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>All of us should be regularly lobbying our lawmakers to make student loans dischargeable by bankruptcy, just like any other loan. Why would anyone lend money
by slg 7y ago
>All of us should be regularly lobbying our lawmakers to make student loans dischargeable by bankruptcy, just like any other loan.
Why would anyone lend money to someone with zero credit history, zero income, zero collateral, zero prospects of repaying the loan for at least 4+ years, and has the ability to immediately declare bankruptcy as soon as it comes time to start paying you back? What would the free market interest rate be on that type of loan?
Allowing loans to discharged is nothing but a band-aid on a broken system. We need to work to make college cheaper. Building the entire system around loans is the problem, not one specific feature of those loans.
- lostcolony 7y agoI'll go one further. Education is not an asset you can take away. Houses and cars can be foreclosed on; you can't take and resell education as a good. It either needs to be kept as a pure luxury commodity, or it needs to be valued societally and not require an individual to pay for. Even if college is 'cheaper', if it prices some people out, it can't be viewed as a necessity to be able to get a good job (not saying it is, but society certainly tries to push that viewpoint).
- jackcosgrove 7y agoLots of credit card debt is unsecured because the purchased goods are consumed, but that is dischargeable.
- slg 7y agoWhich is why credit card interest rates are so high and why you can't get a credit card with $100,000+ limit as an 18 year old with zero income or credit history.
- lostcolony 7y agoAnd also why credit card debt is not concerned a necessity for 'making it' in society.
- YPCrumble 7y agoLenders stopping lending would be fantastic! Without eager lenders with usurious terms on their loans like no bankruptcy colleges would have to make “tough decisions” like figuring out how to be less expensive.
- vonmoltke 7y ago90% of the money comes from the federal government, so how is that going to work?
- dabbledash 7y agoThe interest rate would be very very high, as it should be. You can’t on the one hand encourage people to loan money to those who aren’t credit worthy and on the other hand bemoan the fact that people end up with loans they can’t pay back. The former policy is guaranteed to produce the latter outcome. It also artificially inflates the price colleges can (and will) charge. Allowing people to discharge education debts in bankruptcy is one part of making college cheaper.
- slg 7y agoReducing the supply for colleges isn't going to make overall college education cheaper while maintaining the same quality of education. There is certainly some waste in college budgets, but it will mostly force colleges to cut the least profitable programs. Education is a social good. We should invest in it like we do with other public services. It shouldn't need to be profited minded.
- dabbledash 7y agoI think we should invest in public colleges (increasing supply) and stop subsidizing loans with special bankruptcy protections and federal money (reducing demand at higher price points).
- slg 7y agoSorry, I phrased that last comment incredibly poorly. I was referring to the supply of financing which in turn impacts demand. When the demand curve shifts, they supply being provided by colleges decreases. The overall amount and quality of education is not something we want to be decreasing.
- jimbokun 7y ago> We should invest in it like we do with other public services. Yes. We should invest in public universities to have very low cost or free tuition, and stop pouring public money into private education institutions.
- 7y ago