6 ms·

Except in the subprime debacle, millions of people could declare bankruptcy and walk away. With student loans. The debtors are simply screwed with no recourse.

Except in the subprime debacle, millions of people could declare bankruptcy and walk away. With student loans. The debtors are simply screwed with no recourse. That’s a big difference.

chiefalchemist 7y ago
Silly question: is there any legal way to default on a student loan? Can that be exploited? En mass? Perhaps?
- tehjoker 7y ago
  Here's the thing... when you do it en mass, it doesn't matter if it's illegal because nobody can do anything to stop you. It's called a strike. Apparently the people that started http://rollingjubilee.org/ http://rollingjubilee.org/ were originally working on a student debt strike project. Not sure exactly why they switched to a medical debt project, but it's certainly a worthy one.
  - jrs235 7y ago
    >Not sure exactly why they switched to a medical debt project My assumption is that the government and lenders of government guaranteed loans aren't selling the delinquent accounts for pennies on the dollar.
    - tehjoker 7y ago
      I only mentioned them because I was googling for student debt strike projects and I'd heard of them before. The jubilee project is a form of mutual aid and less a strike. The point of a strike is to build power for the striking class so that the creditor class is forced to make significant concessions up to and including relieving all of it. To be clear, this would mean huge numbers of people simply stop paying in a coordinated and public fashion.
      - jrs235 7y ago
        If they stop paying government student loans en masse and then hid thier income (get paid and work cash only) all that would happen is our current trillion dollar deficit might increase a little bit. The government budget takes into account payments and interest from these loans. The total amount of all the loans is likely spread across repayments over 20 years.
        tehjoker 7y ago
        That's a really great argument for free education, which is an argument the strikers would make. I do think though that you are underestimating the power ordinary people have. If the various funding mechanisms suddenly go into crisis, this will cause a very large ruckus with the potential for positive change.
    - vonmoltke 7y ago
      There are no "lenders of government guaranteed loans" anymore, and there haven't been for at least nine years. Either the government is the lender, or it is a completely private (and dischargeable) loan.
      - jrs235 7y ago
        Thank you for the correction/clarification. However I still have a government guaranteed loan that was issued by a bank. If I default on it that bank isn't selling my account. They'll garnish my wages. Also I never plan on paying off my loan early! It's only 2.25% apr! I got lucky. Rates were really really low when I graduated and consolidated my loans.
      - selimthegrim 7y ago
        How is a private loan dischargeable given the 2005 law?
  - lotsofpulp 7y ago
    What happens when the government starts garnishing wages from the debtors direct deposit payments?
  - int_19h 7y ago
    From their FAQ: "Student debt has surpassed $1 trillion partly because it is one of the most protected forms of debt by federal law. Student debtors can rarely discharge their loans in bankruptcy and lenders have rights to garnish wages and social security payments. The vast majority of student loans have these federal guarantees. We cannot buy these loans because there is no secondary market."
- sjg007 7y ago
  Vote for appropriate candidates
- psychometry 7y ago
  Pretty sure mass suicide would be the only option.
- jrs235 7y ago
  Yes. To default just don't pay. What I think you meant to ask was is there a way to escape repayment (get the debts wiped out in bankruptcy). Yes. It is possible to ask and get a judge to wipe out the student debt loan but the bar is usually fairly high and unlikely. Can it be done en masses or exploited. Not likely. You'd likely need Congress' involvement. Good luck with that and good luck with Devos.
  - toomuchtodo 7y ago
    I have wondered if the right person in the right place could go Mr Robot on the Dept of Education’s loan data, nuking all borrower data (prod, backups, everything). “Non Congressional Sanctioned Forgiveness” thought experiment.
    - dillonmckay 7y ago
      Unfortunately, much of the debt was improperly resold, and collections agencies attempt to collect on debts they have no legal rights to.
    - Tactic 7y ago
      Assuming that is a legitimate question: No. That data resides in many places... with the loan servicers, the NSLDS, the Guarantors... spread in locations around the country.
curiousgal 7y ago
Even if that were the case, declaring bankruptcy at the age of 23 doesn't really make the future easier. Doing so in your 40s is easier one could argue because you'd had more connections and life experience, in a sense.
rayiner 7y ago
On the flip side, a lot of those student loans are subject to income based repayment.
- Whatarethese 7y ago
  That still accrue interest at crazy high rates.

Except in the subprime debacle, millions of people could declare bankruptcy and walk away. With student loans. The debtors are simply screwed with no recourse. That’s a big difference.

chiefalchemist 7y ago

Silly question: is there any legal way to default on a student loan? Can that be exploited? En mass? Perhaps?

tehjoker 7y ago
Here's the thing... when you do it en mass, it doesn't matter if it's illegal because nobody can do anything to stop you. It's called a strike. Apparently the people that started http://rollingjubilee.org/ http://rollingjubilee.org/ were originally working on a student debt strike project. Not sure exactly why they switched to a medical debt project, but it's certainly a worthy one.
- jrs235 7y ago
  >Not sure exactly why they switched to a medical debt project My assumption is that the government and lenders of government guaranteed loans aren't selling the delinquent accounts for pennies on the dollar.
  - tehjoker 7y ago
    I only mentioned them because I was googling for student debt strike projects and I'd heard of them before. The jubilee project is a form of mutual aid and less a strike. The point of a strike is to build power for the striking class so that the creditor class is forced to make significant concessions up to and including relieving all of it. To be clear, this would mean huge numbers of people simply stop paying in a coordinated and public fashion.
    - jrs235 7y ago
      If they stop paying government student loans en masse and then hid thier income (get paid and work cash only) all that would happen is our current trillion dollar deficit might increase a little bit. The government budget takes into account payments and interest from these loans. The total amount of all the loans is likely spread across repayments over 20 years.
      - tehjoker 7y ago
        That's a really great argument for free education, which is an argument the strikers would make. I do think though that you are underestimating the power ordinary people have. If the various funding mechanisms suddenly go into crisis, this will cause a very large ruckus with the potential for positive change.
  - vonmoltke 7y ago
    There are no "lenders of government guaranteed loans" anymore, and there haven't been for at least nine years. Either the government is the lender, or it is a completely private (and dischargeable) loan.
    - jrs235 7y ago
      Thank you for the correction/clarification. However I still have a government guaranteed loan that was issued by a bank. If I default on it that bank isn't selling my account. They'll garnish my wages. Also I never plan on paying off my loan early! It's only 2.25% apr! I got lucky. Rates were really really low when I graduated and consolidated my loans.
    - selimthegrim 7y ago
      How is a private loan dischargeable given the 2005 law?
- lotsofpulp 7y ago
  What happens when the government starts garnishing wages from the debtors direct deposit payments?
- int_19h 7y ago
  From their FAQ: "Student debt has surpassed $1 trillion partly because it is one of the most protected forms of debt by federal law. Student debtors can rarely discharge their loans in bankruptcy and lenders have rights to garnish wages and social security payments. The vast majority of student loans have these federal guarantees. We cannot buy these loans because there is no secondary market."
sjg007 7y ago
Vote for appropriate candidates
psychometry 7y ago
Pretty sure mass suicide would be the only option.
jrs235 7y ago
Yes. To default just don't pay. What I think you meant to ask was is there a way to escape repayment (get the debts wiped out in bankruptcy). Yes. It is possible to ask and get a judge to wipe out the student debt loan but the bar is usually fairly high and unlikely. Can it be done en masses or exploited. Not likely. You'd likely need Congress' involvement. Good luck with that and good luck with Devos.
- toomuchtodo 7y ago
  I have wondered if the right person in the right place could go Mr Robot on the Dept of Education’s loan data, nuking all borrower data (prod, backups, everything). “Non Congressional Sanctioned Forgiveness” thought experiment.
  - dillonmckay 7y ago
    Unfortunately, much of the debt was improperly resold, and collections agencies attempt to collect on debts they have no legal rights to.
  - Tactic 7y ago
    Assuming that is a legitimate question: No. That data resides in many places... with the loan servicers, the NSLDS, the Guarantors... spread in locations around the country.

curiousgal 7y ago

Even if that were the case, declaring bankruptcy at the age of 23 doesn't really make the future easier. Doing so in your 40s is easier one could argue because you'd had more connections and life experience, in a sense.

rayiner 7y ago

On the flip side, a lot of those student loans are subject to income based repayment.

Whatarethese 7y ago
That still accrue interest at crazy high rates.