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When student loans were able to be discharged in bankruptcy, it was popular to declare bankruptcy on graduation. By the time they saved up enough for a down pay

When student loans were able to be discharged in bankruptcy, it was popular to declare bankruptcy on graduation. By the time they saved up enough for a down payment on a house, the bankruptcy will have fallen off the records, so effectively they got a free education (not the ideal mechanism for doing so, better to give people free education upfront). Maybe there is a middle ground where student debt is not easily discharged, but can be in some cases (eg: graduated 10-20yrs ago, could never find a steady job). Ideally we as a country should decide to make trade schools/college free (or at least give people $10k/yr towards tuition). This would not be a huge increase the in budget as we already spend ~$10k/yr (depends on state) to send kids to high school.

praxulus 9y ago
All student loans should be subject to income-based repayment. They can still be very difficult/impossible to discharge in bankruptcy, but you shouldn't have to make significant payments on them unless you're actually making decent money.
- tybit 9y ago
  This is how it works in Australia and it works very well IMO. It also indexes with inflation so that there isn't a major stress if you graduate with a low paying job and work your way up to a higher salary. This does mean its everyone's lowest priority to pay off, but you can't reasonably avoid paying it other than not making an income.
  - learc83 9y ago
    It works exactly like this in the US. People who aren't currently in college just aren't aware of it.
- learc83 9y ago
  All federal student loans work exactly like this, and Federal loans account for 90% of all loan disbursements.
- skgoa 9y ago
  This is how it works in Germany. Tuition is (almsot) free, but you get an allowance (up to aprox €850 IIRC) every month, if you and your parents don't have a high income. In most German states you a) only have to pay back up to €10k of that and you only have to pay if you make more than a pretty high number that I forgot AND you have a graceperiod of several years before you even to start paying after you leave uni. Consequently, I know nobody who has difficulty making payments.
bitJericho 9y ago
Really? Source?
- extrapickles 9y ago
  Source for the bankruptcy: http://archive.gao.gov/f1102a/101903.pdf http://archive.gao.gov/f1102a/101903.pdf
  - bitJericho 9y ago
    Wow, 4 people in 1975-1976 made over 90k in todays dollars and still declared bankruptcy and dissolved their student loans. The report doesn't say why those 4 specifically went bankrupt, but does talk about some issues affecting these people. Injury, large business losses. Guess we better ban anybody from dissolving student loans!
conanbatt 9y ago
The budget of stanford pasted in this thread shows that tuition is 20% of the income alone. Sure, tuition could be made cheaper, but i'd say the incentives got perverted because they don't need more students at all. They get their money from somewhere else.
T-hawk 9y ago
> (or at least give people $10k/yr towards tuition) This just means the colleges will raise their price by $10k/year. They will charge what the market will bear and capture the subsidy for themselves.
- 0xbear 9y ago
  More like by 15k/yr. Administrators need to be paid too. It's the same problem as with the government. It's not their money, so they're spending it like it's about to expire.
ecshafer 9y ago
Could you find a source with the exact numbers or statistics that made this popular? Its possible it was done, but to say it was popular makes me skeptical.
- extrapickles 9y ago
  https://nces.ed.gov/fastfacts/display.asp?id=66 https://nces.ed.gov/fastfacts/display.asp?id=66 lists it as ~$12k/student for the 2013-14 school year.

praxulus 9y ago

All student loans should be subject to income-based repayment. They can still be very difficult/impossible to discharge in bankruptcy, but you shouldn't have to make significant payments on them unless you're actually making decent money.

tybit 9y ago
This is how it works in Australia and it works very well IMO. It also indexes with inflation so that there isn't a major stress if you graduate with a low paying job and work your way up to a higher salary. This does mean its everyone's lowest priority to pay off, but you can't reasonably avoid paying it other than not making an income.
- learc83 9y ago
  It works exactly like this in the US. People who aren't currently in college just aren't aware of it.
learc83 9y ago
All federal student loans work exactly like this, and Federal loans account for 90% of all loan disbursements.
skgoa 9y ago
This is how it works in Germany. Tuition is (almsot) free, but you get an allowance (up to aprox €850 IIRC) every month, if you and your parents don't have a high income. In most German states you a) only have to pay back up to €10k of that and you only have to pay if you make more than a pretty high number that I forgot AND you have a graceperiod of several years before you even to start paying after you leave uni. Consequently, I know nobody who has difficulty making payments.

bitJericho 9y ago

Really? Source?

extrapickles 9y ago
Source for the bankruptcy: http://archive.gao.gov/f1102a/101903.pdf http://archive.gao.gov/f1102a/101903.pdf
- bitJericho 9y ago
  Wow, 4 people in 1975-1976 made over 90k in todays dollars and still declared bankruptcy and dissolved their student loans. The report doesn't say why those 4 specifically went bankrupt, but does talk about some issues affecting these people. Injury, large business losses. Guess we better ban anybody from dissolving student loans!

conanbatt 9y ago

The budget of stanford pasted in this thread shows that tuition is 20% of the income alone. Sure, tuition could be made cheaper, but i'd say the incentives got perverted because they don't need more students at all. They get their money from somewhere else.

T-hawk 9y ago

> (or at least give people $10k/yr towards tuition) This just means the colleges will raise their price by $10k/year. They will charge what the market will bear and capture the subsidy for themselves.

0xbear 9y ago
More like by 15k/yr. Administrators need to be paid too. It's the same problem as with the government. It's not their money, so they're spending it like it's about to expire.

ecshafer 9y ago

Could you find a source with the exact numbers or statistics that made this popular? Its possible it was done, but to say it was popular makes me skeptical.

extrapickles 9y ago
https://nces.ed.gov/fastfacts/display.asp?id=66 https://nces.ed.gov/fastfacts/display.asp?id=66 lists it as ~$12k/student for the 2013-14 school year.