4 ms·

Here's the problem, though: since student loan debt is one of the ONLY types is debt that is almost impossible to discharge through bankruptcy, banks and colleg

by adevine 11y ago

Here's the problem, though: since student loan debt is one of the ONLY types is debt that is almost impossible to discharge through bankruptcy, banks and colleges have almost no incentive to do proper underwriting. They are pretty positive they'll get their pound of flesh, come hell or high water. If there were better rules around getting rid of these debts in bankruptcy ("You loaned 200k to someone who wanted to get an English degree at a low tier, private college? Then you, the lender, deserve to lose."), these ridiculous loans wouldn't be made in the first place.

growupkids 11y ago
Then no one will issue loans to those students, who have a very high likelihood of never paying it back. You're right back to cheap schools and only issuing loans for degrees that will pay a very high salary. The whole point is to make it possible for people who can't get loans otherwise to get them, the inverse is that they have to pay them back. It's a fair trade, you want to borrow 100k for something that isn't tangible. You have no income, and a very high likelihood of defaulting, and the thing that was purchased can't be resold by the lender. That's a pretty awful deal for any lender. So if you make it possible to default then you won't see those loans being made anymore. Why issue the loan? If you don't want a loan you have to pay back, then don't get a student loan get a personal loan which you can default on. Sure it won't be as much, but that's all you can get when you have a low likelihood of paying it back. Or enlist in the military and earn the money to pay for school. Or get a job and pay your way through school. Or go to a cheaper school, and get a more practical degree. There are other options.
- muzz 11y ago
  > Then no one will issue loans to those students This is not the case, the non-dischargability in bankruptcy only came about in 2005 and there were plenty of student loans before then
kjhsadklj1 11y ago
Except one of the motivations for making unsecured loans available to everyone is the idea that kids should go to the best (most expensive) school independent of their parents' ability to pay. Chicken or the egg.

by adevine 11y ago

growupkids 11y ago

Then no one will issue loans to those students, who have a very high likelihood of never paying it back. You're right back to cheap schools and only issuing loans for degrees that will pay a very high salary. The whole point is to make it possible for people who can't get loans otherwise to get them, the inverse is that they have to pay them back. It's a fair trade, you want to borrow 100k for something that isn't tangible. You have no income, and a very high likelihood of defaulting, and the thing that was purchased can't be resold by the lender. That's a pretty awful deal for any lender. So if you make it possible to default then you won't see those loans being made anymore. Why issue the loan? If you don't want a loan you have to pay back, then don't get a student loan get a personal loan which you can default on. Sure it won't be as much, but that's all you can get when you have a low likelihood of paying it back. Or enlist in the military and earn the money to pay for school. Or get a job and pay your way through school. Or go to a cheaper school, and get a more practical degree. There are other options.

muzz 11y ago
> Then no one will issue loans to those students This is not the case, the non-dischargability in bankruptcy only came about in 2005 and there were plenty of student loans before then

kjhsadklj1 11y ago

Except one of the motivations for making unsecured loans available to everyone is the idea that kids should go to the best (most expensive) school independent of their parents' ability to pay. Chicken or the egg.