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You can't do that because it would be far more beneficial at this point to just declare bankruptcy out of college and get the loans dismissed than it would be t

You can't do that because it would be far more beneficial at this point to just declare bankruptcy out of college and get the loans dismissed than it would be to pay them back. Also there's nothing of value to repossess if you were to declare bankruptcy, banks can't repossess and then re-sell a college degree.

LanceH 7y ago
Why are these loans special? Other loans without collateral exist. Maybe private lenders shouldn't have the full force of the government behind them. Maybe they shouldn't be offering some of these loans.
- vonmoltke 7y ago
  They don't, and they aren't. The non-dischargeable loans are all issued directly by the US Government.
- sodafountan 7y ago
  There are loans you can get without collateral, they're typically pretty small loans with higher interest and are only issued to people with good credit. The problem with student loans is students typically don't have any credit, don't have any collateral and what they're seeking can't be repossessed if they default - banks know that issuing loans to these people without the backing of the government is financial suicide, in other words the free market says these loans shouldn't exist at all. The student loan crisis was caused by government intervention, guaranteeing loans for people who otherwise wouldn't have even been eligible to receive that type of money allows institutions to jack the price of school up infinitely and banks to keep allowing it because neither can fail - in the long run it's only the student who has to bear the cost long term. We need to allow institutions and banks to fail again, that's the only way you correct this problem. As soon as you stop guaranteeing loans banks stop issuing them and college's are forced to bring prices down. That would hurt some students in the short term who wouldn't be able to afford college but eventually the free market would do it's work and make college more reasonably priced again.

LanceH 7y ago

Why are these loans special? Other loans without collateral exist. Maybe private lenders shouldn't have the full force of the government behind them. Maybe they shouldn't be offering some of these loans.

vonmoltke 7y ago
They don't, and they aren't. The non-dischargeable loans are all issued directly by the US Government.
sodafountan 7y ago
There are loans you can get without collateral, they're typically pretty small loans with higher interest and are only issued to people with good credit. The problem with student loans is students typically don't have any credit, don't have any collateral and what they're seeking can't be repossessed if they default - banks know that issuing loans to these people without the backing of the government is financial suicide, in other words the free market says these loans shouldn't exist at all. The student loan crisis was caused by government intervention, guaranteeing loans for people who otherwise wouldn't have even been eligible to receive that type of money allows institutions to jack the price of school up infinitely and banks to keep allowing it because neither can fail - in the long run it's only the student who has to bear the cost long term. We need to allow institutions and banks to fail again, that's the only way you correct this problem. As soon as you stop guaranteeing loans banks stop issuing them and college's are forced to bring prices down. That would hurt some students in the short term who wouldn't be able to afford college but eventually the free market would do it's work and make college more reasonably priced again.