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if students could declare bankruptcy there would probably be no student loans. there are already very few private loans available to students without substantia

if students could declare bankruptcy there would probably be no student loans. there are already very few private loans available to students without substantial credit history or a cosigner. how could the numbers possibly work out? to graduate in four years from a state university (paying in-state tuition) costs about $44k. a typical college freshman has close to zero assets and no credit. if they have any income, it's probably a part-time minimum wage job. assuming they don't qualify for any aid, these people need to borrow about $10k each year and likely won't pay any of it back until they get a degree. now let's pause for a moment. how many ways can you get an unsecured $10k loan with limited to no credit history? they basically don't exist. you would need to build credit for a long time before you got a limit anywhere near that on a credit card, and their whole business model revolves around loaning people more money than they should. now consider that in the US, about 40% of students fail to get their bachelors in 6 years. obviously these people will not be able to use the degree to obtain employment, and probably will not ever pay down the debt in full unless they enter a lucrative trade that didn't require the degree in the first place. if we assume that the students who graduate are able to repay the loan, they have to pay a significant amount of interest before the lender breaks even on the group of loans. and keep in mind that there's no guarantee that a student who graduates has acquired a degree that actually improves their earning potential. so tl;dr: it is really hard to offer a reasonable loan of that size to an 18yo with no skills/assets who stands a substantial chance of either not finishing or finishing with a valueless (to the market) degree.

ejnulls 9y ago
You used to be able to discharge student loans through bankruptcy and guess what?? The sky didn't fall down. However, that was also when a year of college could be paid for by a minimum-wage summer job. Now it's egregiously expensive AND they've got you by the balls.
- StudentStuff 9y ago
  Plus, remember that all these banks "offering" student loans aren't actually financing them, that is the domain of the federal government.
- leetcrew 9y ago
  the last time you could discharge student loans in bankruptcy without satisfying special conditions was 1976 in the US. but that was a time where an undergrad degree was relatively cheap, and not many people took out loans in the first place. I don't disagree that something is seriously messed up in this country's higher education system, but the discharge exemption for student loans is probably one of the few things that keeps the system even slightly economic. like I said above, you cannot just lend huge chunks of money to kids without making any risk assessment and also allow them to default whenever. at least, you can't do this unless your intention is to lose money. if I had to have a guess, I would say that the main contributor to our outrageous education costs is the government making all these uneconomic loans in the first place.

ejnulls 9y ago

You used to be able to discharge student loans through bankruptcy and guess what?? The sky didn't fall down. However, that was also when a year of college could be paid for by a minimum-wage summer job. Now it's egregiously expensive AND they've got you by the balls.

StudentStuff 9y ago
Plus, remember that all these banks "offering" student loans aren't actually financing them, that is the domain of the federal government.
leetcrew 9y ago
the last time you could discharge student loans in bankruptcy without satisfying special conditions was 1976 in the US. but that was a time where an undergrad degree was relatively cheap, and not many people took out loans in the first place. I don't disagree that something is seriously messed up in this country's higher education system, but the discharge exemption for student loans is probably one of the few things that keeps the system even slightly economic. like I said above, you cannot just lend huge chunks of money to kids without making any risk assessment and also allow them to default whenever. at least, you can't do this unless your intention is to lose money. if I had to have a guess, I would say that the main contributor to our outrageous education costs is the government making all these uneconomic loans in the first place.