4 ms·

Even the ability to declare bankruptcy would be nice. Millions are in a state of what amounts to indenture.

qubex 8y ago
I don’t mean to be contentious here, but the reason for which student debt cannot be discharged by bankruptcy is pretty sound: it’s because education (theoretically) adds warning power to an individual and cannot be liquidated. (I’m not a lawyer and am not an American either.)
- jgamman 8y ago
  IIRC this was a policy decision change only 20 odd years ago. (also, not a lawyer or USAan)
  - zackmorris 8y ago
    You're correct, the George W. Bush administration banned student loans from bankruptcy in 2005: https://bostonstudentloanlawyer.com/discharging-student-loans-in-bankruptcy-almost-but-not-quite-impossible/ https://bostonstudentloanlawyer.com/discharging-student-loan... But you'll notice that it wasn't really talked about at the time in mainstream news (however, I knew about it as a progressive): https://www.google.com/search?q=george+w+bush+student+loan+bankruptcy+2005 https://www.google.com/search?q=george+w+bush+student+loan+b... For example, "student" is not mentioned on this page: http://www.nbcnews.com/id/7575010/ns/business-personal_finance/t/bush-signs-tougher-bankruptcy-bill-law/ http://www.nbcnews.com/id/7575010/ns/business-personal_finan... So many young people today think that this is how it always was, and don't realize that it's nonsense. Originally meant to decrease the deficit or whatnot, but having the opposite effect of raising the deficit as the US has become more uneducated and susceptible to ignorance. Unfortunately a lot of other draconian legislation was passed at that time - see the DMCA, etc. Now that the truth is coming out though, there's hope that some of this can get reversed after 2020 if enough people learn about the true history of controversial issues like these.
- leetcrew 8y ago
  more to the point: it's an unsecured (ie, there's no collateral to take in the event of default) loan with a very low interest rate issued to a group of people who have little to no credit history.
  - telchar 8y ago
    The debt I've seen my peers saddled with has typically been 6-10%, issued mostly in the recession/post-recession years of low interest rates. It seems like exceedingly high interest to me when mortgages and car loans are half as much.
    - leetcrew 8y ago
      mortgages and auto loans are secured with assets. the lender can take back the car or house if you default, greatly limiting the risk of lending. a better comparison for an unsecured loan would be a credit card. please let me know if you find a credit card with anything near a 10% interest rate. afaik, the best rates are around 14% and only go to people with very good credit.
      - telchar 8y ago
        I think student debt is the safest of all. It can't be discharged in bankruptcy anymore. Further, it's typically guaranteed by the government on top of that. Credit cards are a poor comparison I think.
        leetcrew 8y ago
        it's important not to conflate federal loans with private loans. neither can be discharged during bankruptcy, but only federal loans are guaranteed by the government. also, the government sets the interest rates on federal loans. a private student loan is not a particularly safe debt to issue. even though the loan cannot be discharged, there is still a substantial risk that the borrower will never be able to pay it back. credit cards and personal loans are a pretty good comparison IMO, as the main difference is the fact that student loans cannot be discharged. this is in fact priced in already; even private student loans have much lower interest rates than any other kind of unsecured loan.
- Fomite 8y ago
  On the other hand, you can discharge medical debt, and not dying adds earning power to an individual and cannot be liquidated.

I don’t mean to be contentious here, but the reason for which student debt cannot be discharged by bankruptcy is pretty sound: it’s because education (theoretically) adds warning power to an individual and cannot be liquidated. (I’m not a lawyer and am not an American either.)

jgamman 8y ago
IIRC this was a policy decision change only 20 odd years ago. (also, not a lawyer or USAan)
- zackmorris 8y ago
  You're correct, the George W. Bush administration banned student loans from bankruptcy in 2005: https://bostonstudentloanlawyer.com/discharging-student-loans-in-bankruptcy-almost-but-not-quite-impossible/ https://bostonstudentloanlawyer.com/discharging-student-loan... But you'll notice that it wasn't really talked about at the time in mainstream news (however, I knew about it as a progressive): https://www.google.com/search?q=george+w+bush+student+loan+bankruptcy+2005 https://www.google.com/search?q=george+w+bush+student+loan+b... For example, "student" is not mentioned on this page: http://www.nbcnews.com/id/7575010/ns/business-personal_finance/t/bush-signs-tougher-bankruptcy-bill-law/ http://www.nbcnews.com/id/7575010/ns/business-personal_finan... So many young people today think that this is how it always was, and don't realize that it's nonsense. Originally meant to decrease the deficit or whatnot, but having the opposite effect of raising the deficit as the US has become more uneducated and susceptible to ignorance. Unfortunately a lot of other draconian legislation was passed at that time - see the DMCA, etc. Now that the truth is coming out though, there's hope that some of this can get reversed after 2020 if enough people learn about the true history of controversial issues like these.
leetcrew 8y ago
more to the point: it's an unsecured (ie, there's no collateral to take in the event of default) loan with a very low interest rate issued to a group of people who have little to no credit history.
- telchar 8y ago
  The debt I've seen my peers saddled with has typically been 6-10%, issued mostly in the recession/post-recession years of low interest rates. It seems like exceedingly high interest to me when mortgages and car loans are half as much.
  - leetcrew 8y ago
    mortgages and auto loans are secured with assets. the lender can take back the car or house if you default, greatly limiting the risk of lending. a better comparison for an unsecured loan would be a credit card. please let me know if you find a credit card with anything near a 10% interest rate. afaik, the best rates are around 14% and only go to people with very good credit.
    - telchar 8y ago
      I think student debt is the safest of all. It can't be discharged in bankruptcy anymore. Further, it's typically guaranteed by the government on top of that. Credit cards are a poor comparison I think.
      - leetcrew 8y ago
        it's important not to conflate federal loans with private loans. neither can be discharged during bankruptcy, but only federal loans are guaranteed by the government. also, the government sets the interest rates on federal loans. a private student loan is not a particularly safe debt to issue. even though the loan cannot be discharged, there is still a substantial risk that the borrower will never be able to pay it back. credit cards and personal loans are a pretty good comparison IMO, as the main difference is the fact that student loans cannot be discharged. this is in fact priced in already; even private student loans have much lower interest rates than any other kind of unsecured loan.
Fomite 8y ago
On the other hand, you can discharge medical debt, and not dying adds earning power to an individual and cannot be liquidated.