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I have no debt, but I hold this opinion: Student loan debt should be able to be discharged in bankruptcy. If an institution gives someone a $200k education and

I have no debt, but I hold this opinion: Student loan debt should be able to be discharged in bankruptcy. If an institution gives someone a $200k education and that person can’t pay the debt back with their career, it was overpriced and should have never been give a loan. I’ve seen people flee the country and live in Australia or Germany so as just to escape their student loans. Bad on them for making the poor financial choice but good for them sticking it to the industry that gives out these loans.

sokoloff 5y ago
If you make student loans easier to discharge, you make them harder to get. That might be part of your plan, but it does make it harder for the less wealthy to afford college, so there's a trade-off here, not a straight victory.
- landemva 5y ago
  After a year or two, college costs would drop dramatically. The breadth of degree programs, some of which lead to careers serving coffee, would also shrink.
  - sokoloff 5y ago
    Harvard and Stanford admit about 1 in 20 applicants. MIT around 1 in 15. I doubt you’d see those schools get cheaper as the demand far exceeds the supply. I think you would see a lot more legacy admissions and an overall wealthier student body in the top-tier colleges if poor people couldn’t easily borrow to attend. (As one of those people 35 years ago, I think that’s a way worse outcome than today.) State schools and schools with high admission percentages might get cheaper in tuition, but it’s still going to be expensive to live and eat for 4 years with no income coming in for most of the year.
    - landemva 5y ago
      High school students apply to many colleges, and each student rarely goes on to attend multiple colleges concurrently. That ratio about applications is misleading, and is generally understood to be intended to be social signaling of exclusivity. Why would a student not want to work part time to have a little income? I found it beneficial.
    - kortilla 5y ago
      If people had to pay $200k to attend Harvard, the price will absolutely collapse. 1 in 20 applicants is only the top 5%. Being in the top 5% income earners in the country is not a high enough bar to shell out $50k a year extra post tax to pay a child’s tuition.
      - sokoloff 5y ago
        That 20:1 is the depth of applicant pool and almost entirely unconnected with the 95th percentile current income of one country. Harvard draws from all over the world and many US upper-middle class parents/grandparents are willing to save for 20 years or use HELOCs; they don’t have to pay out of current income. Upper class can just pay for it (there are well over 1M households in the US alone with a net worth over $10M; those people would barely notice putting little Chris through Harvard). If student loans were entirely outlawed, Harvard wouldn’t need to lower its prices; it would just end up not having poor people attending.
      - josephcsible 5y ago
        The top 5% of income for people who apply to Harvard is significantly higher than the top 5% of income for everyone in the country.
PragmaticPulp 5y ago
I somewhat agree, but it turns out the details are extremely tricky. For example, how do you prevent people from finishing college, immediately declaring bankruptcy, and then getting a high-paying job with their degree? Unlike a house or car, the education can't be repossessed so the holder retains all of the upside. It would be the ultimate financial hack to get a medical degree, declare bankruptcy, and then immediately start practicing once the bankruptcy went through. So obviously there would need to be a lot of protections against abuse. Perhaps a provision that the student loan could only be discharged after a protracted period (many years) of too-low income. Ironically, there's a huge resistance to this idea from within humanities departments. They fear (rightly so) that such provisions would make it harder to get loans for humanities degrees because they pay significantly less. I don't think that's really a bad thing, but you'll find some outspoken arguments against this from people in the academic world.
- heartbeats 5y ago
  You can't. What you're describing is textbook indentured servitude, which is a form of slavery. If you're suggesting that some things are only possible to fund through slavery, may I humbly submit that slavery is still wrong, and things which cannot be funded except through slavery have no right to existence?
  - Dylan16807 5y ago
    Not absolutely every form of indentured servitude is wrong. It is entirely possible to have fair deals where you get an education in exchange for X percent of the income you have over Y minimum, for Z years.
    - heartbeats 5y ago
      Yeah, see, I would personally contend that indentured servitude is ipso facto immoral, and so if your "fair deal" includes that, it is not actually fair. Specifically, you're selling future labor in exchange for an asset that you can't immediately liquidate to pay off the debt. This is not acceptable, if the counterparty makes a profit from it. (If you could immediately liquidate it, at that point there would be no need to make recourse to your earning power)
hooande 5y ago
Currently only about 10% of student loans come from private institutions. I'm not sure if I want the government saying "You can't have a loan to study X because you won't make enough money". I'm not sure it's even possible to say that, except for using average life time earnings that could vary wildly over time. Teenagers applying for college usually don't have personal credit histories to be evaluated. Either we give out lots of student loans, or we don't.

sokoloff 5y ago

If you make student loans easier to discharge, you make them harder to get. That might be part of your plan, but it does make it harder for the less wealthy to afford college, so there's a trade-off here, not a straight victory.

landemva 5y ago
After a year or two, college costs would drop dramatically. The breadth of degree programs, some of which lead to careers serving coffee, would also shrink.
- sokoloff 5y ago
  Harvard and Stanford admit about 1 in 20 applicants. MIT around 1 in 15. I doubt you’d see those schools get cheaper as the demand far exceeds the supply. I think you would see a lot more legacy admissions and an overall wealthier student body in the top-tier colleges if poor people couldn’t easily borrow to attend. (As one of those people 35 years ago, I think that’s a way worse outcome than today.) State schools and schools with high admission percentages might get cheaper in tuition, but it’s still going to be expensive to live and eat for 4 years with no income coming in for most of the year.
  - landemva 5y ago
    High school students apply to many colleges, and each student rarely goes on to attend multiple colleges concurrently. That ratio about applications is misleading, and is generally understood to be intended to be social signaling of exclusivity. Why would a student not want to work part time to have a little income? I found it beneficial.
  - kortilla 5y ago
    If people had to pay $200k to attend Harvard, the price will absolutely collapse. 1 in 20 applicants is only the top 5%. Being in the top 5% income earners in the country is not a high enough bar to shell out $50k a year extra post tax to pay a child’s tuition.
    - sokoloff 5y ago
      That 20:1 is the depth of applicant pool and almost entirely unconnected with the 95th percentile current income of one country. Harvard draws from all over the world and many US upper-middle class parents/grandparents are willing to save for 20 years or use HELOCs; they don’t have to pay out of current income. Upper class can just pay for it (there are well over 1M households in the US alone with a net worth over $10M; those people would barely notice putting little Chris through Harvard). If student loans were entirely outlawed, Harvard wouldn’t need to lower its prices; it would just end up not having poor people attending.
    - josephcsible 5y ago
      The top 5% of income for people who apply to Harvard is significantly higher than the top 5% of income for everyone in the country.

PragmaticPulp 5y ago

I somewhat agree, but it turns out the details are extremely tricky. For example, how do you prevent people from finishing college, immediately declaring bankruptcy, and then getting a high-paying job with their degree? Unlike a house or car, the education can't be repossessed so the holder retains all of the upside. It would be the ultimate financial hack to get a medical degree, declare bankruptcy, and then immediately start practicing once the bankruptcy went through. So obviously there would need to be a lot of protections against abuse. Perhaps a provision that the student loan could only be discharged after a protracted period (many years) of too-low income. Ironically, there's a huge resistance to this idea from within humanities departments. They fear (rightly so) that such provisions would make it harder to get loans for humanities degrees because they pay significantly less. I don't think that's really a bad thing, but you'll find some outspoken arguments against this from people in the academic world.

heartbeats 5y ago
You can't. What you're describing is textbook indentured servitude, which is a form of slavery. If you're suggesting that some things are only possible to fund through slavery, may I humbly submit that slavery is still wrong, and things which cannot be funded except through slavery have no right to existence?
- Dylan16807 5y ago
  Not absolutely every form of indentured servitude is wrong. It is entirely possible to have fair deals where you get an education in exchange for X percent of the income you have over Y minimum, for Z years.
  - heartbeats 5y ago
    Yeah, see, I would personally contend that indentured servitude is ipso facto immoral, and so if your "fair deal" includes that, it is not actually fair. Specifically, you're selling future labor in exchange for an asset that you can't immediately liquidate to pay off the debt. This is not acceptable, if the counterparty makes a profit from it. (If you could immediately liquidate it, at that point there would be no need to make recourse to your earning power)

hooande 5y ago

Currently only about 10% of student loans come from private institutions. I'm not sure if I want the government saying "You can't have a loan to study X because you won't make enough money". I'm not sure it's even possible to say that, except for using average life time earnings that could vary wildly over time. Teenagers applying for college usually don't have personal credit histories to be evaluated. Either we give out lots of student loans, or we don't.