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In the US, do student loans need collateral? I recently went through the process in India and was quite surprised at the amount of rigour - the bank requested

by ilarum 8y ago

In the US, do student loans need collateral? I recently went through the process in India and was quite surprised at the amount of rigour - the bank requested a lot of information including grades since high school, discussed potential earnings and requested that the familial home be hypothecated to the bank.

Spooky23 8y ago
No, in the US the government guarantees or buys the loans, which are non discharable. You are free to drop $70k a year on a bachelors/masters in preschool education and make partial payments for the rest of your life!
wincy 8y ago
Not at all. You can spend six years get a degree in photography and museum curation at an expensive art school, get 130,000 in student loan debt, then live with your parents while you pay 20% of your income in perpetuity. (A friend of mine’s real life situation)
occamrazor 8y ago
In the US student loans are for the major part unsecured and guaranteed by the government. The idea behind is that a better educated population is more productive and pays, on aggregate, higher taxes. Part of this tax surplus can be used to pay for the debt defaults. The reality is that the loans in too many cases are too high and will be paid back only in minimal part.
dougmwne 8y ago
I don't know the details, but here goes... In the USA, government and private student loans are easily available. I have never heard of anyone who couldn't study becuase they couldn't get loans, though I'm sure it happens. I have heard of many people who accumulate huge debts for degrees that offer a low increase in potential future earnings. Like an MFA frankly. This is mostly becuase USA student debt is a special debt that follows you for life. It cannot be discharged in bankruptcy. You can enslave yourself with a bad loan. Your soul is the collateral. That's the absurdity the author refers to.

by ilarum 8y ago

Spooky23 8y ago

No, in the US the government guarantees or buys the loans, which are non discharable. You are free to drop $70k a year on a bachelors/masters in preschool education and make partial payments for the rest of your life!

wincy 8y ago

Not at all. You can spend six years get a degree in photography and museum curation at an expensive art school, get 130,000 in student loan debt, then live with your parents while you pay 20% of your income in perpetuity. (A friend of mine’s real life situation)

occamrazor 8y ago

In the US student loans are for the major part unsecured and guaranteed by the government. The idea behind is that a better educated population is more productive and pays, on aggregate, higher taxes. Part of this tax surplus can be used to pay for the debt defaults. The reality is that the loans in too many cases are too high and will be paid back only in minimal part.

dougmwne 8y ago

I don't know the details, but here goes... In the USA, government and private student loans are easily available. I have never heard of anyone who couldn't study becuase they couldn't get loans, though I'm sure it happens. I have heard of many people who accumulate huge debts for degrees that offer a low increase in potential future earnings. Like an MFA frankly. This is mostly becuase USA student debt is a special debt that follows you for life. It cannot be discharged in bankruptcy. You can enslave yourself with a bad loan. Your soul is the collateral. That's the absurdity the author refers to.