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> the fact that educational debt in America can never be voided through bankruptcy seems like a conscious systemic decision to create debt slaves The inabilit

> the fact that educational debt in America can never be voided through bankruptcy seems like a conscious systemic decision to create debt slaves The inability to be voided through bankruptcy, as I understand it, was setup so that educational loans would not wind up with insane interest rates. Given that they are unsecured (there's nothing for the lender to repossess if the borrower fails to pay), there is much greater risk to the lender. Being unable to discharge the load in bankruptcy is one way to mitigate this. Raising interest rates on everyone taking such loans (so the people that do pay subsidize the people that don't) is another. Presumably, it was decided that the former was a better option than the later.

drdec 5y ago
> The inability to be voided through bankruptcy, as I understand it, was setup so that educational loans would not wind up with insane interest rates. Given that they are unsecured (there's nothing for the lender to repossess if the borrower fails to pay), there is much greater risk to the lender. Most loans issued before 2010 are guaranteed by the US government. So while they are technically unsecured, the government will cover the lender if the borrower doesn't pay. Since 2010, student loans are actually owned by the government, that is, students are borrowing money directly from the US federal government. So, in most cases, if a student loan were discharged in bankruptcy, it would be the federal government that would eat the cost of the loan.
- RHSeeger 5y ago
  > Since 2010, student loans are actually owned by the government Federal student loans are owned by the government. Private student loans, of which there are many and more every day, are owned by private (generally for-profit) companies. They're also not covered by the student loan relief efforts of recent times (CARES), if I understand correctly.

drdec 5y ago

> The inability to be voided through bankruptcy, as I understand it, was setup so that educational loans would not wind up with insane interest rates. Given that they are unsecured (there's nothing for the lender to repossess if the borrower fails to pay), there is much greater risk to the lender. Most loans issued before 2010 are guaranteed by the US government. So while they are technically unsecured, the government will cover the lender if the borrower doesn't pay. Since 2010, student loans are actually owned by the government, that is, students are borrowing money directly from the US federal government. So, in most cases, if a student loan were discharged in bankruptcy, it would be the federal government that would eat the cost of the loan.

RHSeeger 5y ago
> Since 2010, student loans are actually owned by the government Federal student loans are owned by the government. Private student loans, of which there are many and more every day, are owned by private (generally for-profit) companies. They're also not covered by the student loan relief efforts of recent times (CARES), if I understand correctly.