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student loans are typically not dischargeable in bankruptcy

Retric 7y ago
That’s based on laws that can change at any time. IMO, people should be able to discharge them in bankruptcy around 15 to 20 years after graduation. This is in line with the “total and permanent disability” escape method which has minimal impact on the larger student loan market. https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/disability-discharge https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancell...
- bradleyjg 7y ago
  There isn't much of a student loan market. The overwhelming majority of student loans are made by the government with no underwriting and the rates set arbitrarily.
  - Retric 7y ago
    The market is on the other end. Loans are constantly resold after being issued, which is why people regularly get new student loan processors.
    - bradleyjg 7y ago
      I don’t believe that’s the case. My understanding is that the government holds on to the loans but hires servicers to interact with borrowers. These servicing contracts are subject to competitive bids and that’s why people regularly get new processors.
      - Retric 7y ago
        It’s true loan servicing does not always change when loans are sold they are independent. In 2010 the policy changed, however plenty of older federally backed student loans are still being sold and resold. https://www.investopedia.com/articles/personal-finance/081216/who-actually-owns-student-loan-debt.asp https://www.investopedia.com/articles/personal-finance/08121...
    - rayiner 7y ago
      Loans are not resold. They stay in the government’s books. The loan processors are just contracted to provide processing services. https://studentaid.ed.gov/sa/repay-loans/understand/servicers#transfer https://studentaid.ed.gov/sa/repay-loans/understand/servicer... > In some cases, ED needs to transfer loans from one servicer to another servicer on the federal loan servicer team. ED transfers loans as part of its efforts to ensure that all borrowers are provided with customer service and repayment support. If ED needs to transfer your federal student loans from your assigned servicer to another servicer, your loans will still be owned by ED. The “transfer” to another servicer on ED’s federal loan servicer team simply means that a new servicer will provide the support you need to fully repay your loans.
      - Retric 7y ago
        https://www.investopedia.com/articles/personal-finance/081216/who-actually-owns-student-loan-debt.asp https://www.investopedia.com/articles/personal-finance/08121... There was a change as a rider to the 2010 affordable care act. But, older federally backed student loans are sold and resold.
        rayiner 7y ago
        Pre-Obama loans represent a small fraction of all student loan debt.
        Retric 7y ago
        I think it’s still on the order of 3-400 Billion or so, but I am not sure of the numbers. Either way loans go back 4+ years before graduation and people take 15+ years to pay them back. So I assume quite a few of these loans are out there even if the remaining balance is not that huge.

That’s based on laws that can change at any time. IMO, people should be able to discharge them in bankruptcy around 15 to 20 years after graduation. This is in line with the “total and permanent disability” escape method which has minimal impact on the larger student loan market. https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/disability-discharge https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancell...

bradleyjg 7y ago
There isn't much of a student loan market. The overwhelming majority of student loans are made by the government with no underwriting and the rates set arbitrarily.
- Retric 7y ago
  The market is on the other end. Loans are constantly resold after being issued, which is why people regularly get new student loan processors.
  - bradleyjg 7y ago
    I don’t believe that’s the case. My understanding is that the government holds on to the loans but hires servicers to interact with borrowers. These servicing contracts are subject to competitive bids and that’s why people regularly get new processors.
    - Retric 7y ago
      It’s true loan servicing does not always change when loans are sold they are independent. In 2010 the policy changed, however plenty of older federally backed student loans are still being sold and resold. https://www.investopedia.com/articles/personal-finance/081216/who-actually-owns-student-loan-debt.asp https://www.investopedia.com/articles/personal-finance/08121...
  - rayiner 7y ago
    Loans are not resold. They stay in the government’s books. The loan processors are just contracted to provide processing services. https://studentaid.ed.gov/sa/repay-loans/understand/servicers#transfer https://studentaid.ed.gov/sa/repay-loans/understand/servicer... > In some cases, ED needs to transfer loans from one servicer to another servicer on the federal loan servicer team. ED transfers loans as part of its efforts to ensure that all borrowers are provided with customer service and repayment support. If ED needs to transfer your federal student loans from your assigned servicer to another servicer, your loans will still be owned by ED. The “transfer” to another servicer on ED’s federal loan servicer team simply means that a new servicer will provide the support you need to fully repay your loans.
    - Retric 7y ago
      https://www.investopedia.com/articles/personal-finance/081216/who-actually-owns-student-loan-debt.asp https://www.investopedia.com/articles/personal-finance/08121... There was a change as a rider to the 2010 affordable care act. But, older federally backed student loans are sold and resold.
      - rayiner 7y ago
        Pre-Obama loans represent a small fraction of all student loan debt.
        Retric 7y ago
        I think it’s still on the order of 3-400 Billion or so, but I am not sure of the numbers. Either way loans go back 4+ years before graduation and people take 15+ years to pay them back. So I assume quite a few of these loans are out there even if the remaining balance is not that huge.