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I feel like I have not really heard a compelling reason why student debt should not be dischargeable thru bankruptcy like (afaik) all other forms of debt. I am

I feel like I have not really heard a compelling reason why student debt should not be dischargeable thru bankruptcy like (afaik) all other forms of debt. I am curious what the ramifications would be if higher education institutions had to (in some form) co-sign the debt being issued. I do get that not all education should be purely for economic reasons, but as an autodidact I feel that "learning for the sake of learning" does not need to come with the prices that people are paying for degrees.

throw2ih020 3mo ago
What would stop graduates from declaring bankruptcy early in their careers to discharge their debt, before they use their education to build a lifetime of earnings and assets?
- bee_rider 3mo ago
  Bankruptcy is still inconvenient. But mostly, people would be less able to get loans and then colleges would get to pick between reducing prices or having only a few rich students.
- AngryData 3mo ago
  Whats to stop people in their 20s now taking out tons of credit then declaring bankruptcy without the college?
  - throw2ih020 3mo ago
    Credit limits on the credit cards they can apply for. Good luck getting a limit higher than a few grand at 20 years old on your own.
chacha102 3mo ago
I'm all for "learning for the sake of learning", but the federal government doesn't need to subsidize it. Losing federal aid is not the same as not permitting colleges to run the programs at all. Supply/demand is still alive and well.
- mulmen 3mo ago
  But the return on that subsidy is positive so why not do it?
- linkregister 3mo ago
  You could say the same about all government programs, including pensions and defense. Yet somehow popularly-elected governments keep finding themselves maximizing public utility. A curious property indeed.
- DonsDiscountGas 3mo ago
  Also if they do subsidize it it should be in the form of public goods (libraries, publicly available research). There's some overlap there with loans to individuals but it's weak.
dataflow 3mo ago
> I feel like I have not really heard a compelling reason why student debt should not be dischargeable thru bankruptcy like (afaik) all other forms of debt. According to Reddit [1] it was to discourage students from immediately declaring bankruptcy upon graduation. I don't see why they couldn't have put a time limit on it though, if that was the reason. Say you can't declare bankruptcy for 7 years after you leave school. [1] https://www.reddit.com/r/StudentLoans/comments/ufejjg/why_cant_student_loan_debt_be_discharged_in/i6t56fn/ https://www.reddit.com/r/StudentLoans/comments/ufejjg/why_ca...
- nibbleyou 3mo ago
  I feel the interests would rise to accommodate for all the bankruptcies that inevitably happen exactly 7 years after
  - tbrownaw 3mo ago
    I would think that in this case, credit would mostly go to people expected to not have negative net worth after that 7 year limit.
  - jjav 3mo ago
    If bankrupcy is allowed some reasonable number of years later (not sure if that is 7 or 10, but some reasonable time) then if your education worked out and you're in a good career path and maybe close to buying a home, etc, declaring bankrupcy would probably hurt more than help. OTOH if you're still poor after those years and don't care about consequences of bankrupcy then maybe that's fair enough to wipe out the debt since the education clearly didn't provide value.
    - fc417fc802 3mo ago
      > declaring bankrupcy would probably hurt more than help. It wouldn't help at all as you are typically forfeiting all but essential assets by declaring it. The only people who benefit are those with nothing to their name except perhaps the home they live in and the car they drive to work everyday.
dyauspitr 3mo ago
Because then the normal thing to do would be to graduate, declare bankruptcy when you have nothing to lose in life because you are just starting out, work for 7 years and you’re in the clear by your late 20s. Everyone would do it.
- chihuahua 3mo ago
  Maybe not everyone, but certainly lots of unethical people would do it, and there are lots of those. They'd post unbearably smug posts on LinkedIn about it too, calling everyone a sucker who didn't walk away from their $200k in student loans via bankrupcty. The justification for student loans being exempt from bankruptcy is simply that there is no asset to be repossessed. Car loans, mortgages, and HELOCs are different. Credit cards have very high interest to pay for the higher risk. I guess we could have student loans with 29% interest, would that be preferable?
  - deleted 3mo ago
    [deleted]
  - vasachi 3mo ago
    You could have free education, for instance. I think that would be preferable to any sort of student loans.
- sethammons 3mo ago
  > Everyone would do it. No, they wouldn't. Source: go back a couple decades, and student loans had low interest rates and were dischargeable in bankruptcy. It was an option. And, in fact, practically nobody did that.
  - nxm 3mo ago
    Yes they would as there’d be no cost to them while all of them on the taxpayers.
    - sethammons 3mo ago
deleted 3mo ago
[deleted]
phyzix5761 3mo ago
Because its usually tax payer money that is used to fund these loans. If people started declaring bankruptcy tax payers would mandate that federal student loans stop existing as a matter of principle. People hold the value that its good to help students as long as they pay back at least what was given to them (adjusted for inflation).
- conductr 3mo ago
  We could also just decide to provide people higher level of education as a right. And, put some Medicare level pricing in place for colleges and universities to get cost in check. I personally would want to see it with greater student participation/testing. The US education has been watered down to be so easy specifically because failing reduces LTV of a student. They want to just crank out degrees to as many people as they can. I personally think we need to figure out the healthy balance of education we need, because college for all isn’t it. Then just pay for them to learn at a high expectation level. Private schools will still exist to pump out full price degrees and that’s fine too.
  - phyzix5761 3mo ago
    I agree. College is not for everyone. Also, we already have an option for those of us who want to provide higher education for people who can't afford it: charities. The advantage of giving my money to a charity instead of the government is that if the organization mismanages the funds it takes me 2 minutes to switch my monthly donation to a different organization. If government mismanages funds it takes between 2-6 years for an election cycle, and even then my candidate may not win or take my needs as a priority.
    - conductr 3mo ago
      Charity is fine, but the scale I’m talking about usually makes sense as a social program that we all participate in and that’s usually where governments come into the picture
  - labcomputer 3mo ago
dv_dt 3mo ago
Student university edication shouldn't even be a loan. The vast majority of student loans are financed by the government itself. The US spends trillions procuring defense (or war), it should also procure an educated workforce without saddling the citizenry with all the extra red tape and misery of collecting back a loan
- nxm 3mo ago
  Well someone has to do it as its bulk of NATO’s funding. It also should not waste tax payer’s money of worthless degrees
  - dv_dt 3mo ago
    Any restrictive administrative loop is always hopelessly behind on what degrees are "valuable". I think colleges should be required to provide information on salary and employment info for a graduates given degree from the university, but otherwise let the choice be open. All the proscription of "value" is useless cost increasing administrative theater
  - amanaplanacanal 3mo ago
    Most of US defense has absolutely nothing to do with NATO. Look at the current Iran fiasco for example.
  - AngryData 3mo ago
    What does the US spend towards NATO that it wouldn't spend if NATO didn't exist? The US has as many aircraft carriers as the entire rest of the world combined, and thats not because NATO requested it. Nor does NATO demand the US produce 20 million dollar a piece missles.
quickthrowman 3mo ago
[dead]

throw2ih020 3mo ago

What would stop graduates from declaring bankruptcy early in their careers to discharge their debt, before they use their education to build a lifetime of earnings and assets?

bee_rider 3mo ago
Bankruptcy is still inconvenient. But mostly, people would be less able to get loans and then colleges would get to pick between reducing prices or having only a few rich students.
AngryData 3mo ago
Whats to stop people in their 20s now taking out tons of credit then declaring bankruptcy without the college?
- throw2ih020 3mo ago
  Credit limits on the credit cards they can apply for. Good luck getting a limit higher than a few grand at 20 years old on your own.

chacha102 3mo ago

I'm all for "learning for the sake of learning", but the federal government doesn't need to subsidize it. Losing federal aid is not the same as not permitting colleges to run the programs at all. Supply/demand is still alive and well.

mulmen 3mo ago
But the return on that subsidy is positive so why not do it?
linkregister 3mo ago
You could say the same about all government programs, including pensions and defense. Yet somehow popularly-elected governments keep finding themselves maximizing public utility. A curious property indeed.
DonsDiscountGas 3mo ago
Also if they do subsidize it it should be in the form of public goods (libraries, publicly available research). There's some overlap there with loans to individuals but it's weak.

dataflow 3mo ago

> I feel like I have not really heard a compelling reason why student debt should not be dischargeable thru bankruptcy like (afaik) all other forms of debt. According to Reddit [1] it was to discourage students from immediately declaring bankruptcy upon graduation. I don't see why they couldn't have put a time limit on it though, if that was the reason. Say you can't declare bankruptcy for 7 years after you leave school. [1] https://www.reddit.com/r/StudentLoans/comments/ufejjg/why_cant_student_loan_debt_be_discharged_in/i6t56fn/ https://www.reddit.com/r/StudentLoans/comments/ufejjg/why_ca...

nibbleyou 3mo ago
I feel the interests would rise to accommodate for all the bankruptcies that inevitably happen exactly 7 years after
- tbrownaw 3mo ago
  I would think that in this case, credit would mostly go to people expected to not have negative net worth after that 7 year limit.
- jjav 3mo ago
  If bankrupcy is allowed some reasonable number of years later (not sure if that is 7 or 10, but some reasonable time) then if your education worked out and you're in a good career path and maybe close to buying a home, etc, declaring bankrupcy would probably hurt more than help. OTOH if you're still poor after those years and don't care about consequences of bankrupcy then maybe that's fair enough to wipe out the debt since the education clearly didn't provide value.
  - fc417fc802 3mo ago
    > declaring bankrupcy would probably hurt more than help. It wouldn't help at all as you are typically forfeiting all but essential assets by declaring it. The only people who benefit are those with nothing to their name except perhaps the home they live in and the car they drive to work everyday.

dyauspitr 3mo ago

Because then the normal thing to do would be to graduate, declare bankruptcy when you have nothing to lose in life because you are just starting out, work for 7 years and you’re in the clear by your late 20s. Everyone would do it.

chihuahua 3mo ago
Maybe not everyone, but certainly lots of unethical people would do it, and there are lots of those. They'd post unbearably smug posts on LinkedIn about it too, calling everyone a sucker who didn't walk away from their $200k in student loans via bankrupcty. The justification for student loans being exempt from bankruptcy is simply that there is no asset to be repossessed. Car loans, mortgages, and HELOCs are different. Credit cards have very high interest to pay for the higher risk. I guess we could have student loans with 29% interest, would that be preferable?
- deleted 3mo ago
  [deleted]
- vasachi 3mo ago
  You could have free education, for instance. I think that would be preferable to any sort of student loans.
sethammons 3mo ago
> Everyone would do it. No, they wouldn't. Source: go back a couple decades, and student loans had low interest rates and were dischargeable in bankruptcy. It was an option. And, in fact, practically nobody did that.
- nxm 3mo ago
  Yes they would as there’d be no cost to them while all of them on the taxpayers.
  - sethammons 3mo ago

deleted 3mo ago

[deleted]

phyzix5761 3mo ago

Because its usually tax payer money that is used to fund these loans. If people started declaring bankruptcy tax payers would mandate that federal student loans stop existing as a matter of principle. People hold the value that its good to help students as long as they pay back at least what was given to them (adjusted for inflation).

conductr 3mo ago
We could also just decide to provide people higher level of education as a right. And, put some Medicare level pricing in place for colleges and universities to get cost in check. I personally would want to see it with greater student participation/testing. The US education has been watered down to be so easy specifically because failing reduces LTV of a student. They want to just crank out degrees to as many people as they can. I personally think we need to figure out the healthy balance of education we need, because college for all isn’t it. Then just pay for them to learn at a high expectation level. Private schools will still exist to pump out full price degrees and that’s fine too.
- phyzix5761 3mo ago
  I agree. College is not for everyone. Also, we already have an option for those of us who want to provide higher education for people who can't afford it: charities. The advantage of giving my money to a charity instead of the government is that if the organization mismanages the funds it takes me 2 minutes to switch my monthly donation to a different organization. If government mismanages funds it takes between 2-6 years for an election cycle, and even then my candidate may not win or take my needs as a priority.
  - conductr 3mo ago
    Charity is fine, but the scale I’m talking about usually makes sense as a social program that we all participate in and that’s usually where governments come into the picture
- labcomputer 3mo ago

dv_dt 3mo ago

Student university edication shouldn't even be a loan. The vast majority of student loans are financed by the government itself. The US spends trillions procuring defense (or war), it should also procure an educated workforce without saddling the citizenry with all the extra red tape and misery of collecting back a loan

nxm 3mo ago
Well someone has to do it as its bulk of NATO’s funding. It also should not waste tax payer’s money of worthless degrees
- dv_dt 3mo ago
  Any restrictive administrative loop is always hopelessly behind on what degrees are "valuable". I think colleges should be required to provide information on salary and employment info for a graduates given degree from the university, but otherwise let the choice be open. All the proscription of "value" is useless cost increasing administrative theater
- amanaplanacanal 3mo ago
  Most of US defense has absolutely nothing to do with NATO. Look at the current Iran fiasco for example.
- AngryData 3mo ago
  What does the US spend towards NATO that it wouldn't spend if NATO didn't exist? The US has as many aircraft carriers as the entire rest of the world combined, and thats not because NATO requested it. Nor does NATO demand the US produce 20 million dollar a piece missles.

quickthrowman 3mo ago

[dead]