4 ms·

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

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.

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.