tax payer is missing from the discussion?
Student debt totals $870 billion!
It would be good to start titles with capital letters.
It isn’t now because Republicans changed the law (at the behest of the private student loan lobby—bankers), such that in 2004, any guaranteed student loan is no longer dischargeable. What is the purpose of bankruptcy? To eliminate the debts of citizens so that they have a fresh start. To not include student loans denies the purpose of the bankruptcy laws. There is no “fresh start.” If you are against including student loans, then you should be against bankruptcy laws.
No, don’t make it discharged through bankruptcy. Let these brilliant young minds do whenever consumers are ripped off wholesale - make them file the class action lawsuit like they should have.
And I’ll tell you where to start: Fraud, in charging ‘mandatory insurance’ to the student account. Student account items are supposed to be ONLY items directly related to the academic education of the student. Which means ASB is out, sports equipment can’t be charged to the student account, etc.
There’s enough relief in there to hammer out a more long term negotiated dropping of the student loans, and it would shut down immediately the wholesale ripping off of students by universities.
I think it would be great, provided the US Taxpayer no longer guarantees or subsidises the loans.
Get the Federal Government out of the money handing out business, and make student loans like any other loan. You have colateral, borrow on it, don’t have colateral, work for it.
If the Government was in charge of sand in the Sahara, there would soon be a shortage.
The federal government kicked private lenders out of the student loan business a couple years ago. If student loans are to be forgiven, it would be purely at the expense of the taxpayer. Forgiving student loan debt would simply be another way of encouraging young people to go to college who otherwise should not. It would add to the welfare/dependent on the government mentality and to the real numbers. Who will be left to pay taxes in the future?
For those who use student loan debt wisely, the outcome can be very good. They can potentially get into a career otherwise unavailable to them, and the earnings are generally better. I am thinking for positions such as health care fields, engineering, education, for example. If the students are also careful to select colleges and universities based more on costs than “status”, use junior college and state schools when appropriate, work some hours while in school, live at home if necessary, the student loans can be kept in check and be reasonable for repayment after graduation.
They aren’t now because they’re guaranteed by the government, if they were dischargable they’d no longer be guaranteed, and by and large the people who need them wouldn’t be able to get them (nobody is going to give you a loan based on potential future earnings if you pass you classes).
It does Johnny no good to come out of college with a four-year degree in Sociology and fifty grand worth of student debt, but the universities don't care... they've already got their money up front. In fact, it's actively in the interest of universities to produce just as many such Johnnies as they can.
Let private lenders make student loans based on what a degree is potentially worth. You want to major in mechanical engineering or nursing? great, here is your loan at 3% interest.
You are going to major in ethnic studies. OK, but it will cost you 18%.
College tuition would come down overnight. Colleges would set up their own funds and work with private lenders to keep their students. Hillsdale College already has a successful model in place doing exactly that. Grove City, Brigham Young, Liberty University and others are in the process of doing something comparable.
So far, only conservative colleges. But the principle is the same: teach kids something useful, they get a marketable degree and will pay back their loan, with interest, in a fairly timely manner.
Its a simple matter of personal responsibility. To the best of my knowledge, no one has ever been forced to take a student loan at gunpoint. Since they voluntarily applied for the loans they are responsible for paying them back.
Yes, make all new student loans dischargeable and none insured. This would force lenders to make responsible loans. It would also make the cost of higher education come down. The higher education business is overpriced because of the loans and no liability. Make it more of a free market entity and the whole system would work better.
If I recall, by the late 80’s or early 90’s, it became a routine practice for recent college grads to default on their school loans, and simply file for personal bankruptcy instead. They were young, had no assets, so they didn't care. The problem eventually became so widespread and epidemic that the government had to pass new laws stating that student loans could not be discharged via bankruptcy. Hence the situation we find ourselves in today.
If this law is repealed, look for the loan default problem to return - except young people's sense of entitlement today seems to be even higher that it was back then (if such a thing is possible). Hence, the problem will be much worse this time around.
I am not sure what the solution might be, but knowing human nature nowadays, I am certain that if the bankruptcy law is put back to the way it was before, that college students will once more begin taking advantage of the situation - and student loan defaults will explode all over again.
Oh HELL no!
Of all the outstanding debt from student loans, how much is in default? How much of that default has occurred in the past four years, and how much of that would start getting paid, if the economy turns around? It seems like those are questions that need to be answered before taxpayers are forced to foot the whole student loan bill.
It seems like it would make the private lenders less likely to loan 50K to someone they knew had no reasonable chance of paying it back...
Lots of misinformation on this subject. It is a dischargeable debt via an adversary proceeding as part of an overall bankruptcy plan.
However, Congress made the new rules for discharge very difficult to prove up in court and the courts have since interpreted the rules in a draconian manner.
You must prove you made a good faith effort. You have no assets. You have some sort of problem which will prevent you from obtaining an income sufficient to pay off the loads and the problem will last for virtually the lifetime of the student.
Because of these rules and draconian precedents in some cases, most attorneys won’t take a student loan case because it is a loser 99.9% of the time; therefore a student almost has to proceed pro se as a pauper against attorneys for the lenders who are experts in the ins and outs of the legal proceedings. So it is almost impossible to get a student loan discharged.
The problem with the old rules for bankruptcy discharge was that too many students had an entitlement mentality and were taking the easy way out, reneging on their obligations via bankruptcy. So Congress acted.
This would immediately reduce the cost of college. It would also restructure every university immediately (closing many) - ending “ethnic studies” and “gender studies” programs. Liberal Arts degrees at second and third tier schools would evaporate as customers disappear.
But, you’d also get a disproportionate minority impact - as tuition (and tuition is increasingly paid for by loans) subsidizes “scholarships” for favored minorities.
Stupid people who borrowed lots of money for nonsense degrees would able to shed their debt - but they weren’t going to pay anyway.
The courts could decide whether Chap 7 (eliminate unsecured debt) or Chap 13 (reduce and/or reorganize payments).
Something like this is going to happen. It beats having a mega-gaggle of 20-somethings placed in defacto indentured servitude because of student loan debt.
Lots of “studies” professors on food stamps......
Student debt is money given on the promise of future earnings, based on the value of the education received. I could only see it as dischargeable if the person were disbarred from ever working in the field they studied.
Otherwise, student loans would become pell grants for the unscrupulous.