5 ms·

Yes, adults can make poor choices. Agreed. Said choices should be constrained though. She wouldn't be allowed to buy a 300k car with no possibility of bankru

Yes, adults can make poor choices. Agreed. Said choices should be constrained though. She wouldn't be allowed to buy a 300k car with no possibility of bankruptcy. The lender is made of adults as well. They also made poor choices. Why is a group of adults hiding behind a piece of paper allowed to be saved from their poor choices while an individual not?

nickff 5y ago
>"Why is a group of adults hiding behind a piece of paper allowed to be saved from their poor choices while an individual not?" The piece of paper is the law, which does not allow for defaults on these loans. These laws were created to allow students to take massive loans, and transfer their future earnings to a school. I would agree that something should change, but the schools will fight tooth and nail to prevent it.
romwell 5y ago
>Why is a group of adults hiding behind a piece of paper allowed to be saved from their poor choices while an individual not? Because rich people lending money to poor people needs to be a risk-free endeavor backed up by the state. This way, it's easier for the banks to make money. And at the same time, it's easy to spin predatory lending as "helping out" when it shouldn't exist to begin with, and victim-blame people who are taken advantage of (which, in the case of student loans, is children: college applications are sent out well before a typical freshman turns 18).
- jjeaff 5y ago
  I don't agree with that take. Without government backing, the alternative is that banks would not lend. Just like they don't currently lend to the poor and that market is instead filled by predatory loan sharks and payday lenders. In other words, the purpose is not to help the banks, but to help people get the loans in the first place. However, the unintended consequences are that the banks are incentivized to make way to many loans. Obviously, there need to be better limits placed on lending for education.
  - ldiracdelta 5y ago
    If payday loans didn't exist, those using it would... wait for payday and defer their consumption by 1-2 weeks. Usurious loans aren't a solution and only enable foolish behavior.
    - imtringued 5y ago
      A lot of people would accept the shame and just ask a friend or family member.
  - romwell 5y ago
    >Without government backing, the alternative is that banks would not lend This is an absurd proposition, since the legislation that makes student loans indismissable with bankruptcy is unique to student loans (and quite recent). Yet lending still happens. Surely you don't mean to say that an educational loan is always a loss, do you? But let's play along for a second, and imagine that lenders back out of the very lucrative business. And that would be bad... why again? Because then the education would be priced affordably if the universities wanted to have any students? Because the government would not have much headroom in defunding higher education (look at state college funding percentage in the 70s vs now? Because the universities would be incentivized to provide education, and wouldn't have an obscene admin-to-professor ratio that they have attained since then? Because the universities would not have the cash to burn on ever-expanding construction projects, like stadiums, luxury residence halls, hotels, etc, and would catch some flak for building them at students' expense? Because the people would be incentivized to demand free, or near-free higher education the way Europe does it, and "just take out a loan like everyone does" won't be an excuse to not provide it anymore? Because fewer university degrees would mean a higher status and acceptance for trade schools, and would lead to trade schools being acceptable for white-collar higher-pay jobs (...without having to rebrand them as "Boot Camps" like we do in software)? Because the universities would then be able to focus on teaching critical thinking and research skills that advance our civilization, and emphasize growth instead of having the students see it as an investment into a salaried position? >However, the unintended consequences Oh, you mean it is just an unfortunate accident that making student loans non-dischargeable in 1976 by the Nixon administration (renowned for integrity)[1] simply coincided with inflation-adjusted education cost starting to grow after a long period of not growing[2]? And, by pure chance, after that 1976 legislation, inflation-adjusted federal education funding remained stagnant and decreased over the subsequent decades[3] in spite of number of students nearly doubling[4]? And that all of that simply coincided with education becoming accessible to Black people (in 1976, the first generation that didn't go to segregated schools would be going to colleges)? And that nobody would have guessed that non-dismissal of loans in case of bankruptcy, and simultaneous effective decrease in higher ed funding as the number of students steadily grows would result in costs and loans ballooning? And that all of that was unintentional, somehow, though the profit and political motives are not only known, documented, and openly admitted, but have been a part of the platform of the party that enacted that legislation? In that case, I might disagree. [1]https://www.tateesq.com/learn/student-loan-bankruptcy-law-history https://www.tateesq.com/learn/student-loan-bankruptcy-law-hi... [2]https://educationdata.org/average-cost-of-college-by-year https://educationdata.org/average-cost-of-college-by-year [3] https://nces.ed.gov/pubs2002/2002129.pdf https://nces.ed.gov/pubs2002/2002129.pdf [4]https://www.statista.com/statistics/183995/us-college-enrollment-and-projections-in-public-and-private-institutions/ https://www.statista.com/statistics/183995/us-college-enroll...
bko 5y ago
> Said choices should be constrained though. She wouldn't be allowed to buy a 300k car with no possibility of bankruptcy. The reason she isn't able to get a crazy car loan is because there's no government program giving anyone unlimited loans, no questions asked. Private lenders understand not all degrees are made equal, so if you go to LendingClub or similar and ask for a student loan for a top tier law school, they'll gladly give you a loan and charge you less than the government. Bonus is that you can dismiss the debt in bankruptcy. The simplest answer would just be to severely restrict or eliminate federal loans for school and let private lenders fill in the gaps.
- david38 5y ago
  Government involvement in higher education is important, but better done as keeping tuition low and encouraging people to live at home, penalizing textbook profiteering, and subsidizing desired majors like engineering, etc where the need is great and the local students aren’t joining in great enough numbers.
rayiner 5y ago
The lender is probably the federal government. The make the political choice to make loans without asking about credit worthiness, because we mistakenly treat university education as the only path to upward mobility. The schools abuse that social status.
- imtringued 5y ago
  If that is the case then the loan is just an unorthodox method of taxation. In that sense there should obviously be a limit to how much tax you owe to the government otherwise it becomes abusive. It also means that the government shouldn't expect you to repay the whole sum.
rsj_hn 5y ago
You can't have it both ways. Either allow the government to turn down most of these loans and charge higher interest rates based on credit-worthiness or make bankruptcy very difficult. What you want is the bankrupcty rights of a non-government guaranteed loan in which credit worthiness is taken into account, but interest rates and credit availability of a loan in which the bankruptcy rights are substantially reduced. That's not possible. I agree we should abolish these lending guarantees entirely and let the private sector provide loans and charge whatever interest rate they want if people can just walk away from the loan. But that's not the interest rate people are paying now, so that's not an option for existing borrowers.
- david38 5y ago
  Few things are black and white. I absolutely believe in bankruptcy. I also believe the government can fund state schools and community colleges in such a way as to improve access without building more palaces. Just by improving the rigor of community colleges students can save massive amounts of money by paying $2k/y instead of $30k and live at home instead of $15k for housing. This cuts the cost basically in half.
  - voakbasda 5y ago
    You think I’d let my kids live with me for less than $200/month?
    - cercatrova 5y ago
      Yes? I never get why parents would charge their own kids rent. Not how you'd build generational wealth.
m0zg 5y ago
> She wouldn't be allowed to buy a 300k car with no possibility of bankruptcy. There are two ways to interpret what you said: 1. Allowing bankruptcy would basically eliminate student loans as a thing, for the typical "moral hazard" reasons. So it's not a realistic proposition. 2. Limiting the amount to something more reasonable, that's something I would actually support. Say, 15-20K/yr, inflation adjusted? Education cost for those financing themselves would also drop considerably.

nickff 5y ago

>"Why is a group of adults hiding behind a piece of paper allowed to be saved from their poor choices while an individual not?" The piece of paper is the law, which does not allow for defaults on these loans. These laws were created to allow students to take massive loans, and transfer their future earnings to a school. I would agree that something should change, but the schools will fight tooth and nail to prevent it.

romwell 5y ago

>Why is a group of adults hiding behind a piece of paper allowed to be saved from their poor choices while an individual not? Because rich people lending money to poor people needs to be a risk-free endeavor backed up by the state. This way, it's easier for the banks to make money. And at the same time, it's easy to spin predatory lending as "helping out" when it shouldn't exist to begin with, and victim-blame people who are taken advantage of (which, in the case of student loans, is children: college applications are sent out well before a typical freshman turns 18).

jjeaff 5y ago
I don't agree with that take. Without government backing, the alternative is that banks would not lend. Just like they don't currently lend to the poor and that market is instead filled by predatory loan sharks and payday lenders. In other words, the purpose is not to help the banks, but to help people get the loans in the first place. However, the unintended consequences are that the banks are incentivized to make way to many loans. Obviously, there need to be better limits placed on lending for education.
- ldiracdelta 5y ago
  If payday loans didn't exist, those using it would... wait for payday and defer their consumption by 1-2 weeks. Usurious loans aren't a solution and only enable foolish behavior.
  - imtringued 5y ago
    A lot of people would accept the shame and just ask a friend or family member.
- romwell 5y ago
  >Without government backing, the alternative is that banks would not lend This is an absurd proposition, since the legislation that makes student loans indismissable with bankruptcy is unique to student loans (and quite recent). Yet lending still happens. Surely you don't mean to say that an educational loan is always a loss, do you? But let's play along for a second, and imagine that lenders back out of the very lucrative business. And that would be bad... why again? Because then the education would be priced affordably if the universities wanted to have any students? Because the government would not have much headroom in defunding higher education (look at state college funding percentage in the 70s vs now? Because the universities would be incentivized to provide education, and wouldn't have an obscene admin-to-professor ratio that they have attained since then? Because the universities would not have the cash to burn on ever-expanding construction projects, like stadiums, luxury residence halls, hotels, etc, and would catch some flak for building them at students' expense? Because the people would be incentivized to demand free, or near-free higher education the way Europe does it, and "just take out a loan like everyone does" won't be an excuse to not provide it anymore? Because fewer university degrees would mean a higher status and acceptance for trade schools, and would lead to trade schools being acceptable for white-collar higher-pay jobs (...without having to rebrand them as "Boot Camps" like we do in software)? Because the universities would then be able to focus on teaching critical thinking and research skills that advance our civilization, and emphasize growth instead of having the students see it as an investment into a salaried position? >However, the unintended consequences Oh, you mean it is just an unfortunate accident that making student loans non-dischargeable in 1976 by the Nixon administration (renowned for integrity)[1] simply coincided with inflation-adjusted education cost starting to grow after a long period of not growing[2]? And, by pure chance, after that 1976 legislation, inflation-adjusted federal education funding remained stagnant and decreased over the subsequent decades[3] in spite of number of students nearly doubling[4]? And that all of that simply coincided with education becoming accessible to Black people (in 1976, the first generation that didn't go to segregated schools would be going to colleges)? And that nobody would have guessed that non-dismissal of loans in case of bankruptcy, and simultaneous effective decrease in higher ed funding as the number of students steadily grows would result in costs and loans ballooning? And that all of that was unintentional, somehow, though the profit and political motives are not only known, documented, and openly admitted, but have been a part of the platform of the party that enacted that legislation? In that case, I might disagree. [1]https://www.tateesq.com/learn/student-loan-bankruptcy-law-history https://www.tateesq.com/learn/student-loan-bankruptcy-law-hi... [2]https://educationdata.org/average-cost-of-college-by-year https://educationdata.org/average-cost-of-college-by-year [3] https://nces.ed.gov/pubs2002/2002129.pdf https://nces.ed.gov/pubs2002/2002129.pdf [4]https://www.statista.com/statistics/183995/us-college-enrollment-and-projections-in-public-and-private-institutions/ https://www.statista.com/statistics/183995/us-college-enroll...

bko 5y ago

> Said choices should be constrained though. She wouldn't be allowed to buy a 300k car with no possibility of bankruptcy. The reason she isn't able to get a crazy car loan is because there's no government program giving anyone unlimited loans, no questions asked. Private lenders understand not all degrees are made equal, so if you go to LendingClub or similar and ask for a student loan for a top tier law school, they'll gladly give you a loan and charge you less than the government. Bonus is that you can dismiss the debt in bankruptcy. The simplest answer would just be to severely restrict or eliminate federal loans for school and let private lenders fill in the gaps.

david38 5y ago
Government involvement in higher education is important, but better done as keeping tuition low and encouraging people to live at home, penalizing textbook profiteering, and subsidizing desired majors like engineering, etc where the need is great and the local students aren’t joining in great enough numbers.

rayiner 5y ago

The lender is probably the federal government. The make the political choice to make loans without asking about credit worthiness, because we mistakenly treat university education as the only path to upward mobility. The schools abuse that social status.

imtringued 5y ago
If that is the case then the loan is just an unorthodox method of taxation. In that sense there should obviously be a limit to how much tax you owe to the government otherwise it becomes abusive. It also means that the government shouldn't expect you to repay the whole sum.

rsj_hn 5y ago

You can't have it both ways. Either allow the government to turn down most of these loans and charge higher interest rates based on credit-worthiness or make bankruptcy very difficult. What you want is the bankrupcty rights of a non-government guaranteed loan in which credit worthiness is taken into account, but interest rates and credit availability of a loan in which the bankruptcy rights are substantially reduced. That's not possible. I agree we should abolish these lending guarantees entirely and let the private sector provide loans and charge whatever interest rate they want if people can just walk away from the loan. But that's not the interest rate people are paying now, so that's not an option for existing borrowers.

david38 5y ago
Few things are black and white. I absolutely believe in bankruptcy. I also believe the government can fund state schools and community colleges in such a way as to improve access without building more palaces. Just by improving the rigor of community colleges students can save massive amounts of money by paying $2k/y instead of $30k and live at home instead of $15k for housing. This cuts the cost basically in half.
- voakbasda 5y ago
  You think I’d let my kids live with me for less than $200/month?
  - cercatrova 5y ago
    Yes? I never get why parents would charge their own kids rent. Not how you'd build generational wealth.

m0zg 5y ago

> She wouldn't be allowed to buy a 300k car with no possibility of bankruptcy. There are two ways to interpret what you said: 1. Allowing bankruptcy would basically eliminate student loans as a thing, for the typical "moral hazard" reasons. So it's not a realistic proposition. 2. Limiting the amount to something more reasonable, that's something I would actually support. Say, 15-20K/yr, inflation adjusted? Education cost for those financing themselves would also drop considerably.