4 ms·

>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

>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...
- david38 5y ago
  Exactly. Banks should not be lending without some risk. Bankruptcy exists for a reason. Far better for the government to decide how many of each profession it’s willing to subsidize than the current free for all. It would give people a rough idea of the value of their debt.

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...
david38 5y ago
Exactly. Banks should not be lending without some risk. Bankruptcy exists for a reason. Far better for the government to decide how many of each profession it’s willing to subsidize than the current free for all. It would give people a rough idea of the value of their debt.