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Disclosure: I work as a blue-collar engine mechanic. Ive never been to college. That having been said, im familiar with debt after the 2008 housing collapse.

Disclosure: I work as a blue-collar engine mechanic. Ive never been to college. That having been said, im familiar with debt after the 2008 housing collapse. I lost my truck and my trailer home, partly because of a shady home loan and partly because well, my employer went out of business. That having been said it was relatively easy to discharge these debts. the bank wasnt too upset about the home and offered to help me restructure payments, which I agreed to until I found someone else to buy it from me. The truck I sold back to the dealership...which incidentally also went bankrupt, but they were easy to work with. I know people in this town with student loans that show up at the local watering hole every week and count their beers in dollars and their tips in change. One of them got her license revoked because she wasnt able to make student loan payments, and had to move back in with her folks. Because she has outstanding student loan debt, she cant qualify for section 8 housing or food stamps. Even her family gets harassing calls about the money she cant pay back fast enough. She is a biologist, but all of her money goes straight to the loans. it has for 9 years now. Why is it I can ditch close to 90 grand in loans lickety-split but students cant? how is education any different?

WrtCdEvrydy 7y ago
Because a few people got fancy degrees and discharged their loans. I'd totally support discharging your loans and having your degree placed into some sort of ADMINISTRATIVE HOLD so it has no value until the loans are being paid back. You can easily pick up the payments once you're fully employed.
- Thorrez 7y ago
  I don't understand how that would work. I can see 2 values in a degree: 1 the ability to put the degree on your resume, 2 the knowledge and enjoyment you got from the degree. I don't see how it's possible to remove 2. I guess you could remove 1 by making it illegal to put on your resume, but then how would you become "fully employed" when you can't put the degree on your resume?
  - WrtCdEvrydy 7y ago
    It prevents high power careers like lawyers and doctors from 'doing away with their loans' as removing those degrees means you can't practice while making lesser degrees dischargeable. It would also make lenders want to make your succeed (it is their money)
    - Thorrez 7y ago
      I still don't see how the person will later become "fully employed" when the person isn't allowed to practice.
  - xfitm3 7y ago
    College educations don't really impart substantial knowledge. It's the ability to put it on your resume that counts.
    - Thorrez 7y ago
      I got substantial knowledge from my degree. But regardless of whether you got any knowledge from your degree, you could still get enjoyment from your degree. And even if you didn't get any knowledge or enjoyment from your degree, if you remove the ability to put it on your resume, how is someone supposed to become "fully employed"?
      - deleted 7y ago
        [deleted]
- sodafountan 7y ago
  Your thoughts on the value of a degree are indicative of the massive disconnect we have in our society between an education and a credential. The reason student loans can't be discharged during bankruptcy is because the value of the degree can't be repossessed by a bank like a house or a car if you default. You attend college to learn and grow, not to pass an HR screening. I could very easily acquire a job as a developer simply by knowing the material and how to write code - how I choose to come by that knowledge is my own prerogative but if I take out a loan from a bank to acquire that knowledge then they have nothing to repossess. You don't attend college for a degree you attend it for the knowledge and experience you gain - a degree is worthless, it can't be resold if a bank were to "take posession" of it. And trust me if banks and financial institutions could create second-hand markets and derivatives for degrees they would, but that would obviously be pointless. I can't just buy and sell PhD's on e-trade.
  - freeone3000 7y ago
    > You attend college to learn and grow, not to pass an HR screening. What? No. I attended college because it let me be hired nearly everywhere with much less hassle than having to "work my way up" - nearly everything I learned was useless or rapidly obsolete (if it wasn't obsolete as it was taught). >You don't attend college for a degree you attend it for the knowledge and experience you gain - a degree is worthless, it can't be resold if a bank were to "take posession" of it. Except to HR, which is frequently where it matters the most, in actual dollars It sure would be nice if a college education was about learning and growth and discovering oneself and all the hoopla they feed you during visits and orientation, but it's a structured credentialing system that involves professors for some reason, and it's effectively mandatory for making an above-median wage.
    - sodafountan 7y ago
      You just accurately described many of the problems in this world. For the record though I don't have a degree myself and I've never been denied for it during the HR screening process, I'm a developer and I use my existing work to market myself. I understand that in other fields this is either very hard to do or near impossible (Doctors, for example, could never do that). In an ideal world, if we could restructure society, we'd have corporations take on the burden of educating their workforce entirely - for instance perhaps out of high school if you were interested in being an accountant you'd intern or do a 2 year rigorous learning/onboarding process at company X where you'd agree to work for less or stay on for Y amount of years. I think a system like that would work a lot better for a lot of people and ultimately bring the cost of higher education down for the people who simply can't avoid it.
- mikeash 7y ago
  Sure, let’s block a valuable worker from contributing to society because they didn’t pay their loans. This is vindictive thinking with no gain to anyone.
yasp 7y ago
Because students generally are poor and so don't have much to lose by declaring bankruptcy. They shrug off massive debts are left with an (ostensibly) valuable degree. Lenders are unable to secure the loan against the borrower's assets, as would generally be the case for a home, auto, or business loan. It's possible that if student loans were dischargeable in bankruptcy that, absent a government guarantee, the lender would need to charge a high enough interest rate where the student loan market simply wouldn't function. And a government guarantee combined with student loan dischargeability in bankruptcy would leave US taxpayers holding the bag.
- freewilly1040 7y ago
  Preventing the student loan market from functioning as it is now is a feature, not a bug.
- nicoburns 7y ago
  In the UK, student loans are not dischargeable via bankruptcy. But repayment is income based (9% of income), and is only due at all for people who are earning above a certain income (currently ~£21k). This seems like a decent way of dealing with this issue.
  - rayiner 7y ago
    Same is true in the US.
    - otaviokz 7y ago
      So, after the 6 months of "grace period", does only students with and a minimum wage get to pay it? I thought you just had to start paying after 6 months.
      - bko 7y ago
        If you enroll in income based repayment, you pay 10% of discretionary income for 20 years. I'm not sure how "discretionary income" is calculated but its probably similar to the UK threshold [0] https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...
coryrc 7y ago
Because your loans have collateral to return (home, car) and education does not.
- anticensor 7y ago
  Education has yourself as return.
  - nordsieck 7y ago
    > Education has yourself as return. That is not something a lender can repossess.
    - SilasX 7y ago
      Not as they currently do it, no, but I imagine (at least with future loans), it could have the penalty that the university would not issue your transcript or vouch for your degree when the loan became delinquent enough. That would be similar in spirit repossession (except that the bank couldn't sell it). But of course, they wouldn't get to take back any of that valuable knowledge and human capital you acquired there /semi-s
      - dragonwriter 7y ago
        Schools already do that with debts, but most student loans for accredited schools aren't issued by the school, who has been fully paid by the lender.
      - djakjxnanjak 7y ago
        College degrees are mostly about signaling. Employers can already check your credit history, so this wouldn’t tell them much they don’t already know.
      - mikeash 7y ago
        The whole point of repossession is that he bank can sell it to recover at least some of their loss. Without that, it’s just destructive punishment. You’d be making society poorer by restricting this person’s job prospects, with no gain anywhere to offset it.
deogeo 7y ago
> One of them got her license revoked because she wasnt able to make student loan payments, and had to move back in with her folks. Because she has outstanding student loan debt, she cant qualify for section 8 housing or food stamps. All that's missing are weekly whippings...
rayiner 7y ago
> Why is it I can ditch close to 90 grand in loans lickety-split but students cant? how is education any different? When you initially took your loans, your lender assessed your credit and made the lending decision accordingly. Any individual loan won’t pan out, it on average the portfolio will, because the lender controls what loans are made. Student loans are completely different. The lender (the federal government—which originates almost all student loans) makes loans almost without assessing your credit or ability to repay. (There may be a filter, but if there is it’s extremely lax.) Your interest rate, moreover, doesn’t depend on your credit. Finally, there is no collateral the government can repossess to recoup its loss. It’s nothing like an ordinary loan.
- downrightmike 7y ago
  The assessing is done by the school as they are a trusted third party. And then the school inflates prices to bring in more money for the endowment and administration. The selling line is something like: "Don't want to have a shit life and no options? We didn't think so, so sign this paper and go cram for tests and don't worry about the bill. People with a degree earn more than those without." And then the jobs are shit or gigs or just not existent. Unless you have a good network to use.
  - mbrumlow 7y ago
    > The assessing is done by the school as they are a trusted third party. That might be for some loans, but from my understanding everybody is guaranteed a loan, regardless of their grades. The point was the government would back the loans so those who were less affluent could also go to school. The end result is we tried to help the poor, and screwed everybody else along the way. Not only did the poor get a bad deal, people who could have normally afforded school got slotted into these bad deals too. People like to blame the schools for raising the prices, but that simply how supply and demand works. Schools can hold X people, if > X people want in then the price goes up. Schools can also only expand so fast. The fact is, not everybody needs to go to a 4 year school. The process of making it near mandatory lowers the value it brings in general as curriculum is adjusted for a much wider group of people -- generally by lowering the bar. This is in part because you now have a bunch of people given loans who without getting that degree probably won't be able to pay back that first year of school they failed out in -- even more so when that is north of 20k. Before we started guaranteeing loans it as either your money, your parents money, or somebody loaning you money who truly was invested in vetting candidates abilities to finish school, get a job, and pay the loan back. With prices generally being lower the loans were smaller too. A much better way to have addressed the issue with poor people would have been to set up grants, vetted students based of merit, and provide grants for those kids who showed promise. The end result is paying a lot less than the mess we have today, and it would have not dragged down those who would have probably been able to afford school on their own accord before this mess happened.
ummonk 7y ago
Because your loan didn't come from the taxpayers.
Waterluvian 7y ago
Wait, why are people losing their driver's license because they can't pay a debt?
DoreenMichele 7y ago
Can you clarify if you meant "she lost her driver's license" or if you meant some kind of professional license?
bko 7y ago
> Why is it I can ditch close to 90 grand in loans lickety-split but students cant? how is education any different? Because most student loans are to the federal government (~93%) [0]. Generally if you owe money to the government, you're kind of on the hook. And even if you discharge your loans after 20 years of income based repayment, you still owe a tax bill on the amount written off since that's a windfall. One argument to get the federal government away from making student loans. They offer a one size fit all interest rate regardless of the economic viability of the degree and ability to pay back. Private lenders offer better rates to students with lower risks (better schools and highly lucrative majors, mainly graduate degrees). [0] https://www.nerdwallet.com/blog/loans/student-loans/student-loan-debt/ https://www.nerdwallet.com/blog/loans/student-loans/student-...
TomMckenny 7y ago
We want everyone who can, rich or poor, to be able to go to college. So everyone gets a loan no questions asked. No private bank would do this so it has to be government. But we want this to cost the government nothing, so the loan is uniquely inescapable. And we want Universities to charge essentially whatever they want, so the loan required is close to unlimited. We'd need to change one of those to fix the problem. Forcing private banks to issue unlimited loosing loans, telling universities what they can do or, only alowing the rich into uinversitys are all unacceptable. Which leave one option, the one other developed continues use. Which is hammered with words like "socialist" or the like.
- mrep 7y ago
  > We want everyone who can, rich or poor, to be able to go to college. So everyone gets a loan no questions asked That doesn't mean the loan needs to be unlimited. Pretty much every story you hear about unreasonable loan repayments are from people who went to a private school and spent $50,000 a year on a major that doesn't have good job prospects. I went to a public state school and most of the people there were because it was cheaper than going to out of state schools or private schools and they majored in subject that had good job prospects. A simple cap on college loans per major would force people to choose cheaper schools (like starting at community college and going in-state) and/or more job economical majors so they don't drown themselves in debt that they cannot pay off. > Which leave one option, the one other developed continues use. Which is hammered with words like "socialist" or the like. Except that solution involves subsidizing everyone to go to college despite how economically useful going to college is for each person. For a prime example, see this topic [0] where european colleges were losing all of their top AI professors because they wouldn't pay their AI professors market wages because they got paid at the same rate as un-economically useful majors. [0]: https://news.ycombinator.com/item?id=15600275 https://news.ycombinator.com/item?id=15600275
- dantheman 7y ago
  Or, we make the applicant apply and only give them a lone we think they'll be able to repay based on their skill, the school, and the choice of major. If they start doing poorly then we don't give them future loans. It's really not that hard -- get the government out of the loan business.
emmelaich 7y ago
Your other responses are excellent. But I want to say this is another TANSTAAFL. You worked, had skills, and otherwise "worked" for your loan. If loans are "free" like student loans, the costs can end up being even higher. What will happen is that once there's enough examples like your biologist friend, the government will forgive them with a TARP like exercise. That might be OK if the underlying system changed and we stopped loaning out money to people unlikely to hand it back. And the money ends up bloating the academic bureaucracy anyway. Not enough ends up improving or providing education.
zaroth 7y ago
Losing a professional license (or even a driver's license) based on a student loan default is asinine. [1] I've never heard of outstanding student loan debt limiting eligibility for food stamps (SNAP) or section 8 housing. Can you point to any resource which can confirm this? My understanding is that both programs are based on household income. [1] - https://studentloanhero.com/featured/unpaid-student-loans-facing-default-lose-license-states/ https://studentloanhero.com/featured/unpaid-student-loans-fa...
microcolonel 7y ago
Education loans, especially the highly-regulated and specific form currently practiced[0], do not have collateral. If you fail to restructure your other debts, there is property to control; if you fail to restructure your student debts, the lender is out on their ass. Student loans are pretty soft on borrowers, the way I look at it. What perhaps should be done is to make the liability conditional on income: loans for nonsense degree mill "educations" would become dramatically more expensive, which I think would be a good thing; but so would loans for anything lenders didn't find promising. Of course, in the U.S, the government is involved in a lot of the lending, which means that they'll probably do whatever irrational thing pleases whoever they're trying to please; except this time around when they're doing the thing they are responsible for doing (actually enforcing the terms of the loan agreements) rather than the popular thing. Here in Canada, I feel the system is pretty unfair to people who did not require higher education; I'm stuck paying for the useless, pompous ignorami who make private life harder and more boring for me with their prefab ideas and vague bloviation, and I've been paying net taxes into it since I was 17. When I move to the U.S, I hope I'm not paying even more for the same garbage that convinces smart people that they are useless without college, and convinces dumb people that college has automatically made them useful. [0] As long as the conversation about the tremendous amount of student debt held in the U.S. is centered around loan forgiveness, lenders have no incentive to improve their practices. The federal government can't just steal their property, so they figure they'll get a sweet settlement and a smooth exit, just like the lenders who were publicly scapegoated, and privately rewarded, a decade ago.
bradleyjg 7y ago
> She is a biologist, but all of her money goes straight to the loans. it has for 9 years now. Federally owned student loans, which are the vast majority, have income driven repayment plans available. There are a lot of details but most are eligible for a plan that requires the payment of 10% of income after 150% of poverty line.
Lazare 7y ago
The logic runs like this: A secured loan should be easy and cheap to get, because if it goes bad, the lender can reposes the collateral. This is like your house and the truck; you ran up some debt, it didn't work out, you lost them both, but you also lost the debt. An unsecured loan should be harder to get and pretty expensive, because it's riskier. If I run up $20k on my credit card paying for a fancy vacation, then can't pay, they can't take that vacation back from me. If I declare bankruptcy, I get a "free" vacation (I mean, not exactly, bankruptcy is complicated and expensive, but...) That's why credit cards run a 16% interest rate. Student loans are for an education, which you can't repossess, but we also don't want to carefully vet applicants or charge them 16% interest rates. To try and square the circle, we've decided that student loans will be super easy to get and have very low rates, but then to try and avoid abuse we've decided they can't be discharged in bankruptcy. And then to try and avoid people being stuck with massive loans they can never repay, there's a bunch of complex income-based repayment plans and schemes where you can get balances forgiven in some cases. > Why is it I can ditch close to 90 grand in loans lickety-split but students cant? how is education any different? Education debt is different due to the combination of being inherently riskier than, say, a mortgage to buy a house, while still being something we want widely and cheaply available. That being said, your biologist friend may have some better options if she looks into it.
- hammock 7y ago
  >Student loans are for an education, which you can't repossess, but we also don't want to carefully vet applicants or charge them 16% interest rates. To try and square the circle, we've decided that student loans will be super easy to get and have very low rates, but then to try and avoid abuse we've decided they can't be discharged in bankruptcy. And then to try and avoid people being stuck with massive loans they can never repay, there's a bunch of complex income-based repayment plans and schemes where you can get balances forgiven in some cases You say that like there was some master central plan, but I doubt that's the case. Would love to know the history of how our whole "system" / tangle of rules etc came to be, timeline of events, etc
  - throw20102010 7y ago
eanzenberg 7y ago
Because there were assets tied to those loans (the house and the car)
TheBobinator 7y ago
Students treat college as a jobs training program and as an investment of their time to get into a better life. However, both the government and the schools do not treat college this way. If the government was wisely investing, they'd decide STEM Folks can get huge loans due to the long-term need for them and their relative scarcity, but "luxury" degrees such as art, history, music, etc majors can only take out tiny ones due to the lack of economic utility, with quota's set for each so that you do not over-supply the market with more labor than it can absorb. You need both long-term and short-term feedback systems and you need to fail people in programs who are unsuitable early on. Furthermore, because college is about "building character and life skills", there's no control on accredited institutions that do not provide economically viable candidates. Which college students in what programs repay their loans vs do not? Where's that data? Surely that information is a matter of public record but students go to college courses, get A's, and come out the other end jobless or under-employed. The net effect is children who's parents have never gone through college or continuing education programs, especially minorities, don't know to ask the above questions or how to navigate the system successfully, and the college administrators in order to make their millions, screw those kids and their families over 9 ways from Sunday as hard as they possible can because it's a dog-eat-dog world and screw em'. Think about it; please fill out your FASFA and tell me exactly how much money you make so I know how much to charge. It's an unsustainable system and the only thing that gives it a some amount of legitimacy is the fact the loans are given by the government and people are allowed to do what they want with them. It's a system that is begging for regulation.

WrtCdEvrydy 7y ago

Because a few people got fancy degrees and discharged their loans. I'd totally support discharging your loans and having your degree placed into some sort of ADMINISTRATIVE HOLD so it has no value until the loans are being paid back. You can easily pick up the payments once you're fully employed.

Thorrez 7y ago
I don't understand how that would work. I can see 2 values in a degree: 1 the ability to put the degree on your resume, 2 the knowledge and enjoyment you got from the degree. I don't see how it's possible to remove 2. I guess you could remove 1 by making it illegal to put on your resume, but then how would you become "fully employed" when you can't put the degree on your resume?
- WrtCdEvrydy 7y ago
  It prevents high power careers like lawyers and doctors from 'doing away with their loans' as removing those degrees means you can't practice while making lesser degrees dischargeable. It would also make lenders want to make your succeed (it is their money)
  - Thorrez 7y ago
    I still don't see how the person will later become "fully employed" when the person isn't allowed to practice.
- xfitm3 7y ago
  College educations don't really impart substantial knowledge. It's the ability to put it on your resume that counts.
  - Thorrez 7y ago
    I got substantial knowledge from my degree. But regardless of whether you got any knowledge from your degree, you could still get enjoyment from your degree. And even if you didn't get any knowledge or enjoyment from your degree, if you remove the ability to put it on your resume, how is someone supposed to become "fully employed"?
    - deleted 7y ago
      [deleted]
sodafountan 7y ago
Your thoughts on the value of a degree are indicative of the massive disconnect we have in our society between an education and a credential. The reason student loans can't be discharged during bankruptcy is because the value of the degree can't be repossessed by a bank like a house or a car if you default. You attend college to learn and grow, not to pass an HR screening. I could very easily acquire a job as a developer simply by knowing the material and how to write code - how I choose to come by that knowledge is my own prerogative but if I take out a loan from a bank to acquire that knowledge then they have nothing to repossess. You don't attend college for a degree you attend it for the knowledge and experience you gain - a degree is worthless, it can't be resold if a bank were to "take posession" of it. And trust me if banks and financial institutions could create second-hand markets and derivatives for degrees they would, but that would obviously be pointless. I can't just buy and sell PhD's on e-trade.
- freeone3000 7y ago
  > You attend college to learn and grow, not to pass an HR screening. What? No. I attended college because it let me be hired nearly everywhere with much less hassle than having to "work my way up" - nearly everything I learned was useless or rapidly obsolete (if it wasn't obsolete as it was taught). >You don't attend college for a degree you attend it for the knowledge and experience you gain - a degree is worthless, it can't be resold if a bank were to "take posession" of it. Except to HR, which is frequently where it matters the most, in actual dollars It sure would be nice if a college education was about learning and growth and discovering oneself and all the hoopla they feed you during visits and orientation, but it's a structured credentialing system that involves professors for some reason, and it's effectively mandatory for making an above-median wage.
  - sodafountan 7y ago
    You just accurately described many of the problems in this world. For the record though I don't have a degree myself and I've never been denied for it during the HR screening process, I'm a developer and I use my existing work to market myself. I understand that in other fields this is either very hard to do or near impossible (Doctors, for example, could never do that). In an ideal world, if we could restructure society, we'd have corporations take on the burden of educating their workforce entirely - for instance perhaps out of high school if you were interested in being an accountant you'd intern or do a 2 year rigorous learning/onboarding process at company X where you'd agree to work for less or stay on for Y amount of years. I think a system like that would work a lot better for a lot of people and ultimately bring the cost of higher education down for the people who simply can't avoid it.
mikeash 7y ago
Sure, let’s block a valuable worker from contributing to society because they didn’t pay their loans. This is vindictive thinking with no gain to anyone.

yasp 7y ago

Because students generally are poor and so don't have much to lose by declaring bankruptcy. They shrug off massive debts are left with an (ostensibly) valuable degree. Lenders are unable to secure the loan against the borrower's assets, as would generally be the case for a home, auto, or business loan. It's possible that if student loans were dischargeable in bankruptcy that, absent a government guarantee, the lender would need to charge a high enough interest rate where the student loan market simply wouldn't function. And a government guarantee combined with student loan dischargeability in bankruptcy would leave US taxpayers holding the bag.

freewilly1040 7y ago
Preventing the student loan market from functioning as it is now is a feature, not a bug.
nicoburns 7y ago
In the UK, student loans are not dischargeable via bankruptcy. But repayment is income based (9% of income), and is only due at all for people who are earning above a certain income (currently ~£21k). This seems like a decent way of dealing with this issue.
- rayiner 7y ago
  Same is true in the US.
  - otaviokz 7y ago
    So, after the 6 months of "grace period", does only students with and a minimum wage get to pay it? I thought you just had to start paying after 6 months.
    - bko 7y ago
      If you enroll in income based repayment, you pay 10% of discretionary income for 20 years. I'm not sure how "discretionary income" is calculated but its probably similar to the UK threshold [0] https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...

coryrc 7y ago

Because your loans have collateral to return (home, car) and education does not.

anticensor 7y ago
Education has yourself as return.
- nordsieck 7y ago
  > Education has yourself as return. That is not something a lender can repossess.
  - SilasX 7y ago
    Not as they currently do it, no, but I imagine (at least with future loans), it could have the penalty that the university would not issue your transcript or vouch for your degree when the loan became delinquent enough. That would be similar in spirit repossession (except that the bank couldn't sell it). But of course, they wouldn't get to take back any of that valuable knowledge and human capital you acquired there /semi-s
    - dragonwriter 7y ago
      Schools already do that with debts, but most student loans for accredited schools aren't issued by the school, who has been fully paid by the lender.
    - djakjxnanjak 7y ago
      College degrees are mostly about signaling. Employers can already check your credit history, so this wouldn’t tell them much they don’t already know.
    - mikeash 7y ago
      The whole point of repossession is that he bank can sell it to recover at least some of their loss. Without that, it’s just destructive punishment. You’d be making society poorer by restricting this person’s job prospects, with no gain anywhere to offset it.

deogeo 7y ago

> One of them got her license revoked because she wasnt able to make student loan payments, and had to move back in with her folks. Because she has outstanding student loan debt, she cant qualify for section 8 housing or food stamps. All that's missing are weekly whippings...

rayiner 7y ago

> Why is it I can ditch close to 90 grand in loans lickety-split but students cant? how is education any different? When you initially took your loans, your lender assessed your credit and made the lending decision accordingly. Any individual loan won’t pan out, it on average the portfolio will, because the lender controls what loans are made. Student loans are completely different. The lender (the federal government—which originates almost all student loans) makes loans almost without assessing your credit or ability to repay. (There may be a filter, but if there is it’s extremely lax.) Your interest rate, moreover, doesn’t depend on your credit. Finally, there is no collateral the government can repossess to recoup its loss. It’s nothing like an ordinary loan.

downrightmike 7y ago
The assessing is done by the school as they are a trusted third party. And then the school inflates prices to bring in more money for the endowment and administration. The selling line is something like: "Don't want to have a shit life and no options? We didn't think so, so sign this paper and go cram for tests and don't worry about the bill. People with a degree earn more than those without." And then the jobs are shit or gigs or just not existent. Unless you have a good network to use.
- mbrumlow 7y ago
  > The assessing is done by the school as they are a trusted third party. That might be for some loans, but from my understanding everybody is guaranteed a loan, regardless of their grades. The point was the government would back the loans so those who were less affluent could also go to school. The end result is we tried to help the poor, and screwed everybody else along the way. Not only did the poor get a bad deal, people who could have normally afforded school got slotted into these bad deals too. People like to blame the schools for raising the prices, but that simply how supply and demand works. Schools can hold X people, if > X people want in then the price goes up. Schools can also only expand so fast. The fact is, not everybody needs to go to a 4 year school. The process of making it near mandatory lowers the value it brings in general as curriculum is adjusted for a much wider group of people -- generally by lowering the bar. This is in part because you now have a bunch of people given loans who without getting that degree probably won't be able to pay back that first year of school they failed out in -- even more so when that is north of 20k. Before we started guaranteeing loans it as either your money, your parents money, or somebody loaning you money who truly was invested in vetting candidates abilities to finish school, get a job, and pay the loan back. With prices generally being lower the loans were smaller too. A much better way to have addressed the issue with poor people would have been to set up grants, vetted students based of merit, and provide grants for those kids who showed promise. The end result is paying a lot less than the mess we have today, and it would have not dragged down those who would have probably been able to afford school on their own accord before this mess happened.

ummonk 7y ago

Because your loan didn't come from the taxpayers.

Waterluvian 7y ago

Wait, why are people losing their driver's license because they can't pay a debt?

DoreenMichele 7y ago

Can you clarify if you meant "she lost her driver's license" or if you meant some kind of professional license?

bko 7y ago

> Why is it I can ditch close to 90 grand in loans lickety-split but students cant? how is education any different? Because most student loans are to the federal government (~93%) [0]. Generally if you owe money to the government, you're kind of on the hook. And even if you discharge your loans after 20 years of income based repayment, you still owe a tax bill on the amount written off since that's a windfall. One argument to get the federal government away from making student loans. They offer a one size fit all interest rate regardless of the economic viability of the degree and ability to pay back. Private lenders offer better rates to students with lower risks (better schools and highly lucrative majors, mainly graduate degrees). [0] https://www.nerdwallet.com/blog/loans/student-loans/student-loan-debt/ https://www.nerdwallet.com/blog/loans/student-loans/student-...

TomMckenny 7y ago

We want everyone who can, rich or poor, to be able to go to college. So everyone gets a loan no questions asked. No private bank would do this so it has to be government. But we want this to cost the government nothing, so the loan is uniquely inescapable. And we want Universities to charge essentially whatever they want, so the loan required is close to unlimited. We'd need to change one of those to fix the problem. Forcing private banks to issue unlimited loosing loans, telling universities what they can do or, only alowing the rich into uinversitys are all unacceptable. Which leave one option, the one other developed continues use. Which is hammered with words like "socialist" or the like.

mrep 7y ago
> We want everyone who can, rich or poor, to be able to go to college. So everyone gets a loan no questions asked That doesn't mean the loan needs to be unlimited. Pretty much every story you hear about unreasonable loan repayments are from people who went to a private school and spent $50,000 a year on a major that doesn't have good job prospects. I went to a public state school and most of the people there were because it was cheaper than going to out of state schools or private schools and they majored in subject that had good job prospects. A simple cap on college loans per major would force people to choose cheaper schools (like starting at community college and going in-state) and/or more job economical majors so they don't drown themselves in debt that they cannot pay off. > Which leave one option, the one other developed continues use. Which is hammered with words like "socialist" or the like. Except that solution involves subsidizing everyone to go to college despite how economically useful going to college is for each person. For a prime example, see this topic [0] where european colleges were losing all of their top AI professors because they wouldn't pay their AI professors market wages because they got paid at the same rate as un-economically useful majors. [0]: https://news.ycombinator.com/item?id=15600275 https://news.ycombinator.com/item?id=15600275
dantheman 7y ago
Or, we make the applicant apply and only give them a lone we think they'll be able to repay based on their skill, the school, and the choice of major. If they start doing poorly then we don't give them future loans. It's really not that hard -- get the government out of the loan business.

emmelaich 7y ago

Your other responses are excellent. But I want to say this is another TANSTAAFL. You worked, had skills, and otherwise "worked" for your loan. If loans are "free" like student loans, the costs can end up being even higher. What will happen is that once there's enough examples like your biologist friend, the government will forgive them with a TARP like exercise. That might be OK if the underlying system changed and we stopped loaning out money to people unlikely to hand it back. And the money ends up bloating the academic bureaucracy anyway. Not enough ends up improving or providing education.

zaroth 7y ago

Losing a professional license (or even a driver's license) based on a student loan default is asinine. [1] I've never heard of outstanding student loan debt limiting eligibility for food stamps (SNAP) or section 8 housing. Can you point to any resource which can confirm this? My understanding is that both programs are based on household income. [1] - https://studentloanhero.com/featured/unpaid-student-loans-facing-default-lose-license-states/ https://studentloanhero.com/featured/unpaid-student-loans-fa...

microcolonel 7y ago

Education loans, especially the highly-regulated and specific form currently practiced[0], do not have collateral. If you fail to restructure your other debts, there is property to control; if you fail to restructure your student debts, the lender is out on their ass. Student loans are pretty soft on borrowers, the way I look at it. What perhaps should be done is to make the liability conditional on income: loans for nonsense degree mill "educations" would become dramatically more expensive, which I think would be a good thing; but so would loans for anything lenders didn't find promising. Of course, in the U.S, the government is involved in a lot of the lending, which means that they'll probably do whatever irrational thing pleases whoever they're trying to please; except this time around when they're doing the thing they are responsible for doing (actually enforcing the terms of the loan agreements) rather than the popular thing. Here in Canada, I feel the system is pretty unfair to people who did not require higher education; I'm stuck paying for the useless, pompous ignorami who make private life harder and more boring for me with their prefab ideas and vague bloviation, and I've been paying net taxes into it since I was 17. When I move to the U.S, I hope I'm not paying even more for the same garbage that convinces smart people that they are useless without college, and convinces dumb people that college has automatically made them useful. [0] As long as the conversation about the tremendous amount of student debt held in the U.S. is centered around loan forgiveness, lenders have no incentive to improve their practices. The federal government can't just steal their property, so they figure they'll get a sweet settlement and a smooth exit, just like the lenders who were publicly scapegoated, and privately rewarded, a decade ago.

bradleyjg 7y ago

> She is a biologist, but all of her money goes straight to the loans. it has for 9 years now. Federally owned student loans, which are the vast majority, have income driven repayment plans available. There are a lot of details but most are eligible for a plan that requires the payment of 10% of income after 150% of poverty line.

Lazare 7y ago

The logic runs like this: A secured loan should be easy and cheap to get, because if it goes bad, the lender can reposes the collateral. This is like your house and the truck; you ran up some debt, it didn't work out, you lost them both, but you also lost the debt. An unsecured loan should be harder to get and pretty expensive, because it's riskier. If I run up $20k on my credit card paying for a fancy vacation, then can't pay, they can't take that vacation back from me. If I declare bankruptcy, I get a "free" vacation (I mean, not exactly, bankruptcy is complicated and expensive, but...) That's why credit cards run a 16% interest rate. Student loans are for an education, which you can't repossess, but we also don't want to carefully vet applicants or charge them 16% interest rates. To try and square the circle, we've decided that student loans will be super easy to get and have very low rates, but then to try and avoid abuse we've decided they can't be discharged in bankruptcy. And then to try and avoid people being stuck with massive loans they can never repay, there's a bunch of complex income-based repayment plans and schemes where you can get balances forgiven in some cases. > Why is it I can ditch close to 90 grand in loans lickety-split but students cant? how is education any different? Education debt is different due to the combination of being inherently riskier than, say, a mortgage to buy a house, while still being something we want widely and cheaply available. That being said, your biologist friend may have some better options if she looks into it.

hammock 7y ago
>Student loans are for an education, which you can't repossess, but we also don't want to carefully vet applicants or charge them 16% interest rates. To try and square the circle, we've decided that student loans will be super easy to get and have very low rates, but then to try and avoid abuse we've decided they can't be discharged in bankruptcy. And then to try and avoid people being stuck with massive loans they can never repay, there's a bunch of complex income-based repayment plans and schemes where you can get balances forgiven in some cases You say that like there was some master central plan, but I doubt that's the case. Would love to know the history of how our whole "system" / tangle of rules etc came to be, timeline of events, etc
- throw20102010 7y ago

eanzenberg 7y ago

Because there were assets tied to those loans (the house and the car)

TheBobinator 7y ago

Students treat college as a jobs training program and as an investment of their time to get into a better life. However, both the government and the schools do not treat college this way. If the government was wisely investing, they'd decide STEM Folks can get huge loans due to the long-term need for them and their relative scarcity, but "luxury" degrees such as art, history, music, etc majors can only take out tiny ones due to the lack of economic utility, with quota's set for each so that you do not over-supply the market with more labor than it can absorb. You need both long-term and short-term feedback systems and you need to fail people in programs who are unsuitable early on. Furthermore, because college is about "building character and life skills", there's no control on accredited institutions that do not provide economically viable candidates. Which college students in what programs repay their loans vs do not? Where's that data? Surely that information is a matter of public record but students go to college courses, get A's, and come out the other end jobless or under-employed. The net effect is children who's parents have never gone through college or continuing education programs, especially minorities, don't know to ask the above questions or how to navigate the system successfully, and the college administrators in order to make their millions, screw those kids and their families over 9 ways from Sunday as hard as they possible can because it's a dog-eat-dog world and screw em'. Think about it; please fill out your FASFA and tell me exactly how much money you make so I know how much to charge. It's an unsustainable system and the only thing that gives it a some amount of legitimacy is the fact the loans are given by the government and people are allowed to do what they want with them. It's a system that is begging for regulation.