's 7 years because the government says it can't be longer. It's not anything truly harsh like prison sentence or anything.
    - mgkimsal 10y ago
      And yet, there's a growing industry of people who explicitly target the newly bankrupt (with high interest loans).
    - toomuchtodo 10y ago
      This is incorrect. Lenders are more likely to lend to you after bankruptcy, as you're not permitted to declare bankruptcy again for several years. Now, if you're credit score is simply low due to negative marks from late payments or charge offs, yes, it's likely you won't be lent to again until you take action to raise your credit score (by making payments on time).
btilly 10y ago
We should treat student loan debt like any other debt. Until Bush changed the rules at the request of the financial industry, we did.

deegles 10y ago

How would one repossess an education? Isn't that the reason student loans are not dischargeable?

morgante 10y ago
Like toomuchtodo mentions, we could treat it like other unsecured debt (like credit card debt). Just because it's unsecured doesn't mean we shouldn't be able to discharge it with bankruptcy. Get the government out of the loan business and the market will correct itself. You won't be able to get a loan for a useless degree and if you end up being unable to pay off your loan you can go through normal bankruptcy proceedings and their consequences.
- ChemicalWarfare 10y ago
  Upvoted. But. The argument against this could be that due to the unsecured nature of the six-figure (potentially) debt the free market rates will be insane effectively reducing access to higher ed for those who can't afford it without the loans. Then again, if less ppl could afford a degree in Queer Musicology (does exist - https://www.musicology.ucla.edu/mission-and-history-1 https://www.musicology.ucla.edu/mission-and-history-1) or let's say Environmental Studies etc maybe the supply and demand would even out so that'll be a good thing.
  - dragonwriter 10y ago
    > The argument against this could be that due to the unsecured nature of the six-figure (potentially) debt the free market rates will be insane effectively reducing access to higher ed for those who can't afford it without the loans. Given that federal loans have always had rates set by government policy (not market rates) and the fact that private participation in the program was ended in favor of exclusively direct loans in 2010, I'm not sure what the concern for "market rates" is -- there is no market involved.
    - ChemicalWarfare 10y ago
      see the comment I was replying to >>> "Get the government out of the loan business and the market will correct itself."
  - zanny 10y ago
    There is already plenty of movement, and in general close to ready availability, of free college in everyones home state at their state university or several other public universities funded by the state government. If you got rid of the insanity that is federal loans it would just increase demand for state schools and community college.
  - paulcole 10y ago
    >Environmental Studies God forbid.
    - ChemicalWarfare 10y ago
      in the "free market" student loan situation this would be an unsafe bet on the creditor's behalf.
      - mywittyname 10y ago
        There's no such thing as "free market" lending because so much of it is tied to legal institutions. For example, is bankruptcy allowed in a free market? Indentured servitude? Seizure of assets? Absent a government, lending is a lose-lose situation. The lender has little recourse to compel the lendee to pay, and the lendee has no protection from the lender.
- feklar 10y ago
  Would tuition also follow by being more affordable? The government guarantees loans for everybody so institutions jack up their fees accordingly it seems.
  - kbutler 10y ago
    Yes, government-backed loans reduce the apparent cost of higher education, increasing the amount people are willing to pay, driving up the costs, and reducing access to people who are unwilling to take the loans. http://www.economist.com/node/21559618 http://www.economist.com/node/21559618 quoting a research paper: "With all factors present, net tuition increases from $6,100 to $12,559. As column 4 demonstrates, the demand shocks — which consist mostly of changes in financial aid — account for the lion’s share of the higher tuition." And then: "so much of the subsidy is translated into higher tuition that enrollment doesn’t increase! What does happen is that students take on more debt, which many of them can’t pay."
- rayiner 10y ago
  Poor minorities also won't be able to get student loans. That makes your proposal a total non-starter in a society that emphasizes education as the path to economic advancement for minorities.
  - morgante 10y ago
    That's an unproven assumption. If existing lenders aren't willing to loan to minorities, then there would be a fantastic opening to make a profit in loaning money to poor minorities with high test scores to study STEM.
    - rayiner 10y ago
      20% of African Americans have credit scores below 620 compared to 5% of non-Hispanic whites. On average, disadvantaged minorities don't do as well on standardized tests, and have worse graduation rates even when they attend the same colleges: http://mobile.nytimes.com/2014/05/18/magazine/who-gets-to-graduate.html http://mobile.nytimes.com/2014/05/18/magazine/who-gets-to-gr.... The US is very deeply invested in the idea that the way to overcome the disadvantages faced by members of certain minorities is education. But those same disadvantages make those students worse credit risks. A credit-based system looking to optimize return wouldn't give these students access to the same educational opportunities.
      - morgante 10y ago
        A credit-based system looking to optimize return would reflect the likelihood of such students actually graduating and getting good jobs. If the problem is that minority students have difficulty achieving at the level of white students, let's focus on that. I don't think it's very helpful that we saddle these students up with loans but then they don't even end up graduating. Instead of forcing lenders to lend to bad credit risks, let's come up with ways to support minority students so they aren't credit risks. I personally would be happy to invest in minority students studying CS, for example. And yes, it will be somewhat painful in the short term. We'll have to confront the reality that lending to students with low SAT scores to study esoteric subjects is maybe not a good idea. Perhaps it would even encourage such students to not waste their time and money on bad degrees.
trentmb 10y ago
It's possible for colleges to rescind degrees, so if you wanted to be particularly evil you could go down that route.
- gm-conspiracy 10y ago
  If the debtor completed their degree.
  - trentmb 10y ago
    You could prevent tranferring credits.
    - gm-conspiracy 10y ago
      You are assuming the debtor wants to complete their degree.
dragonwriter 10y ago
> How would one repossess an education? You can't. > Isn't that the reason student loans are not dischargeable? No. First, student loans are, in fact, dischargeable, though there is a higher bar to discharging them. So expalanations of why they are not dischargeable are unnecessary (and necessarily incorrect.) But, more to the point, unsecured loans in general are dischargeable without the heightened requirements that apply to student loans; not having something to repossess isn't a difference between student loans and other unsecured loans, so cannot explain the difference in treatment.
- dpark 10y ago
  > First, student loans are, in fact, dischargeable, though there is a higher bar to discharging them. So expalanations of why they are not dischargeable are unnecessary (and necessarily incorrect.) Explanations of why they are more difficult to discharge is certainly necessary, though. I'm also curious how student loans can be discharged except via death of the lendee. It probably happens, but I don't personally know anyone who has discharged subsidized student loans in bankruptcy. (I do know people who have discharged unsubsidized private student loans in bankruptcy.)
  - dragonwriter 10y ago
    Regarding discharge, the standard in bankruptcy is "undue hardship": http://www.studentloanborrowerassistance.org/bankruptcy/ http://www.studentloanborrowerassistance.org/bankruptcy/ (Also, "borrower" is the more usual term, rather than "lendee".)
    - dpark 10y ago
      Thanks for the reference. I'm thankfully no longer carrying student loan debt, but it's good to see that we haven't completely blocked the ability to clear these debts via bankruptcy. (Also, agree on "borrower". It's late and I'm exhausted and all I could come up with was "lendee".)
  - undersuit 10y ago
    >I'm also curious how student loans can be discharged except via death of the lendee. I work in the industry, some of the ways you can have your student loans discharged are: False Certification (Ability to Benefit): For forgiving a borrower's loan based upon a false certification of the borrower's ability to receive benefits to attend college because he/she doesn't have a GED or high school diploma. False Certification (Disqualifying Status): For forgiving a borrower's loan based on the borrower's disqualifying condition(s) for the degree. False Certification (Unauthorized Signature/Unauthorized Payment): For forgiving a borrower's loan based upon endorsement or certification of the promissory note, disbursement, or application by an unauthorized person. School Closure: For forgiving a borrower's loan based upon a school closure that prevents the borrower from completing his/her degree or program. Unpaid Refund: For forgiving the borrower's loan because the borrower's school did not provide the correct refund to the borrower's lender. Teacher Loan Forgiveness Forbearance: For borrowers who are eligible for the Teacher Loan Forgiveness program and whose entire outstanding balance will be forgiven at the end of their fifth year of teaching in a qualifying school. Total and Permanent Disability: For borrowers who are unable to repay their Federal Family Loan Program student loans due to total and permanent disability (as defined by the U.S. Department of Education).
GunboatDiplomat 10y ago
Make them hand back their diploma, strip their name from all documentation of ever having gone to the school, bar them from referencing their degree in any way.
- paulcole 10y ago
  Dunno why you're being downvoted for this. It makes a lot of sense, but is practically useless since fewer employers will care.
- phs318u 10y ago
  If one of the broader benefits to society of an education is your contribution to the economy, then this would negate that benefit. Eg no one wins from having qualified doctors being unable to practice. It's punitive rather than correctional.

toomuchtodo 10y ago

> We should treat student loan debt like any other debt. We should! There's no asset to secure the debt, so just mark the trade line as unpaid/collections and have it be a black mark for 7 years. If Congress isn't going to fix this, Millenials can max out unsecured credit, pay off their student loans, and then go bankrupt on the unsecured debt; 7-10 years of bad credit is better than the federal government pursuing you for the rest of your life.* * Not legal advice. Confirm with an attorney first if you attempt such a feat to ensure you stay within the law by doing so.

mattmanser 10y ago
7 years for a bad decision made when you were 18? That seems incredibly harsh. Then again, you Americans really don't believe in rehabilitation do you.
- q3r3qr3q 10y ago
  So you can't buy a house before you're 25? Wow, cry me a river.
- DashRattlesnake 10y ago
  Do other countries allow people to declare bankruptcy and discharge their debt without consequences? The 7 year black mark is no one wanting to loan you money because you've shown you won't pay it back, and it's 7 years because the government says it can't be longer. It's not anything truly harsh like prison sentence or anything.
  - mgkimsal 10y ago
    And yet, there's a growing industry of people who explicitly target the newly bankrupt (with high interest loans).
  - toomuchtodo 10y ago
    This is incorrect. Lenders are more likely to lend to you after bankruptcy, as you're not permitted to declare bankruptcy again for several years. Now, if you're credit score is simply low due to negative marks from late payments or charge offs, yes, it's likely you won't be lent to again until you take action to raise your credit score (by making payments on time).

btilly 10y ago

We should treat student loan debt like any other debt. Until Bush changed the rules at the request of the financial industry, we did.