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Most students graduate with no assets so what would stop someone from graduating and declaring bankruptcy before they begin working? Would that not reduce the e

by pb7 6y ago

Most students graduate with no assets so what would stop someone from graduating and declaring bankruptcy before they begin working? Would that not reduce the ease in getting student loans since banks would be reluctant to loan to someone that doesn't have a wealthy cosigner, effectively eliminating poorer people from attending?

giantrobot 6y ago
You don't declare bankruptcy like Michael Scott by just yelling into a hallway. If college loans could be discharged, your fresh grad example still has to convince a court to discharge the loan. That's not likely to happen unless they also managed to rack up many tens of thousands of dollars in unsecured debt. No one is going to give a 22 year old that much unsecured credit so it would be pretty obvious they're trying to game the system. At best they could attempt loan restructuring but even that would probably not be worth it. Student loans really don't need the bankruptcy protection they have. It's created a huge problem for a whole generation of adults that have been fucked over by three separate recessions in a twenty year span.
- pb7 6y ago
  Your argument doesn’t sound very convincing. People declare bankruptcy now all the time; it’s quite easy actually if you really have no assets and don’t mind your credit ruined for 7 years or less. You haven’t actually stated under what conditions you would be allowed to discharge your debt, you’re just trying to convince me that it wouldn’t be abused and also that we really need this to happen. Again, not very convincing. There’s a reason student debt was made undischargeable right around the same time that the government started guaranteeing loans.
  - ryandrake 6y ago
    Isn't the risk of default/bankruptcy part of what justifies charging interest? If there is no risk for lenders, how do they justify charging interest?
    - plorkyeran 6y ago
      Not being able to discharge a debt in bankruptcy doesn't make the loan zero risk. Even if you can garnish someone's income there's no guarantee that they'll ever make enough money for that to repay the loan. The risk also isn't the only thing that justifies interest. Why would they let you borrow some of their money if they weren't getting some benefit from doing so?

by pb7 6y ago

giantrobot 6y ago

You don't declare bankruptcy like Michael Scott by just yelling into a hallway. If college loans could be discharged, your fresh grad example still has to convince a court to discharge the loan. That's not likely to happen unless they also managed to rack up many tens of thousands of dollars in unsecured debt. No one is going to give a 22 year old that much unsecured credit so it would be pretty obvious they're trying to game the system. At best they could attempt loan restructuring but even that would probably not be worth it. Student loans really don't need the bankruptcy protection they have. It's created a huge problem for a whole generation of adults that have been fucked over by three separate recessions in a twenty year span.

pb7 6y ago
Your argument doesn’t sound very convincing. People declare bankruptcy now all the time; it’s quite easy actually if you really have no assets and don’t mind your credit ruined for 7 years or less. You haven’t actually stated under what conditions you would be allowed to discharge your debt, you’re just trying to convince me that it wouldn’t be abused and also that we really need this to happen. Again, not very convincing. There’s a reason student debt was made undischargeable right around the same time that the government started guaranteeing loans.
- ryandrake 6y ago
  Isn't the risk of default/bankruptcy part of what justifies charging interest? If there is no risk for lenders, how do they justify charging interest?
  - plorkyeran 6y ago
    Not being able to discharge a debt in bankruptcy doesn't make the loan zero risk. Even if you can garnish someone's income there's no guarantee that they'll ever make enough money for that to repay the loan. The risk also isn't the only thing that justifies interest. Why would they let you borrow some of their money if they weren't getting some benefit from doing so?