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Bring back the ability to declare bankruptcy for student loans and then market can better price risk. The only stipulation I would think might be good is a wait

Bring back the ability to declare bankruptcy for student loans and then market can better price risk. The only stipulation I would think might be good is a waiting period of say 10 or 15 years. This would to prevent say a new dentist or lawyer student from immediately declaring bankruptcy after graduation. By 10-15years on, if the person can't afford student loan payments, then bankruptcy should be on the table.

chrsig 4y ago
I fully agree with this. I'd add fixing interest on it. Variable interest rates just shouldn't exist.
troyvit 4y ago
Why should a college education take 10-15 years to pay off though?
- Eddy_Viscosity2 4y ago
  It wouldn't if you get a good paying job. But sometimes the degree doesn't pay out that way and people are left struggling to pay rent, let alone debt.
- skellington 4y ago
  Sure. Why should anything cost anything? Why should anyone have to subsidize people getting useless degrees at expensive colleges? Why can't you go to CCs and then state schools for much less? For most people, the modern college experience is just extended high school with almost zero educational value. Most people are more suited to trade schools. The poor kids already have incredible access to scholarships. It's all just "I want it" thinking.
  - Turing_Machine 4y ago
    You'd probably be surprised at how many of the student loans in default came from trade schools. I know the narrative is that all the people in student loan trouble majored in Bulgarian folk singing or whatever, but that's not anything like an accurate picture. The largest outright student loan cancellation in recent years was for former students of ITT Tech, which was a trade school.
    - rustybelt 4y ago
      Was it? How many plumbers, carpenters, or electricians came out of ITT tech?
      - Turing_Machine 4y ago
        They had drafting and electronics technician programs, both of which would be considered trades, not professional degrees. "Trade school" generally includes stuff like that. Also cosmetology schools, truck driving schools, and so on.
        ticviking 4y ago
        What happened a lot of the time is people choose the easiest program and it produces a wild oversupply in that field. Meanwhile we will basically always have an under supply of plumbers and septic technicians cause most folks hate the idea of working with sewage.
    - throwoutway 4y ago
      > The largest outright student loan cancellation in recent years was for former students of ITT Tech, which was a trade school. I don’t see how A massive fraud is even a relevant argument here. This isn’t a trade school like welders, plumbers, etc. and it certainly doesn’t justify the non-fraud subsidies
  - troyvit 4y ago
    Ehh if "I want it" was all it was about then why is the US so hilariously expensive for college compared to other countries? Looking around at my fellow Americans it doesn't seem to be because it makes us smarter that's for sure.
_-david-_ 4y ago
I'm a bit conflicted on this. With regular bankruptcy the loaner can take possession of the item you bought. With education the bank can't take your degree, knowledge, network and whatever else you gained from university. I'm not saying this shouldn't be a thing, but it would encourage people with no real property to declare bankruptcy even if they could pay it off.
- allisdust 4y ago
  Not true for unsecured loans and even for secured loans there is no guarantee that the security provided will cover the loan. Which is why the probability of a default is a variable while giving loans. By removing bankruptcy option, government is encouraging subprime loans in education.
- Turing_Machine 4y ago
  > With regular bankruptcy the loaner can take possession of the item you bought. If it's worth anything, which it may not be. I'd bet the average amount collected on, say, SBA loans for small businesses is pennies on the dollar, at best. It will be interesting to see what happens with FHA/VA loans when those go massively underwater oh...about a year from now.
chriogenix 4y ago
Student loans actually can be discharged in bankruptcy. There’s been this myth floating around for awhile. Yes it is harder and it’s a bit more work for your lawyer but is absolutely doable.
- dgfitz 4y ago
  Source: https://studentaid.gov/manage-loans/forgiveness-cancellation/bankruptcy https://studentaid.gov/manage-loans/forgiveness-cancellation...
- mywittyname 4y ago
  In theory, one can discharge student loans through bankruptcy. In practice, the bar demonstrating an undo hardship severe enough to have them discharged de facto impossible to cross. Thus, people simply say that they aren't dischargeable. If you talk to a lawyer on the subject, they will tell you exactly that. Even developing cancer that gives you a 20% chance of living for the next five years isn't a hardship undo enough for courts to discharge student loans.
fallingknife 4y ago
I think this is a good policy, as long as the universities are made to bear the risk of non payment. They should stand behind the value of their product with their money on the line like every other business.

chrsig 4y ago

I fully agree with this. I'd add fixing interest on it. Variable interest rates just shouldn't exist.

troyvit 4y ago

Why should a college education take 10-15 years to pay off though?

Eddy_Viscosity2 4y ago
It wouldn't if you get a good paying job. But sometimes the degree doesn't pay out that way and people are left struggling to pay rent, let alone debt.
skellington 4y ago
Sure. Why should anything cost anything? Why should anyone have to subsidize people getting useless degrees at expensive colleges? Why can't you go to CCs and then state schools for much less? For most people, the modern college experience is just extended high school with almost zero educational value. Most people are more suited to trade schools. The poor kids already have incredible access to scholarships. It's all just "I want it" thinking.
- Turing_Machine 4y ago
  You'd probably be surprised at how many of the student loans in default came from trade schools. I know the narrative is that all the people in student loan trouble majored in Bulgarian folk singing or whatever, but that's not anything like an accurate picture. The largest outright student loan cancellation in recent years was for former students of ITT Tech, which was a trade school.
  - rustybelt 4y ago
    Was it? How many plumbers, carpenters, or electricians came out of ITT tech?
    - Turing_Machine 4y ago
      They had drafting and electronics technician programs, both of which would be considered trades, not professional degrees. "Trade school" generally includes stuff like that. Also cosmetology schools, truck driving schools, and so on.
      - ticviking 4y ago
        What happened a lot of the time is people choose the easiest program and it produces a wild oversupply in that field. Meanwhile we will basically always have an under supply of plumbers and septic technicians cause most folks hate the idea of working with sewage.
  - throwoutway 4y ago
    > The largest outright student loan cancellation in recent years was for former students of ITT Tech, which was a trade school. I don’t see how A massive fraud is even a relevant argument here. This isn’t a trade school like welders, plumbers, etc. and it certainly doesn’t justify the non-fraud subsidies
- troyvit 4y ago
  Ehh if "I want it" was all it was about then why is the US so hilariously expensive for college compared to other countries? Looking around at my fellow Americans it doesn't seem to be because it makes us smarter that's for sure.

_-david-_ 4y ago

I'm a bit conflicted on this. With regular bankruptcy the loaner can take possession of the item you bought. With education the bank can't take your degree, knowledge, network and whatever else you gained from university. I'm not saying this shouldn't be a thing, but it would encourage people with no real property to declare bankruptcy even if they could pay it off.

allisdust 4y ago
Not true for unsecured loans and even for secured loans there is no guarantee that the security provided will cover the loan. Which is why the probability of a default is a variable while giving loans. By removing bankruptcy option, government is encouraging subprime loans in education.
Turing_Machine 4y ago
> With regular bankruptcy the loaner can take possession of the item you bought. If it's worth anything, which it may not be. I'd bet the average amount collected on, say, SBA loans for small businesses is pennies on the dollar, at best. It will be interesting to see what happens with FHA/VA loans when those go massively underwater oh...about a year from now.

chriogenix 4y ago

Student loans actually can be discharged in bankruptcy. There’s been this myth floating around for awhile. Yes it is harder and it’s a bit more work for your lawyer but is absolutely doable.

dgfitz 4y ago
Source: https://studentaid.gov/manage-loans/forgiveness-cancellation/bankruptcy https://studentaid.gov/manage-loans/forgiveness-cancellation...
mywittyname 4y ago
In theory, one can discharge student loans through bankruptcy. In practice, the bar demonstrating an undo hardship severe enough to have them discharged de facto impossible to cross. Thus, people simply say that they aren't dischargeable. If you talk to a lawyer on the subject, they will tell you exactly that. Even developing cancer that gives you a 20% chance of living for the next five years isn't a hardship undo enough for courts to discharge student loans.

fallingknife 4y ago

I think this is a good policy, as long as the universities are made to bear the risk of non payment. They should stand behind the value of their product with their money on the line like every other business.