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You’re assuming market forces will kick in. Most student loans are made by the federal government which can decide to secure these loans or not. Today, they are
by pcarolan 7y ago
You’re assuming market forces will kick in. Most student loans are made by the federal government which can decide to secure these loans or not. Today, they are not underwritten and there’s no reason to think they would be if bankruptcy is enabled. They could just view it as a subsidy which is likely the most politically popular and easy thing to do and push the costs onto taxpayers or raise the standard interest rate for everyone.
- sandoooo 7y agoWhat happened to non-bankruptable debt before? My guess is that the vast majority of them just sat in limbo with no repayment and are effectively just as worthless as defaulted debt. Really this just cleans up the books and force people to have a more realistic assessment of what the debt being held is actually worth, which is always a plus.
- bandrami 7y agoThe 2008 crash had as a proximate cause people finally admitting that stuff that had always been worthless was in fact worthless.
- Vinnl 7y agoWe have subsidies in the Netherlands, but they're combined with a cap on tuition rates. (Although part of the tuition needs to be paid by students, for which they can get underwritten loans from the government.)