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Often times when student loans come up people blame exclusively the borrower. We should keep in mind that in a properly functioning lending market both the bor

• Judgmentality 8y ago
  I agree. I feel like most of the problem would be solved by allowing student debt to be erased by declaring bankruptcy. It's absurd that isn't the case.
  • YinglingLight 8y ago
    What's absurd about that? The bank has no salvageable assets to claim. They can't claim 4 years of European Literature from your mind.
    • gdhbcc 8y ago
      Same thing happens w8tg a bankrupt business...
    • gerbal 8y ago
      Fortunately most of the debt is held by the US department of Education, and could easily be written off. (Minor inflationary effects asside).
      • thrill 8y ago
        So, your solution is to stick the taxpayers with the debt?
        • Judgmentality 8y ago
          I feel like that's a small step towards rectifying the destruction of a generation. This country has too much inequality as it is.
        • gerbal 8y ago
          The actual costs of student loan forgiveness is fairly marginal compared to the economic benefits [1]. Further the federal government can write off debt without anyone ever having to pay for it. Student loans are created by the Treasury for the Department of Ed, repayment just gets dumped onto a balance sheet in the treasury that has no relationship to reality. [1] http://www.levyinstitute.org/publications/the-macroeconomic-effects-of-student-debt-cancellation http://www.levyinstitute.org/publications/the-macroeconomic-...
    • Jtsummers 8y ago
      You can wipe out medical loans, which also have no assets to claim, with bankruptcy. Or do you think we need to make Repo Men a reality?
      • madengr 8y ago
        Medical loans? You can wipe out medical debt, but can you actually get a loan for medical procedures?
    • dasil003 8y ago
      What's absurd is they don't have to take into account the ability of the student to pay back the loan, instead taking on an indentured servant for life. This distorts the market leading to higher tuition for everyone.
    • empath75 8y ago
      They can't claim assets for credit card debt either, and yet you can discharge those in bankruptcy.
    • theandrewbailey 8y ago
      It gives the lender little to no incentive to evaluate the marketability of the degree.
  • JumpCrisscross 8y ago
    > most of the problem would be solved by allowing student debt to be erased by declaring bankruptcy Going forward. It's tough to stomach retroactively applying this to existing loans.
    • LyndsySimon 8y ago
      The prohibition was retroactively applied to private loans already existing. My wife and I chose private loans specifically to retain bankruptcy protection in case of serious life issues. A couple years after we took them, the law changed and we were stuck with the higher interest rates of the private loans without those protections. For a time, we considered a Constiitutional challenge to that, as we believed it to be an ex post facto law. We didn’t want to incur the negatives of a bankrupty to gain standing, though, and couldn’t afford the astronomical legal fees that would certainly accompany that sort of case. As far as I know, no one has pursued it.
  • thrower123 8y ago
    If that was allowed, then the interest rates would have to float according to the likelihood that the loan was repaid. Good for CS and econ and engineering, not so good for lierature and gender studies.
  • dd36 8y ago
    Powerful interests have corrupted the legal mechanisms that make markets work efficiently. Here it is bankruptcy. In other markets it is forced arbitration and preventing groups of people from joining together to share legal expenses. Leaving all accountability mechanisms to the government is bad for free markets. Ideally, if you truly want to help low income people get an education through loans, it should be structured more like SBA loans. The lenders should take on a big enough % of the risk that they want to avoid defaults but not so little that they act recklessly and fund loans or schools that are unlikely to perform. I'm sure that if SBA loans were non-dischargeable, there would be an explosion in bad SBA loans that drag on the economy.
• mempko 8y ago
  "Both parties are at fault". Or we can have a tuition-free public education system like we used to. But you know...
  • skh 8y ago
    Yes. This is what I advocate.
• ant6n 8y ago
  The actual problem is high tuition.
  • graeme 8y ago
    Easy access to unlimited loans is a major comtributor to high tuition.
    • skh 8y ago
      I believe for public universities the cost driver has been an increase in administrators and a decrease in funding per student.
      • graeme 8y ago
        Right, but they're competing with private universities. And those are adding administrators, facilities, etc. The public universities are keeping up with that. Without no default loans, the dynamic would change.
  • shados 8y ago
    Yup. Which is partly because of near infinite free money that no one is really responsible for. Hindsight is 20/20, and not being American I don't have the whole history...but what I'm picturing with this situation is: "Omg, it costs $5000 to get a degree! That means only the rich have access to education and increase the gap between rich and poor! We need a solution!" "You can't just go giving education for free! Communism!" "We never said that! Let's lend up to $5000 to anyone without the mean to pay for education! That will level the playing field and in the long term we get back the money, it's win all around!" <fast forward a few years> "Omg, it costs $10,000 to get a degree! Poor people can get loans, but they have to repay them in addition to paying $5,000 out of pocket! That divides the rich and the poor, etc etc! We should load up to $10,000 to even out the playing field! win win!" <fast forward to now after a few cycle> "Omg, we have a student debt crisis!" Like, did someone really not see it coming? Without some form of cost control, this is just government sponsored cost inflation. Because of where Im from Im just used to government paid education. It's not always as good, and there are a lot of friction, but costs are kept a little more under control. I guess you could also, in theory, just not have the loans at all, or much fewer, and if it had been that way from the beggining, cost wouldn't have gone up nearly as fast.
• MaupitiBlue 8y ago
  I don’t “blame” anyone. Millennials made a decision based on their preferences. Now they’ve changed their mind and want me to pick up the tab. No thanks.
  • lovich 8y ago
    As a society we've decide that people <21 aren't responsible enough to have a beer, but are responsible enough to take on massive amounts of loans. All of this while having government propaganda and society telling them since childhood that if they don't get a college degree, they'll be poor their whole lives. Then the law was changed as well so only student debt was not dischargeable in bankruptcy while every other type of debt is. It's disengenous to imply that these were freely made choices. Well running capitalism relies on information parity between both sides and not interactions where it's all of society and a massive industry trying to convince undeveloped minds to make bad choices
  • lilactown 8y ago
    I would say that many millennials made a decision based on information that perhaps wasn't true, and perhaps was given even in bad faith. Source: am a millennial and experienced the huge pressure to go to college, especially an expensive one.
    • fetus8 8y ago
      I too, am a millennial. I grew up being told that the only serious option after high school was to go to college. That's just how life worked. I believed it, as most my family went to college immediately after high school. Not only did my family perpetuate this idea, but my middle class suburban high school did as well. Our guidance counselors actively were involved with the local state universities. They spent a lot of time shoving the idea of attending college down your throat. Maybe they only did this with the higher performing students. I even was going on college tours in 10th grade, through programs at my high school. At the time, I really didn't think there was another option aside from college after high school.
• matis140 8y ago
  I think our public education system is also to blame. We push kids down academic paths too often and many of those paths do not lead to professions that can sustain 45-80k debt after graduation. Too much easy credit is available driving up the price. Degrees are not properly valued. Degrees in social work should not cost the same as a degree in STEM because they are not worth the same. More kids should be going into trades like electricians, plumbers, and millwrites. Good careers that also pay through their apprenticeship programs and currently are looking for kids to train.
  • zelon88 8y ago
    > Good careers that also pay through their apprenticeship programs and currently are looking for kids to train. This isn't always viable either. I started in entry-level manufacturing and worked my way up to production control and IT specifically because even at the highest level of manufacturing I wasn't going to be satisfactorily compensated. I would have been working long overtime hours for a decade or two only to be replaced by CNC machines instead of ever hitting the bigtime anyway. If I hadn't swapped collars I was destined for a life of sub $50k hard labor with shitty insurance and constant threats of bodily injury. Reporting to a "boss" who probably made as much as the manager of McDonalds and drove a Rav-4. Yeah, that's real potential right there.
  • adamrezich 8y ago
    Most of my friends growing up were way into music... not just playing in bands in their spare time, but high school band, marching band, jazz band, drumline, etc., as well as composing and producing digital music in their spare time. A few of these friends pursued other careers in college but many of them went to the state college that's known for its music programs. There, they eventually came to realize the reality of the situation: if you want to continue pursuing music in a college capacity, you're looking at either education or performance. Performance is extremely demanding and unless you're the best of the best of the best... good luck finding work with that degree. If you go down the education route, then, being a state school, you're STRONGLY encouraged to teach at a school somewhere in the state... which has the lowest teacher wages in the country (correction: second-worst as of 2018, moving up!). Many of my friends didn't fully realize the reality of the situation until they'd already got their degrees. One ended up a high school band teacher in our hometown and truly loves it. Another decided to purse computer science instead and just completed his degree in that (and is now realizing how hard it is to find work as a fresh grad with no internship). Another quickly got a business minor and is doing well in the banking industry. Another is a bouncer and photographer. What I'm getting at is, these kids were all pushed into going to college and getting degrees in the thing they enjoyed doing in high school, without stopping to realize their career prospects with said degree. College is just a thing you do after high school, unless you're a loser (or you went to a trade school, which is "a step up but not college"). The whole system is completely broken for modern society in my opinion, we need something to shake the whole thing up and turn it on its head.
• JimboOmega 8y ago
  Do we, as a society want to let the free market decide what education is valuable and what education is not? Giving lenders a lifetime claim on the maximum wage garnishment is undeniably one of the most backwards ways to decide we don't want to let them pick which educations to fund. But if we want lenders to decide what educations are worth funding, and incentivize them to do so, what factors can they consider? You might find, for instance, that women get denied such loans more often - perhaps because of the degrees they pursue, or perhaps because they tend to get paid less. Is that fair? Again saddling somebody with a lifetime of debt (that will never, realistically, get repaid) because of an idealistic choice they made as a teenager feels like one of the most idiotic solutions possible to this problem. It encourages constant tuition creep because there's always more money to throw at it. But there is a lot of risk in letting a small cabal of lenders (as would inevitably emerge if it hasn't already) decide exactly who gets to have what educations.
  • skh 8y ago
    I don’t want lenders at all. Higher education is a public good in the same way k-12 is. I’m in favor of free higher education for qualified people.
  • moduspol 8y ago
    We're not headed toward dystopia by acknowledging some students / degrees have more financial potential than others, and I think we're already increasingly seeing the societal impacts of what happens when we let the idealistic and unrealistic choices of teenagers go unquestioned until their mid-twenties. Using taxpayer funds to make those idealistic and unrealistic choices more appealing and less immediately problematic doesn't help the student or society in the long term.
• moduspol 8y ago
  > Lenders [...] should not be absolved of blame or have less outrage directed at them. I was with you until this point. What part do you blame them for? The federal loan guarantees were created for the express purpose of allowing people who otherwise couldn't get the loans to get them. The lenders are doing exactly what they're supposed to, and would be expected. Lenders should be in the position of determining risk, but it's not their fault federal policy means they don't need to. They're not the ones raising the costs of higher education, they're just facilitating them as intended and expected. If your outrage is directed at the lenders, you're barking up the wrong tree. Put the lenders back in the business of evaluating risk (like they do for home, auto, business, and other loans) and they'll do that.
  • skh 8y ago
    Lenders, through lobbying and regulatory capture, created the system. At least as I see things.
    • moduspol 8y ago
      I don't doubt they contributed, but this isn't like a coal company getting emissions restrictions relaxed. There's a pretty common world view that financial viability should not even be a concern in young people's choices of what field to pursue, and subscribers to that are what created this policy. Lenders benefit, but this is driven by what a large group of people want society to look like. Even if the government subsidized all higher education and removed the lenders from the equation completely, we'd still have increasing numbers of young people graduating in their early and mid-twenties with degrees in fields like gender studies. They won't be in significant debt, but they're still comparatively behind by four years and woefully unprepared for the workforce. Are the students better off from being financially enabled to get in that situation? Is society better off from enabling thousands of people to do it? I don't think so.
      • skh 8y ago
        I can’t think of a reason why the number of gender studies students would increase under a universal higher education system for qualified students. Europe does not appear to be overwhelmed by gender studies graduates. Given the sexual harassment problem at Google, Uber, etc perhaps it would be good for there to be an increase in gender studies. California has free higher education until Reagan became governor. It worked well then and provided it is only available to qualified students I don’t see why it can’t work now.