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> let students discharge student loans via bankruptcy This is a fine idea, but you have to recognize that this just means approximately no one gets student loa

> let students discharge student loans via bankruptcy This is a fine idea, but you have to recognize that this just means approximately no one gets student loans (and those who do get them don't need them). Think about it: if you come out of college with, say, $20k of debt (granting that this might bring down prices) and no assets, bankruptcy is a very tempting option. Student loans are just inherently problematic - the people who need them have no assets, and the thing they pay for can't be used to secure the loan. Sure, prices would come down, but partially because so many people would be priced out and demand would drop. The solution has to involve more than that.

Gibbon1 8y ago
> Think about it: if you come out of college with, say, $20k of debt (granting that this might bring down prices) and no assets, bankruptcy is a very tempting option. You actually have to convince a judge that's appropriate. And the court has a wide variety of tools at it's disposal to reach an equitable decision. From telling the petitioner to get stuffed all the way to telling the creditors to get stuffed.
- thedufer 8y ago
  Can you cite a case of this happening? As far as I can tell, chapter 7 cases are only ever denied for failing to file properly (missing deadlines, failure to disclose, etc), or kicked over to chapter 13 (which would be pretty remarkable in a case involving the little to no income of most students).
  - Gibbon1 8y ago
    If we were being reasonable about student loan debt Chapter 13 or 11 would be more appropriate than Chapter 7. Both of those allow for debt service to be renegotiated. Student loan debt is a particularly odious bit of neoliberal policy, forcing students to take on debt for something other societies provide for free, non dischargable and guaranteed by the state.
JauntyHatAngle 8y ago
A potential solution is HECS here in Australia for university. It's a government loan that anyone who goes to a HELP approved course can obtain (nearly all proper university courses) and it gets taxed out of your future earnings, and is indexed at (almost) CPI (e.g. this year it was indexed at 2%). There is still argument here on whether it should be free (University used to be free in Australia) or a higher rate of repayment (the government tried to index it at the bond rate which would make it an indefinite tax on a high proportion of those with HECS debts...) but it does work in the sense that it doesn't drive anyone into the ground and allows anyone with high enough marks to go to uni without worrying about course fees - and it still will eventually be repaid. Can someone with better knowledge on these areas than I tell me why a loan system like HECS would or wouldn't work in the US?
Analemma_ 8y ago
Bull. Student loans did not become non-dischargeable until the mid-2000’s; and before that plenty of people got loans and there was no epidemic of graduates immediately declaring bankruptcy. You’re spouting propaganda talking points from predatory lenders.
- nostrebored 8y ago
  There actually was. Particularly with doctors and lawyers. Among regular students, not as much, but discharging hundreds of thousands of dollars of debt for a few years of bad credit when you're making hundreds of thousands of dollars is a great deal. It was a rational decision to make.
dragonwriter 8y ago
> This is a fine idea, but you have to recognize that this just means approximately no one gets student loans (and those who do get them don't need them). The vast majority of student loan loans are issued by the federal government since private lenders are cut out of the federally-guaranteed Stafford loan program, so changing rules on discharge won't meaningfully effect loan issuance without some other federal policy change. > Think about it: if you come out of college with, say, $20k of debt (granting that this might bring down prices) and no assets, bankruptcy is a very tempting option. So make them hard, as they are now, to discharge for some period of years after they would regularly first enter repayment, and then subject to discharge like normal unsecured debt. Or, just eliminate the federal student loan program and special bankruptcy treatment of student loans in favor of robust federal need-based and public-service-based grants.
- thedufer 8y ago
  > The vast majority of student loan loans are issued by the federal government since private lenders are cut out of the federally-guaranteed Stafford loan program, so changing rules on discharge won't meaningfully effect loan issuance without some other federal policy change. This is a good point - I think of Stafford loans as inextricably tied to the no-discharge terms, but that's probably not the case. Perhaps cutting out the no-discharge terms would just be a backdoor to government-provided university-level education.

Gibbon1 8y ago

> Think about it: if you come out of college with, say, $20k of debt (granting that this might bring down prices) and no assets, bankruptcy is a very tempting option. You actually have to convince a judge that's appropriate. And the court has a wide variety of tools at it's disposal to reach an equitable decision. From telling the petitioner to get stuffed all the way to telling the creditors to get stuffed.

thedufer 8y ago
Can you cite a case of this happening? As far as I can tell, chapter 7 cases are only ever denied for failing to file properly (missing deadlines, failure to disclose, etc), or kicked over to chapter 13 (which would be pretty remarkable in a case involving the little to no income of most students).
- Gibbon1 8y ago
  If we were being reasonable about student loan debt Chapter 13 or 11 would be more appropriate than Chapter 7. Both of those allow for debt service to be renegotiated. Student loan debt is a particularly odious bit of neoliberal policy, forcing students to take on debt for something other societies provide for free, non dischargable and guaranteed by the state.

JauntyHatAngle 8y ago

A potential solution is HECS here in Australia for university. It's a government loan that anyone who goes to a HELP approved course can obtain (nearly all proper university courses) and it gets taxed out of your future earnings, and is indexed at (almost) CPI (e.g. this year it was indexed at 2%). There is still argument here on whether it should be free (University used to be free in Australia) or a higher rate of repayment (the government tried to index it at the bond rate which would make it an indefinite tax on a high proportion of those with HECS debts...) but it does work in the sense that it doesn't drive anyone into the ground and allows anyone with high enough marks to go to uni without worrying about course fees - and it still will eventually be repaid. Can someone with better knowledge on these areas than I tell me why a loan system like HECS would or wouldn't work in the US?

Analemma_ 8y ago

Bull. Student loans did not become non-dischargeable until the mid-2000’s; and before that plenty of people got loans and there was no epidemic of graduates immediately declaring bankruptcy. You’re spouting propaganda talking points from predatory lenders.

nostrebored 8y ago
There actually was. Particularly with doctors and lawyers. Among regular students, not as much, but discharging hundreds of thousands of dollars of debt for a few years of bad credit when you're making hundreds of thousands of dollars is a great deal. It was a rational decision to make.

dragonwriter 8y ago

> This is a fine idea, but you have to recognize that this just means approximately no one gets student loans (and those who do get them don't need them). The vast majority of student loan loans are issued by the federal government since private lenders are cut out of the federally-guaranteed Stafford loan program, so changing rules on discharge won't meaningfully effect loan issuance without some other federal policy change. > Think about it: if you come out of college with, say, $20k of debt (granting that this might bring down prices) and no assets, bankruptcy is a very tempting option. So make them hard, as they are now, to discharge for some period of years after they would regularly first enter repayment, and then subject to discharge like normal unsecured debt. Or, just eliminate the federal student loan program and special bankruptcy treatment of student loans in favor of robust federal need-based and public-service-based grants.

thedufer 8y ago
> The vast majority of student loan loans are issued by the federal government since private lenders are cut out of the federally-guaranteed Stafford loan program, so changing rules on discharge won't meaningfully effect loan issuance without some other federal policy change. This is a good point - I think of Stafford loans as inextricably tied to the no-discharge terms, but that's probably not the case. Perhaps cutting out the no-discharge terms would just be a backdoor to government-provided university-level education.