5 ms·

this is huge. this terrible bush era provision set up some really perverse incentives for college administrators. if you think about it, it's really pretty sic

by a-dub 7y ago

this is huge. this terrible bush era provision set up some really perverse incentives for college administrators. if you think about it, it's really pretty sick. let's soak young people who know nothing about money with nondischargable debt in the name of something that is supposed to be good before they're even eligible for a credit card. if you ask me, i think people should be losing their jobs and/or going to jail for this sort of predatory behavior.

egdod 7y ago
Since the Brunner test for deciding whether student loan debt is dischargeable is from a 1985 case[0], I don’t think this can be said to have anything to do with either Bush. [0] https://www.lexisnexis.com/community/casebrief/p/casebrief-in-re-brunner https://www.lexisnexis.com/community/casebrief/p/casebrief-i...
- a-dub 7y ago
  nope. https://www.npr.org/templates/story/story.php?storyId=9803213 https://www.npr.org/templates/story/story.php?storyId=980321...
  - ianai 7y ago
    Next let’s fix glass-steagall! There were some very good regulations in place before they got dismantled...
    - a-dub 7y ago
      this was a political fail. had to be patched by the courts. :(
  - StillBored 7y ago
    That whole law was a giant middle finger to the population. It wasn't like judges were handing out debt forgiveness like candy. Yet, the law acts like they were and creates a means test that removes ~50% of the population from being eligible. There are thousands of really ugly laws like this. This is why I think the democrats are incompetent. Its Obamacare's bad marketing, where if you ask random people what the law did, overwhelmingly most people aren't going to remember the positive things, only the individual mandate and all the negative things being used to reduce its public appeal. The entire democratic party has this problem, partially because they don't have a #1 propoganda channel running reminding people of these failings.
    - blaser-waffle 7y ago
      There are plenty of left-wing propaganda channels. They just push "woke" agenda items and not financial ones. Some of this is because, like with the right, it's easier to push emotional issues than abstract financial ones -- how many average voters understand Glass–Steagall?
  - gok 7y ago
    The 2005 law extended it, but dischargabilty has been increasingly excepted by the bankruptcy code starting in 1976.
- tgb 7y ago
  That doesn't seem to be what the grandparent post is saying Bush did.
wyldfire 7y ago
I think it's a huge mistake to make it such that the student loans couldn't be discharged. But I wonder: were people taking on debt that they couldn't handle with the intent of declaring bankruptcy later? Or perhaps was this sold as a way to decrease the cost of lending? What was the case for making this change?
- chii 7y ago
  If you track where the money went, I'd say it's education institutions' lobbying. Loans should only be given to those who stand to create more value than the loan itself. I still believe education is valuable, but not every degree is worth the loan - and with non-dischargable loans, the lender has no incentive to check if the loan makes sense for the degree.
- a-dub 7y ago
  greed.
- michaelt 7y ago
  The traditional fear with making student debt dischargeable and market-based is that lenders will ask for your parents to co-sign. And that'll be no problem at all for middle- and upper-class families where the parents have savings and good credit, but bad for orphans and kids from poor families. Of course, the current unlimited-loans system that has let costs spiral out of control has problems too, albeit different ones.
- michaelmrose 7y ago
  How do you suppose they were planning on discharging student loans everyone knew couldn't be discharged outside of truly extraordinary situations? It strains credulity to suppose that they made such a plan with this legal battle in mind.
pkulak 7y ago
I always thought that the reason it wasn't dischargeable was because the product couldn't be taken back in bankruptcy either. Like, why wouldn't you just go to medical school for 12 years, then declare bankruptcy? I'm probably missing something about how bankruptcy works, but it seems like you'd be set for life in that situation.
- asdfasgasdgasdg 7y ago
  At least according to the judge, the petitioner had to pass a few tests. 1. Good faith efforts to repay the loan. 2. Present lack of funds to pay. 3. Unlikely to be able to pay going forward. A newly minted medical school graduate would not pass any of these tests execpt perhaps #2.
  - jeffdavis 7y ago
    In this case, the petitioner went to law school and simply decided being a lawyer wasn't for him. A medical school graduate could declare that they want to pursue a career in music, thus making them qualify for both #2 and #3. #1 perhaps not, but "good faith" is pretty squishy.
    - asdfasgasdgasdg 7y ago
      So is "undue hardship", but it's not so squishy that it hasn't stymied many attempts to discharge student loans in the past.
- deleted 7y ago
  [deleted]
- nosianu 7y ago
  So anything that is either used up or that loses value - which is pretty much everything there is apart from very few things that keep their value or increase - would fall under the same argument. That would apply to most loans, and even houses don't have a natural law that their values always remain or increase. Seems like a lazy and made-up excuse to me rather than an actual reason. I don't mind people making lazy arguments - I mind those that accept them unquestionably and even more lazily (because finding fault in other people's words is far easier) much more, meaning not anyone here specifically, but the fact that that argument could spread so far in the first place.
qubex 7y ago
The original argument was that education debt should not be dischargable insofar as it allows a person to increase their earnings and cannot be “stripped away” from them if and when they enter into bankruptcy. At a first glance, that’s almost reasonable (although terrifyingly vindictive and materialistic) but on closer consideration it’s not at all consistent with many other paid-for advantages (such as medical care, which though inordinately expensive, certainly does, by virtue of keeping a person alive and functional in the workplace, enhance their future earnings). Non-dischargable debt thrust upon youngsters and carried by them like the burden of original sin for the rest of their lives must come to an end. (I’m European, fortunately I have never had this problem.)
c3534l 7y ago
And this is loan is made contingent on the promise that graduating from university will grant you a middle-class job, which in the case of being underwater in student loan debt, means they failed to provide. People wouldn't take these loans if they didn't think college was supposed to pay them back. That's the only reason 99% of the population would go into debt attending college. And that's the lie we've hammered into kids since they were in first grade like a cult.
- ummonk 7y ago
  >And this is loan is made contingent on the promise that graduating from university will grant you a middle-class job, which in the case of being underwater in student loan debt, means they failed to provide. That's not necessarily true. In this case, he got a job at a law firm, but chose to quit it because he realized he didn't like the career. Now I don't think he should have been forced to work as a lawyer, but let's not claim that all instances of being underwater are because the university didn't keep the promise of getting you a good job.

by a-dub 7y ago

egdod 7y ago

Since the Brunner test for deciding whether student loan debt is dischargeable is from a 1985 case[0], I don’t think this can be said to have anything to do with either Bush. [0] https://www.lexisnexis.com/community/casebrief/p/casebrief-in-re-brunner https://www.lexisnexis.com/community/casebrief/p/casebrief-i...

a-dub 7y ago
nope. https://www.npr.org/templates/story/story.php?storyId=9803213 https://www.npr.org/templates/story/story.php?storyId=980321...
- ianai 7y ago
  Next let’s fix glass-steagall! There were some very good regulations in place before they got dismantled...
  - a-dub 7y ago
    this was a political fail. had to be patched by the courts. :(
- StillBored 7y ago
  That whole law was a giant middle finger to the population. It wasn't like judges were handing out debt forgiveness like candy. Yet, the law acts like they were and creates a means test that removes ~50% of the population from being eligible. There are thousands of really ugly laws like this. This is why I think the democrats are incompetent. Its Obamacare's bad marketing, where if you ask random people what the law did, overwhelmingly most people aren't going to remember the positive things, only the individual mandate and all the negative things being used to reduce its public appeal. The entire democratic party has this problem, partially because they don't have a #1 propoganda channel running reminding people of these failings.
  - blaser-waffle 7y ago
    There are plenty of left-wing propaganda channels. They just push "woke" agenda items and not financial ones. Some of this is because, like with the right, it's easier to push emotional issues than abstract financial ones -- how many average voters understand Glass–Steagall?
- gok 7y ago
  The 2005 law extended it, but dischargabilty has been increasingly excepted by the bankruptcy code starting in 1976.
tgb 7y ago
That doesn't seem to be what the grandparent post is saying Bush did.

wyldfire 7y ago

I think it's a huge mistake to make it such that the student loans couldn't be discharged. But I wonder: were people taking on debt that they couldn't handle with the intent of declaring bankruptcy later? Or perhaps was this sold as a way to decrease the cost of lending? What was the case for making this change?

chii 7y ago
If you track where the money went, I'd say it's education institutions' lobbying. Loans should only be given to those who stand to create more value than the loan itself. I still believe education is valuable, but not every degree is worth the loan - and with non-dischargable loans, the lender has no incentive to check if the loan makes sense for the degree.
a-dub 7y ago
greed.
michaelt 7y ago
The traditional fear with making student debt dischargeable and market-based is that lenders will ask for your parents to co-sign. And that'll be no problem at all for middle- and upper-class families where the parents have savings and good credit, but bad for orphans and kids from poor families. Of course, the current unlimited-loans system that has let costs spiral out of control has problems too, albeit different ones.
michaelmrose 7y ago
How do you suppose they were planning on discharging student loans everyone knew couldn't be discharged outside of truly extraordinary situations? It strains credulity to suppose that they made such a plan with this legal battle in mind.

pkulak 7y ago

I always thought that the reason it wasn't dischargeable was because the product couldn't be taken back in bankruptcy either. Like, why wouldn't you just go to medical school for 12 years, then declare bankruptcy? I'm probably missing something about how bankruptcy works, but it seems like you'd be set for life in that situation.

asdfasgasdgasdg 7y ago
At least according to the judge, the petitioner had to pass a few tests. 1. Good faith efforts to repay the loan. 2. Present lack of funds to pay. 3. Unlikely to be able to pay going forward. A newly minted medical school graduate would not pass any of these tests execpt perhaps #2.
- jeffdavis 7y ago
  In this case, the petitioner went to law school and simply decided being a lawyer wasn't for him. A medical school graduate could declare that they want to pursue a career in music, thus making them qualify for both #2 and #3. #1 perhaps not, but "good faith" is pretty squishy.
  - asdfasgasdgasdg 7y ago
    So is "undue hardship", but it's not so squishy that it hasn't stymied many attempts to discharge student loans in the past.
deleted 7y ago
[deleted]
nosianu 7y ago
So anything that is either used up or that loses value - which is pretty much everything there is apart from very few things that keep their value or increase - would fall under the same argument. That would apply to most loans, and even houses don't have a natural law that their values always remain or increase. Seems like a lazy and made-up excuse to me rather than an actual reason. I don't mind people making lazy arguments - I mind those that accept them unquestionably and even more lazily (because finding fault in other people's words is far easier) much more, meaning not anyone here specifically, but the fact that that argument could spread so far in the first place.

qubex 7y ago

The original argument was that education debt should not be dischargable insofar as it allows a person to increase their earnings and cannot be “stripped away” from them if and when they enter into bankruptcy. At a first glance, that’s almost reasonable (although terrifyingly vindictive and materialistic) but on closer consideration it’s not at all consistent with many other paid-for advantages (such as medical care, which though inordinately expensive, certainly does, by virtue of keeping a person alive and functional in the workplace, enhance their future earnings). Non-dischargable debt thrust upon youngsters and carried by them like the burden of original sin for the rest of their lives must come to an end. (I’m European, fortunately I have never had this problem.)

c3534l 7y ago

And this is loan is made contingent on the promise that graduating from university will grant you a middle-class job, which in the case of being underwater in student loan debt, means they failed to provide. People wouldn't take these loans if they didn't think college was supposed to pay them back. That's the only reason 99% of the population would go into debt attending college. And that's the lie we've hammered into kids since they were in first grade like a cult.

ummonk 7y ago
>And this is loan is made contingent on the promise that graduating from university will grant you a middle-class job, which in the case of being underwater in student loan debt, means they failed to provide. That's not necessarily true. In this case, he got a job at a law firm, but chose to quit it because he realized he didn't like the career. Now I don't think he should have been forced to work as a lawyer, but let's not claim that all instances of being underwater are because the university didn't keep the promise of getting you a good job.