Posted on 01/31/2020 5:48:59 AM PST by karpov
For years, a contentious and sometimes emotionally heated debate has raged over the issue of letting people discharge their student loan debts in bankruptcy. A recent decision opens the door for individuals with high levels of student debt to have their burdens discharged in bankruptcy.
Should we cheer?
Until 1976, the bankruptcy law made no distinction between student loan debt and other kinds. In that year, however, Congress amended the law so as to mostly exclude student loan debts from bankruptcy, even though the level of college debt was vastly lower than it is today. On average, college cost only around $2,300 per year back then, but Congress saw fit to eliminate the temptation for graduates to file for bankruptcy to wipe out even the low amounts of debt that students were accumulating.
Congress did not make it impossible to discharge college loan debt in bankruptcy, but put impediments in the way. Student loan debts could only be considered for bankruptcy discharge only if the debtor filed an “adversary proceeding” in court to demonstrate that repaying the debt imposed “undue hardship.”
The law deterred many from seeking to escape their student debts, but some still tried. One was Marie Brunner, who sought relief from her college debts in 1987. Just 10 months after her loan payments began, she filed for bankruptcy. A sympathetic bankruptcy judge in New York granted her wish to be free of the payments, but the federal district court reversed that ruling and, when Brunner appealed to the Second Circuit, it upheld the district court’s reversal of the initial ruling in her favor.
(Excerpt) Read more at jamesgmartin.center ...
Let the judge pay for it out of his own pocket.
No reason or accountability.
This decision is probably unconstitutional and thus illegal. The feds have no constitutional authority to get involved in things like student debt. Decisions like this are excuses for the Left to raise taxes.
So let’s forgive debt of professional students being indoctrinated by our left-wing institutions of higher learning...WHAT A GREAT IDEA! /sarc
I can hardly wait for the NEW TV Commercials ...
Will they pay me back for the mortgages I paid off ?
College costs have skyrocketed because of all the “free money” that the government gives to kids with no real expectation of having genuine careers.
I think all college loans should be made directly by the educational institution that will be granting the degree. And I think that college loans should be treated like any debt in a bankruptcy case.
My college loans in 1969, $7K, would equal $60K in 2020, just adjusted for inflation. So the kids graduating with $60K in loans today who are all whining... tighten your belt buckle. When we graduated from college we moved to CLUTE, Texas. We had an apartment for $125 a month. We had a ‘67 VW Beetle. We rented furniture! We ate weenies and fish sticks and baked potatoes. A feast was having biscuits, gravy, eggs, and sausage for dinner! Where were the liberals who hand out money, back when we were scrimping and saving to get ahead. We repaid my college loans on time, in full. And looking back, those were such happy newlywed memories!
Exactly right, get gov out of the student loan business.
My college education, Okla S. U. cost $1300 per year. Room & Board was 98 a month. Tuition was 11 per credit hour first year and had gone up to 14 per credit hour by senior year.
We scraped up 1.25 to get a small cheese pizza at Bill’s Italian in Stillwater. YUM! Miss that place!
At the Wet Olive beer was 25 cents. $1.25 per pitcher!
Coffee at student union, 4th floor, was a nickel! And they gave refills!
We didn’t go on expensive vacations, like the rich kids went skiing during spring break. I saw them boarding a bus.
Do today’s young people have ANY idea how to scrimp and save?????
When I was in graduate school, one classmate used some of his student loan money to buy a new car. Others used money for vacations, living in expensive apartments, etc.
Part of the problem is the institutions themselves for lending too much money. Another part of the problem is the interest rates they charge.
There needs to be a revamping of the whole student loan system so people aren’t getting out of school with so much debt that it takes 20 years or more to pay off.
And obviously, the cost of attending university is outrageous to begin with.
So, a state judge in New York overrules federal law to grant relief on a debt owed to the federal government.
This should be overturned by the first federal judge in the appeal process.
I don’t understand this. All someone has to do is get a credit card?card, transfer the student loan and declare bankruptcy. Why do judges have to be involved
bad.
debts shouldn’t be so high to begin with but court should not dismiss them.
Back in 1976, the reasoning was a car or house or other material possession beyond a certain exemption level could be repossessed to pay toward the debt, but knowledge could not.
In those years, most colleges actually taught useful marketable skills and tuitions were reasonable making loan repayments not so burdensome.
Both of my parents were on a university faculty at the time and made less than unionized high school faculty in the same town. The state university in question had very reasonable tuition and the state played a key role in student lending. They did such things as limiting loan amounts for fluff degrees and professional students. As a result, the default rate on their loans was near zero.
All of this changed when Fedzilla took over and started passing out easy money. Fluff degrees sprouted like mushrooms in a manure pile in spring as did skyrocketing tuitions and special professors (like Elizabeth Warren) who were paid mid six figure salaries for teaching one class.
The whole rotten system needs to be overhauled or rebuilt from the ground up on either the private lender model used by Hillsdale College or the state model which I just described used by the State of North Dakota. This was established back when it was one of the poorest states in the union.
I took a loan out to get my BA. Went to night school, worked during the day, had to care for my mother, etc. I paid it off like my other debts over time. This generation thinks everything should be handed to them on a golden platter thanks to the politicians using them as a political pond. The schools today do not teach kids about responsibility and finances. My grandchild in the 90’s had all of his credits in high school to graduated and free time. Talked him into taking a high school accounting course. He was amazed at what taxes can be taken out of a paycheck, etc. It was an eye opener for him.
That was my experience too, BuffyT, college and law school, $1500 a semester, I owed $5K at graduation and paid it back. Ate a lot of popcorn and spaghetti during law school, did not go on any Mexican spring break trips or ski trips.
The feds have no constitutional authority to get involved in things like student debt.
—
Congress wrote the law.
The courts can determine if the law is constitutional or not.
Allowing some debt to be discharged by bankruptcy but not allowing other could be considered as discriminatory or not treating all citizens as equal.
Not a lawyer, just an opinion and as always I could be wrong.
What happens if the student recieves a degree and then defaults on the loan?
Does the graduat lose the degree at that point?
Yes, student loans should be included in bankruptcy, but...
1. It should be part of a full bankruptcy; no just declaring bankruptcy on the student loan, but not on everything else in your life
2. just like every other loan, you have to return what was purchased with the loan (the collateral) to the lender; in this case that would be any credits and degrees paid for by the loan
People would think twice if they had to give up their hard earned degree to get out of debt.
And, for those people that never made it through college, but racked up tons of debt, it will give the colleges an incentive to not loan money to people they don’t think can complete the degree.
I understand there’s a kneejerk reaction by a lot of conservatives to say “you take out the loans, you pay them off... Period.” I don’t think that’s a practical position anymore, even if I personally adhere to it.
College has runaway costs and little accountability for those costs, in large part because college loans are guaranteed by the government. The government guarantees and without the ability to discharge bad debt, loans are artificially kept cheap and easy to obtain. Where else can a 19-year-old get a six figure line of credit without a concrete method of collateral (or something to repossess if the debt isn’t paid)?
The other reality that we all have to deal with is that this debt is out there, and a lot of Americans are under this debt. Those people span a lot of demographics and fair or not, they will be swayed politically by someone who can “fix” this. (There are of course also plenty of people who did the right thing, payed off their debts in full or never went into debt, and would be enraged by a blanket amnesty from college debt)
There are ways to fix this problem in a free market, capitalistic system. Lord knows our President has used the legal mechanisms for discharging bad debt to his advantage over the years, as have many business owners.
It’s not socialist to address education costs, shifting risk from the government to the colleges, providing incentives to employers who help discharge debt, and even allowing former students to discharge bad education debt in bankruptcy in some fashion.
If the only responses the right has are dismissive, like “tough luck dummy, should have been a plumber,” or “I ate baloney sandwiches and slept on a steam grate to pay for college,” it does nobody any favors. It doesn’t address the existing problems, and it pushes people away from supporting the solutions you would favor and toward solutions you would not favor.
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