5 ms·

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.

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.