5 ms·

This is probably a good idea. It's ridiculous that we coddle people who wastefully took out loans with the goal of improving human capital, and then failed to t

This is probably a good idea. It's ridiculous that we coddle people who wastefully took out loans with the goal of improving human capital, and then failed to take advantage of them. Previously student loans were a socialized losses, privatized gains situation. This gives borrowers some skin in the game and will hopefully give them more reason to carefully evaluate whether college is really a good idea for them.

imsofuture 10y ago
What? Borrowers already have skin in the game. Lenders have none. Make student loans dischargeable and suddenly a lot more people are thinking about the actual utility of college and it's costs.
- nhangen 10y ago
  I agree with the downvote and the fact that borrowers have skin in the game, but not that lenders have none. Debt should not be dischargeable, else it's not debt at all.
  - deleted 10y ago
    [deleted]
  - HarryHirsch 10y ago
    Of course debt can be written off. Out there in the real world contracts are renegotiated all the time. More of that would be advantageous in the face of information asymmetry, the party with better insight would be less tempted to exploit their position.
    - nhangen 10y ago
      You're talking about corporate debt not personal debt. Show me an example of personal date that is frequently discharged (outside of bankruptcy) and I'll adjust my position. If you're referring to the fact that it can't be discharged as part of bankruptcy, then I tend to agree with you. It should be.
      - icebraining 10y ago
        If you're referring to the fact that it can't be discharged as part of bankruptcy, then I tend to agree with you. How else would they be dischargeable? I assume you were talking about bankruptcy.
        nhangen 10y ago
        As some sort of student loan forgiveness program.
      - HarryHirsch 10y ago
        How about medical debt? I understand that US hospitals will cut you a deal based on your ability to pay.
        nhangen 10y ago
        Yes that's true. However, they won't discharge it completely. They'll set you up with a payment plan and/or negotiate the total. I think they still report it to your credit profile though.
      - pdkl95 10y ago
        https://en.wikipedia.org/wiki/Jubilee_%28biblical%29 https://en.wikipedia.org/wiki/Jubilee_%28biblical%29
      - loeg 10y ago
        Bankruptcy is exactly the vector for discharging most personal debt. The problem is that student loans are exempt from bankruptcy.
  - lazyasciiart 10y ago
    Maybe we can focus on making a rich real estate investor's debt non-dischargeable before tightening the screws on broke student loan holders.
- HarryHirsch 10y ago
  a lot more people are thinking about the actual utility of college Yeah. It's time that lenders began doing diligence again on their borrowers. Even if the prospective borrower didn't know that that Kaplan degree wasn't such a great idea the loan officer at the bank would know and deny the loan.
- someguydave 10y ago
  >Borrowers already have skin in the game. Lenders have none That's absolutely false. Lenders have skin in the game - they run the risk that the borrower fails to pay back the principal. That's why they charge risky borrowers more interest. If lenders truly had no skin in the game then loans would be nearly interest free.
  - HarryHirsch 10y ago
    If lenders truly had no skin in the game then loans would be nearly interest free. There's a testable hypothesis there: did rates for student loans go up much when they were made non-dischargeable? I'm too lazy to check.
    - someguydave 10y ago
      It's a good point. I failed to caveat that my prediction might not be true: - in a situation where other "risk-free" investments are more profitable - in a situation where the supply of money lent is regulated or controlled enough to fail to bring down rates.
felipelemos 10y ago
College should be a good idea for everyone. Sometimes I think the Renaissance never happened.
andr 10y ago
A professional VC will be wrong about some 80% of the startups they fund. Yet you want to punish a teenager for not correctly evaluating the chances of receiving a well-paying job 4+ years into the future?
- someguydave 10y ago
  The VC is "punished" by his own (and his investor's) voluntary investment losses. Who covers the teenager's losses?
  - neves 10y ago
    Civilized societies.
  - notahacker 10y ago
    And the startup founder isn't punished for failing to earn enough money; the wealthy fund with the risk capital accepts the loss and moves on rather than pursuing the broke founders for the rest of their life with 16% penalty interest rates and invented collection costs and special legislation to exempt them from bankruptcy Why are people lending to students expecting to not be punished for their voluntary investment losses?
    - someguydave 10y ago
      >Why are people lending to students expecting to not be punished for their voluntary investment losses? I don't think they should be.
EpicEng 10y ago
Except we've created a system in which you're told that you have to go to college your entire life. You can't be a damn hotel manager without a college degree these days. The price of college has been on the rise for decades and the only one assuming risk here is the borrower.
HeavenBanned 10y ago
>and then failed to take advantage of them. Giving kids 120K loans for Puppeteering majors at public universities will be looked back upon as a bait for criminal indentured servitude of our nation's young academic minds. Your pathetic insistence on their fault in this manner while big loan fat-cats get fatter off the false promises made to the younger generation that can "major in anything and get a living wage" is perfectly archetypical of the sociopathic capitalistic mindset peddled on here regularly that seeks to milk naive yet gifted minds of their worth for the benefit of the higher classes that exploit them mercilessly. I have a comment if you go into my history that detail's Harvey Mudd's model for universities. Only STEM. No other majors. If you want to major in Gender Theory, you can do it at a private university without loans. I don't want tax dollars funneled in that direction if they're not getting the general public jobs. If you can pay out of pocket for Queer Marxist Theory you can do that at a private "university". Otherwise, stop milking the bright kids/teens out of high school with false promises, big loans and useless majors. If you think for one second having useless majors doesn't line the pockets of the rich, you're an evil, evil person. Don't trample on others because you made it out cleanly.

imsofuture 10y ago

What? Borrowers already have skin in the game. Lenders have none. Make student loans dischargeable and suddenly a lot more people are thinking about the actual utility of college and it's costs.

nhangen 10y ago
I agree with the downvote and the fact that borrowers have skin in the game, but not that lenders have none. Debt should not be dischargeable, else it's not debt at all.
- deleted 10y ago
  [deleted]
- HarryHirsch 10y ago
  Of course debt can be written off. Out there in the real world contracts are renegotiated all the time. More of that would be advantageous in the face of information asymmetry, the party with better insight would be less tempted to exploit their position.
  - nhangen 10y ago
    You're talking about corporate debt not personal debt. Show me an example of personal date that is frequently discharged (outside of bankruptcy) and I'll adjust my position. If you're referring to the fact that it can't be discharged as part of bankruptcy, then I tend to agree with you. It should be.
    - icebraining 10y ago
      If you're referring to the fact that it can't be discharged as part of bankruptcy, then I tend to agree with you. How else would they be dischargeable? I assume you were talking about bankruptcy.
      - nhangen 10y ago
        As some sort of student loan forgiveness program.
    - HarryHirsch 10y ago
      How about medical debt? I understand that US hospitals will cut you a deal based on your ability to pay.
      - nhangen 10y ago
        Yes that's true. However, they won't discharge it completely. They'll set you up with a payment plan and/or negotiate the total. I think they still report it to your credit profile though.
    - pdkl95 10y ago
      https://en.wikipedia.org/wiki/Jubilee_%28biblical%29 https://en.wikipedia.org/wiki/Jubilee_%28biblical%29
    - loeg 10y ago
      Bankruptcy is exactly the vector for discharging most personal debt. The problem is that student loans are exempt from bankruptcy.
- lazyasciiart 10y ago
  Maybe we can focus on making a rich real estate investor's debt non-dischargeable before tightening the screws on broke student loan holders.
HarryHirsch 10y ago
a lot more people are thinking about the actual utility of college Yeah. It's time that lenders began doing diligence again on their borrowers. Even if the prospective borrower didn't know that that Kaplan degree wasn't such a great idea the loan officer at the bank would know and deny the loan.
someguydave 10y ago
>Borrowers already have skin in the game. Lenders have none That's absolutely false. Lenders have skin in the game - they run the risk that the borrower fails to pay back the principal. That's why they charge risky borrowers more interest. If lenders truly had no skin in the game then loans would be nearly interest free.
- HarryHirsch 10y ago
  If lenders truly had no skin in the game then loans would be nearly interest free. There's a testable hypothesis there: did rates for student loans go up much when they were made non-dischargeable? I'm too lazy to check.
  - someguydave 10y ago
    It's a good point. I failed to caveat that my prediction might not be true: - in a situation where other "risk-free" investments are more profitable - in a situation where the supply of money lent is regulated or controlled enough to fail to bring down rates.

felipelemos 10y ago

College should be a good idea for everyone. Sometimes I think the Renaissance never happened.

andr 10y ago

A professional VC will be wrong about some 80% of the startups they fund. Yet you want to punish a teenager for not correctly evaluating the chances of receiving a well-paying job 4+ years into the future?

someguydave 10y ago
The VC is "punished" by his own (and his investor's) voluntary investment losses. Who covers the teenager's losses?
- neves 10y ago
  Civilized societies.
- notahacker 10y ago
  And the startup founder isn't punished for failing to earn enough money; the wealthy fund with the risk capital accepts the loss and moves on rather than pursuing the broke founders for the rest of their life with 16% penalty interest rates and invented collection costs and special legislation to exempt them from bankruptcy Why are people lending to students expecting to not be punished for their voluntary investment losses?
  - someguydave 10y ago
    >Why are people lending to students expecting to not be punished for their voluntary investment losses? I don't think they should be.

EpicEng 10y ago

Except we've created a system in which you're told that you have to go to college your entire life. You can't be a damn hotel manager without a college degree these days. The price of college has been on the rise for decades and the only one assuming risk here is the borrower.

HeavenBanned 10y ago

>and then failed to take advantage of them. Giving kids 120K loans for Puppeteering majors at public universities will be looked back upon as a bait for criminal indentured servitude of our nation's young academic minds. Your pathetic insistence on their fault in this manner while big loan fat-cats get fatter off the false promises made to the younger generation that can "major in anything and get a living wage" is perfectly archetypical of the sociopathic capitalistic mindset peddled on here regularly that seeks to milk naive yet gifted minds of their worth for the benefit of the higher classes that exploit them mercilessly. I have a comment if you go into my history that detail's Harvey Mudd's model for universities. Only STEM. No other majors. If you want to major in Gender Theory, you can do it at a private university without loans. I don't want tax dollars funneled in that direction if they're not getting the general public jobs. If you can pay out of pocket for Queer Marxist Theory you can do that at a private "university". Otherwise, stop milking the bright kids/teens out of high school with false promises, big loans and useless majors. If you think for one second having useless majors doesn't line the pockets of the rich, you're an evil, evil person. Don't trample on others because you made it out cleanly.