6 ms·

> On one hand, this is great for the students who were effected. On the other hand, what mechanisms exist to prevent this from happening again? Debt forgiveness

> On one hand, this is great for the students who were effected. On the other hand, what mechanisms exist to prevent this from happening again? Debt forgiveness in general is a terrible precedent to set. I don't know if they have plans to do this, but they should turn around and attempt to collect the debt from the schools that defrauded the students rather than the students who were victims of that fraud. And frankly, debt forgiveness isn't a bad policy. It's essentially what bankruptcy relief is (relief that's available to almost all other debt holders).

fortran77 6y ago
In bankruptcy the lender already factored in that possibility when creating the loan, and the Government and taxpayers aren’t left holding the bag.
- Ancapistani 6y ago
  My wife took private student loans, which at the time were forgivable in bankruptcy, as a hedge against future financial issues. She accepted a higher interest rate to account for that. … then the federal government retroactively made them non-dischargeable. I mention this to highlight that changes in the regulatory environment don’t always favor the borrower, nor are there always concessions made to limit harm to the injured party.
  - D13Fd 6y ago
    That's also a great example of how discharge-ability and the potential for student loan forgiveness warps the actions of borrowers, and in an unfair way.
    - oarsinsync 6y ago
      How is it unfair if the loan came with higher interest rates to account for that? That’s exactly the point of how debt markets are supposed to work. Higher risk borrowers are more likely to default, so pay higher interest rates to cover the % that do. If as a borrower you’re willing to pay more for your debt to give you that option (and quite frankly, all debt should be this way. There’s no debt an LLC can’t write off, why is there debt individuals can’t write off?), why is this bad?
      - fortran77 6y ago
        One "unfair" thing is generally when there's a mass "loan forgiveness" program (like there was for Mortgage Debt in 2008) borrowers are exempted from considering forgiven debt as income. That's unfair to the rest of us taxpayers.
D13Fd 6y ago
Debt forgiveness is a horrible policy. It encourages borrowers to hold on to their debt as long as possible to achieve forgiveness, and punishes those who don't. My wife and I worked our butts off to pay off our student debt 10+ years early. How is it fair that our peers with the same jobs, who didn't scrimp and save, will achieve the same outcome we did if the government just decides to take all of that personal debt and basically just add it to the national debt (or expand the money supply)? Beyond that, when the government does that, OUR taxes will be going to pay off our FRIENDS' debt (or we'll be paying via inflation), even though we ourselves worked to pay off our own debt early. This is grossly unfair.
- tablespoon 6y ago
  > Beyond that, when the government does that, OUR taxes will be going to pay off our FRIENDS' debt (or we'll be paying via inflation), even though we ourselves worked to pay off our own debt early. This is grossly unfair. So you basically think that people who were defrauded should have an debt-albatross hanging over their necks (potentially for their whole lives), so you won't feel like a sucker for paying of your own student debt? Were you defrauded by the school whose loans you worked so hard to pay off?
  - D13Fd 6y ago
    First, I was responding to your comment that debt relief was a good policy generally. It's not. Second, what about all of the other victims of crime. Are people who were defrauded by a private school more worthy of relief than carjacking victims? Arson victims? What about victims of other frauds? What about non-monetary crimes? Are people who were defrauded by private schools more worthy of relief than rape victims, or the families of murder victims? It's just not a role of government to provide monetary relief (as opposed to justice) to victims of crime. And even if it were, I see no reason why victims of private school fraud should receive relief before all others.
    - smnrchrds 6y ago
      > Are people who were defrauded by a private school more worthy of relief than carjacking victims? Arson victims? What about victims of other frauds? Mortgage and car loan issuers always force you to purchase adequate insurance. If you are a victim of arson or carjacking, you won't still owe the lender the full amount of the loan—insurance will make both you and the lender whole. There is no insurance for education though. So someone has to lose money here. The question is, is it better for the student to be out of the money or the lender.

fortran77 6y ago

In bankruptcy the lender already factored in that possibility when creating the loan, and the Government and taxpayers aren’t left holding the bag.

Ancapistani 6y ago
My wife took private student loans, which at the time were forgivable in bankruptcy, as a hedge against future financial issues. She accepted a higher interest rate to account for that. … then the federal government retroactively made them non-dischargeable. I mention this to highlight that changes in the regulatory environment don’t always favor the borrower, nor are there always concessions made to limit harm to the injured party.
- D13Fd 6y ago
  That's also a great example of how discharge-ability and the potential for student loan forgiveness warps the actions of borrowers, and in an unfair way.
  - oarsinsync 6y ago
    How is it unfair if the loan came with higher interest rates to account for that? That’s exactly the point of how debt markets are supposed to work. Higher risk borrowers are more likely to default, so pay higher interest rates to cover the % that do. If as a borrower you’re willing to pay more for your debt to give you that option (and quite frankly, all debt should be this way. There’s no debt an LLC can’t write off, why is there debt individuals can’t write off?), why is this bad?
    - fortran77 6y ago
      One "unfair" thing is generally when there's a mass "loan forgiveness" program (like there was for Mortgage Debt in 2008) borrowers are exempted from considering forgiven debt as income. That's unfair to the rest of us taxpayers.

D13Fd 6y ago

Debt forgiveness is a horrible policy. It encourages borrowers to hold on to their debt as long as possible to achieve forgiveness, and punishes those who don't. My wife and I worked our butts off to pay off our student debt 10+ years early. How is it fair that our peers with the same jobs, who didn't scrimp and save, will achieve the same outcome we did if the government just decides to take all of that personal debt and basically just add it to the national debt (or expand the money supply)? Beyond that, when the government does that, OUR taxes will be going to pay off our FRIENDS' debt (or we'll be paying via inflation), even though we ourselves worked to pay off our own debt early. This is grossly unfair.

tablespoon 6y ago
> Beyond that, when the government does that, OUR taxes will be going to pay off our FRIENDS' debt (or we'll be paying via inflation), even though we ourselves worked to pay off our own debt early. This is grossly unfair. So you basically think that people who were defrauded should have an debt-albatross hanging over their necks (potentially for their whole lives), so you won't feel like a sucker for paying of your own student debt? Were you defrauded by the school whose loans you worked so hard to pay off?
- D13Fd 6y ago
  First, I was responding to your comment that debt relief was a good policy generally. It's not. Second, what about all of the other victims of crime. Are people who were defrauded by a private school more worthy of relief than carjacking victims? Arson victims? What about victims of other frauds? What about non-monetary crimes? Are people who were defrauded by private schools more worthy of relief than rape victims, or the families of murder victims? It's just not a role of government to provide monetary relief (as opposed to justice) to victims of crime. And even if it were, I see no reason why victims of private school fraud should receive relief before all others.
  - smnrchrds 6y ago
    > Are people who were defrauded by a private school more worthy of relief than carjacking victims? Arson victims? What about victims of other frauds? Mortgage and car loan issuers always force you to purchase adequate insurance. If you are a victim of arson or carjacking, you won't still owe the lender the full amount of the loan—insurance will make both you and the lender whole. There is no insurance for education though. So someone has to lose money here. The question is, is it better for the student to be out of the money or the lender.