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The idea that someone can get a huge loan and walk away from it... Great for them, but what about all the other people who have loans? Do they get to walk away

The idea that someone can get a huge loan and walk away from it... Great for them, but what about all the other people who have loans? Do they get to walk away too? Had anyone worked out how it's supposed to work? Where is the a detailed paper explaining the legal/social implications? Or, wait, is "cancel student debt" just another Twitter soundbyte that a million people liked and retweeted, but nobody has thought through? For the record, I think that the cost of education in the US is ridiculous, and I don't understand why people put up with it. But making selective debts simply disappear? "Hmmmmm" If America started out by making education free (at least for your first run thorough college), then there may be a case to make for debt forgiveness for recent graduates. Otherwise I can't see how this is supposed to work. It's feels kinda like notions like "property is theft". I'm from a country with a reasonable social net, free-ish healthcare! I'm all-ears! Go on! Explain how this is supposed to works without causing a civil war? Who exactly has the right to live in this the house I paid for?

_heimdall 5y ago
I 100% agree with you hear. I have never actually understood the argument for how cancelling debt could work, my point was only that it can technically be done and in fact wouldn't be the first instance of the US government taking on bad debt to prop up markets. I've seen first hand how willing the education, banking, and political systems are to pile student debt on people who can never reasonably afford it. The check on bad debt, though, is supposed to be lender risk. When a failed loan directly hits the lender's books they are more careful about what loans they write. The government helped ruin the housing market by effectively underwriting ever bad loan. They've done the same with the college loan market. To tour point, no one can possibly know what blowback there would be by cancelling loans. They government could sweep up the loans to protect any securities backed by them, but that adds even more federal debt and creates securities markets that are truly based on smoke and mirrors. Allowing those loans to be closed or moved without default also gives a green light to the banking industry to keep writing more and more bad student loans, and to the colleges to keep increasing tuition and fees.
CogitoCogito 5y ago
Many kinds of loans can be discharged in bankruptcy and no civil wars have broken out to date (for that reason). So for a start, changes could be made to allow student loans to be more easily discharged as well.
- _heimdall 5y ago
  Changes here definitely should be made. The laws were changed in the late 70s to make student debt largely ineligible for bankruptcy discharge for no reason beyond baseless claims of bankruptcy abuse by recent grads. That doesn't solve all the debt currently there though. We allowed banks to write student loans for 50 years knowing that the debt couldn't be discharged. Total student debt I'm the US is upwards of $1.7T, and the government would almost certainly have to eat that cost for any defaulted loans.

_heimdall 5y ago

I 100% agree with you hear. I have never actually understood the argument for how cancelling debt could work, my point was only that it can technically be done and in fact wouldn't be the first instance of the US government taking on bad debt to prop up markets. I've seen first hand how willing the education, banking, and political systems are to pile student debt on people who can never reasonably afford it. The check on bad debt, though, is supposed to be lender risk. When a failed loan directly hits the lender's books they are more careful about what loans they write. The government helped ruin the housing market by effectively underwriting ever bad loan. They've done the same with the college loan market. To tour point, no one can possibly know what blowback there would be by cancelling loans. They government could sweep up the loans to protect any securities backed by them, but that adds even more federal debt and creates securities markets that are truly based on smoke and mirrors. Allowing those loans to be closed or moved without default also gives a green light to the banking industry to keep writing more and more bad student loans, and to the colleges to keep increasing tuition and fees.

CogitoCogito 5y ago

Many kinds of loans can be discharged in bankruptcy and no civil wars have broken out to date (for that reason). So for a start, changes could be made to allow student loans to be more easily discharged as well.

_heimdall 5y ago
Changes here definitely should be made. The laws were changed in the late 70s to make student debt largely ineligible for bankruptcy discharge for no reason beyond baseless claims of bankruptcy abuse by recent grads. That doesn't solve all the debt currently there though. We allowed banks to write student loans for 50 years knowing that the debt couldn't be discharged. Total student debt I'm the US is upwards of $1.7T, and the government would almost certainly have to eat that cost for any defaulted loans.