2 ms·

That's false. My father and mother took out student loans when they were dischargeable and they paid them off. My dad via working as a taxi driver and bouncer,

by breck 7y ago

That's false. My father and mother took out student loans when they were dischargeable and they paid them off. My dad via working as a taxi driver and bouncer, because there was downward pricing pressure back then. There are severe consequences to filing for bankruptcy. That is on your record for 7 years, minimum.

tptacek 7y ago
This is also a non sequitur response. Doubtless many people would pay back their loans, for personal moral reasons. But a BK on your record from ages 21-28 is not a meaningful practical deterrent for ruthless default, because those are ages when personal credit history is not especially important; the BK would come off your record years before most people take out their first mortgage (the median age of first home purchase is 42, but a mortgage in your early 30s would be easily accomplished after a student loan default). There are annoying consequences to having a BK on your record --- it would be harder (though not impossible) to get a credit card, and your first couple apartment lessors might want cosigners (though it is extremely possible to get a lease with terrible credit). The problem is that these consequences are far less onerous than shouldering student debt, which takes most people decades to repay. What's worse is, the incentive would likely be to default as quickly as possible, since that's what starts the recovery countdown. Not defaulting right after graduation would be a significant gamble on your ability to either repay or practically default later in life, when you're more exposed to the credit system. Obviously, an important part of this analysis is that student loan amounts have gotten significantly larger in the last 2 decades. Another easily-made observation is that student loans stopped being dischargeable because of widespread ruthless default, even with tuition rates less than 1/3rd what they are now.
- breck 7y ago
  > an important part of this analysis is that student loan amounts have gotten significantly larger in the last 2 decades. Another easily-made observation is that student loans stopped being dischargeable because of widespread ruthless default, even with tuition rates less than 1/3rd what they are now. Four decades ago student loans started becoming undischargeable (1) and the price of college has gone up over 6x, and I have never seen evidence that prior to that there was "widespread ruthless default", as you stated. Not to mention, times have changed and with the Internet and it would be much harder today than back then to hide a previous bankruptcy. 1.https://info.legalzoom.com/did-laws-effect-preventing-bankruptcy-student-loans-26426.html https://info.legalzoom.com/did-laws-effect-preventing-bankru... College should cost 10x less, easily. If I graduated with $5K in debt instead of $50K (or to take the national current average of $2,400 instead of $24,000), there would be no need to even consider bankruptcy.
  - tptacek 7y ago
    That college should cost less isn't the debate we're having. You're unlikely to find anyone here to disagree with about that. For this thread, college costs what it costs, and it costs enough for a deliberate bankruptcy (the technical term for that, by the way, is "ruthless default") to be a practical option. We're referring to the same time period, by the way. Have you looked for evidence of defaults in the late 60s and early 70s? Where did you look? During the housing crisis, a material number of people defaulted ruthlessly on their homes. There was even slang for it --- "jingle mail", for people mailing their keys back to their lenders. That is, defaults were a problem even when lenders actually had a valuable asset to seize. Later A more tenable suggestion would be to restore the status quo ante of the 98 Bankruptcy Reform act, making loans dischargeable in bankruptcy after 7 years. It'd be interesting to go look for the rationale for the '98 act's indefinite non-dischargeability provision. This is an interesting paper, one you'll probably like as it's skeptical of arguments against non-dischargeability, that goes into some detail about what other countries do (they do address what the paper calls "opportunistic" default): https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1709&context=articles https://repository.law.umich.edu/cgi/viewcontent.cgi?article...
    - breck 7y ago
      > (the technical term for that, by the way, is "ruthless default") Thanks! Appreciate the lesson. That's a pretty cool technical term, btw. > Have you looked for evidence of defaults in the late 60s and early 70s? Where did you look? Yes. Semantic Scholar. No luck for things in earlier than the 1980's. Have you found anything? Later, after reading the paper you cited `the Chairman of the House Subcommittee on Postsecondary Education who oversaw the Education Amendments of 1976 (Rep. James O'Hara) objected to the introduction of a student loan nondischargeability rule. 15 O'Hara protested bitterly that Congress was "fighting a 'scandal' which exists primarily in the imagination" and that the amendment "treats educational loans precisely as the law now treats loans incurred by fraud, felony, and alimony dodging".'"` ... "The evidence of a lower than 1% discharge rate of federally insured student loans in bankruptcy did not block the nondischargeability provision from entering the Bankruptcy Code - this even so under a comparatively liberal Congress that passed the debtor-friendly 1978 overhaul of the Bankruptcy Code." So indeed, there was never a real problem, and the law was enacted in the 1970's at the last minute on behalf of frauds and felons. Thanks very much for the reference. This is an issue I care about deeply (clearly), but my arguments are a bit sloppy. That being said, it's very much a military tactic being employed by people who want to preserve the status quo to pretend this is a complex issue, when it's really pretty simple.

by breck 7y ago

tptacek 7y ago

This is also a non sequitur response. Doubtless many people would pay back their loans, for personal moral reasons. But a BK on your record from ages 21-28 is not a meaningful practical deterrent for ruthless default, because those are ages when personal credit history is not especially important; the BK would come off your record years before most people take out their first mortgage (the median age of first home purchase is 42, but a mortgage in your early 30s would be easily accomplished after a student loan default). There are annoying consequences to having a BK on your record --- it would be harder (though not impossible) to get a credit card, and your first couple apartment lessors might want cosigners (though it is extremely possible to get a lease with terrible credit). The problem is that these consequences are far less onerous than shouldering student debt, which takes most people decades to repay. What's worse is, the incentive would likely be to default as quickly as possible, since that's what starts the recovery countdown. Not defaulting right after graduation would be a significant gamble on your ability to either repay or practically default later in life, when you're more exposed to the credit system. Obviously, an important part of this analysis is that student loan amounts have gotten significantly larger in the last 2 decades. Another easily-made observation is that student loans stopped being dischargeable because of widespread ruthless default, even with tuition rates less than 1/3rd what they are now.

breck 7y ago
> an important part of this analysis is that student loan amounts have gotten significantly larger in the last 2 decades. Another easily-made observation is that student loans stopped being dischargeable because of widespread ruthless default, even with tuition rates less than 1/3rd what they are now. Four decades ago student loans started becoming undischargeable (1) and the price of college has gone up over 6x, and I have never seen evidence that prior to that there was "widespread ruthless default", as you stated. Not to mention, times have changed and with the Internet and it would be much harder today than back then to hide a previous bankruptcy. 1.https://info.legalzoom.com/did-laws-effect-preventing-bankruptcy-student-loans-26426.html https://info.legalzoom.com/did-laws-effect-preventing-bankru... College should cost 10x less, easily. If I graduated with $5K in debt instead of $50K (or to take the national current average of $2,400 instead of $24,000), there would be no need to even consider bankruptcy.
- tptacek 7y ago
  That college should cost less isn't the debate we're having. You're unlikely to find anyone here to disagree with about that. For this thread, college costs what it costs, and it costs enough for a deliberate bankruptcy (the technical term for that, by the way, is "ruthless default") to be a practical option. We're referring to the same time period, by the way. Have you looked for evidence of defaults in the late 60s and early 70s? Where did you look? During the housing crisis, a material number of people defaulted ruthlessly on their homes. There was even slang for it --- "jingle mail", for people mailing their keys back to their lenders. That is, defaults were a problem even when lenders actually had a valuable asset to seize. Later A more tenable suggestion would be to restore the status quo ante of the 98 Bankruptcy Reform act, making loans dischargeable in bankruptcy after 7 years. It'd be interesting to go look for the rationale for the '98 act's indefinite non-dischargeability provision. This is an interesting paper, one you'll probably like as it's skeptical of arguments against non-dischargeability, that goes into some detail about what other countries do (they do address what the paper calls "opportunistic" default): https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1709&context=articles https://repository.law.umich.edu/cgi/viewcontent.cgi?article...
  - breck 7y ago
    > (the technical term for that, by the way, is "ruthless default") Thanks! Appreciate the lesson. That's a pretty cool technical term, btw. > Have you looked for evidence of defaults in the late 60s and early 70s? Where did you look? Yes. Semantic Scholar. No luck for things in earlier than the 1980's. Have you found anything? Later, after reading the paper you cited `the Chairman of the House Subcommittee on Postsecondary Education who oversaw the Education Amendments of 1976 (Rep. James O'Hara) objected to the introduction of a student loan nondischargeability rule. 15 O'Hara protested bitterly that Congress was "fighting a 'scandal' which exists primarily in the imagination" and that the amendment "treats educational loans precisely as the law now treats loans incurred by fraud, felony, and alimony dodging".'"` ... "The evidence of a lower than 1% discharge rate of federally insured student loans in bankruptcy did not block the nondischargeability provision from entering the Bankruptcy Code - this even so under a comparatively liberal Congress that passed the debtor-friendly 1978 overhaul of the Bankruptcy Code." So indeed, there was never a real problem, and the law was enacted in the 1970's at the last minute on behalf of frauds and felons. Thanks very much for the reference. This is an issue I care about deeply (clearly), but my arguments are a bit sloppy. That being said, it's very much a military tactic being employed by people who want to preserve the status quo to pretend this is a complex issue, when it's really pretty simple.