7 ms·

College loans rates (costs) would certainly spike if they were made dischargeable. The bargain probably should have been "Cannot be discharged in bankruptcy, u

• mrfusion 7y ago
  Or they could just become more selective and only loan to people with good prospects of repaying. Maybe they’ll look at your major, maybe discourage private universities.
  • wgerard 7y ago
    > Maybe they’ll look at your major That wouldn't make much sense, many students aren't accepted into a major until a year or two into their education. "Intended major" would also be a poor choice, as I think we all know many people who intended to go into one field and ended up in a completely different one.
    • mrfusion 7y ago
      Well you won’t switch your major if your loan depends on it. Someone else is lending you the money, they can add any strings they want. Banks deny mortgages for problems with homes all the time. You aren’t able to swap in a different house after the bank approves it.
      • wgerard 7y ago
        > Well you won’t switch your major if your loan depends on it. I'm not sure what this has to do with anything I said. If you're referring to my second statement, I met many people in school who intended to go into engineering or computer science or medicine and had to change their career path once it was clear they weren't going to make it through the first year of introductory classes. I doubt I was alone in seeing that happen.
        • MiroF 7y ago
          and some people need to get above a certain GPA to hold on to their merit scholarship
      • ethbro 7y ago
        I did know a guy who was on a neighboring-state subsidized grant for a nuclear engineering major... and only taking classes in humanities while summering abroad in France. Not sure how that ended for him, but hopefully poorly? (The program was originated as that state didn't have a NucE program, so found it cheaper to pay them to go somewhere else than run its own)
        • MiroF 7y ago
          Unsure why you would hope something ended poorly for someone else.
          • ethbro 7y ago
            Because he faffed around France for multiple years while choosing not to pursue the major expected by the program that helped fund his attendence in the first place? I've got no sympathy for someone who deliberately makes unethical choices.
            • wang_li 7y ago
              Surveys have revealed that 30% of student loan borrowers use some portion of their loans to travel for spring break partying.
              • deleted 7y ago
                [deleted]
        • beerandt 7y ago
          It's called Academic Common Market, and it only offers in-state rates to out of state students. (There's no direct scholarship or money, although sometimes unrelated scholarships are also awarded.) It's not really subsidized any more than regular in-state tuition, since it's a reciprocal program between states.
  • ethbro 7y ago
    The problem with "good prospects of replaying" / full-knowledge lending (and what the system was originally intended to prevent) is that the best lendees are wealthy students from socioeconomic groups with good employment prospects. I'm not one to toot on the SJW train, but it's likely inefficient (and certainly unjust) if we encode existing economic biases into our primary method of access to educational capital.
    • yzmtf2008 7y ago
      I agree with everything you said, but doesn't lending money to the group of people that are less likely to make repayment puts them in a worse place? Instead of being in a socioeconomic disadvantage, they now also have a loan that they can never payback. It honestly feels predatory and sounds like payday lending or one of those "more credit = more cash in your wallet" ads. I'm really sad that in this view, access to credit is equated to access to education. Sure, in a first degree thinking the goal is achieved, but at the end of the day education is a means to an end rather than an end in itself. Lending people money to attend unaffordable institutions can't be the best way to fix the problem.
      • bsanr2 7y ago
        >I agree with everything you said, but doesn't lending money to the group of people that are less likely to make repayment puts them in a worse place? Not if loan terms aren't designed to court default, which they often seem to be. Doesn't it seem backwards to require that the people least likely to be able to pay, pay higher interest rates?
        • yzmtf2008 7y ago
          > Doesn't it seem backwards to require that the people least likely to be able to pay, pay higher interest rates? I mean, yes. But on the other hand if the ability to payback the loan (risk of default) isn't taken into account these loans might not exist at all (not necessarily a bad thing). Eventually the risk-adjusted rate hits usury limits and loans start disappearing. (Of course we still get things like payday loans, credit cards, student loans, etc., but these are legal loopholes that should be closed.)
• Sanzig 7y ago
  This is essentially how it works here in Canada. In Canada, the vast majority of student loans are taken out directly from the government. You can't declare bankruptcy on a government-issued student loan until seven years after the last day you were a full-time student. After the seven year timer runs out, it's treated the same as any other unsecured debt and you can include it in a bankruptcy (equivalent to a Chapter 7 in the US) or a consumer proposal (equivalent to a Chapter 13 in the US). Private student loans also exist, but unlike government loans they have no special protection - you can go bankrupt on them just like any other type of unsecured debt at any time. For this reason, private lenders almost always require a cosigner for these types of loans.
  • guelo 7y ago
    A big part of the problem is the US's annoying penchant for privatization which then means you need a profit motive. There's a revoltion against any kind of program purely for the public good.
    • jlawson 7y ago
      No, there's an understanding that nobody works 'purely for the public good' because we have no selfless angels that we can assign to run the government. Since we only have selfish humans, they'll always work for their own good - whether it's profit motive in an open market, or political power and attached financial benefits. Jeez, imagine how easy society would be if we could actually create government programs 'purely for the public good'. I'd love to live in a world where everything didn't become as corrupt as it structurally can.
      • nl 7y ago
        Jeez, imagine how easy society would be if we could actually create government programs 'purely for the public good'. I'd love to live in a world where everything didn't become as corrupt as it structurally can. It's ironic that in much of the world this is the case. Specifically, in this thread the Canadian system was mentioned and the Australian system is similar.
    • 7y ago
• wutbrodo 7y ago
  > while removing market influence on guiding students to choose majors with a return on investment. In theory, non-dischargeability should be _increasing_ pressure on students to choose majors that are worth the monetary investment, no? I guess perhaps your point is that successful insurance companies would be better positioned to make this assessment, but I'm not sure that's true: a student and his advisors/parents have a lot more relevant information about which major they in particular would be most productive in, along with access to the prior for how productive a given major is on average. Eg, my parents REALLY wanted me to be a doctor, but I knew I'd find medical education intensely boring and unchallenging. Ostensibly, going into medicine may have been more conducive to loan repayment than getting a math degree (and CS, added later), but I had the inside information to know that, if anything, I'd have a tiny (but nonzero) chances of failing to finish a medical education for sheer lack of work ethic. That's the kind of case-by-case information that's not available to insurance companies. If my parents had an incomplete picture of how degree choice played into my loan repayment, an insurance company would be way worse off as compared to our collective decision.
  • toasterlovin 7y ago
    The market influence referred to is lenders being more choosy about how much they lend to whom, specifically because 18 year old don’t make good decisions.
    • wutbrodo 7y ago
      Yea, but I don't think it's accurate to describe it as "market influence being removed": the responsibility just shifts from the lender to the borrower (who is better-positioned to make the call, from an informational standpoint). > specifically because 18 year old don’t make good decisions. I'm sympathetic to this argument because there are _some_ 18 year olds making these huge decisions without any reasonable guidance, but for a big chunk of the population, we're talking about 18 y/os + their parents + their college counselors. And I'm also not claiming it's black-and-white: people (even adults) do very stupid things all the time, so it may be rational to have insurance cos bear part of the responsibility for measuring risk of a given student trying for a given degree. But 1) Given the extremely asymmetric information, this is an extremely blunt instrument, which will lead to countless hot takes about seemingly-ludicrous-but-inevitable false positives and negatives where a student is charged an absurd rate for something that makes sense in his case 2) It's simply not accurate to claim, as GP comment did, that the market influence is being removed: it's just being shifted from insurance co to student+advisors (who again, is much more equipped from an informational perspective to make this call)