and America takes another one in the........
Posted on 07/20/2012 4:01:31 PM PDT by Oldeconomybuyer
The Obama administration urged Congress to make it easier for people to discharge a portion of certain student debt by filing for bankruptcy protection.
The recommendation, in a report by the Education Department and the Consumer Financial Protection Bureau, wouldn't affect the vast majority of student debt, which is issued by the federal government. It would apply only to the roughly $150 billion, or 15% of total outstanding student debt, issued by private lenders such as SLM Corp.'s Sallie Mae and Wells Fargo & Co.
Consumer bureau chief Richard Cordray said Congress should consider modifying a 2005 law that, except in rare circumstances, prohibits discharging private student loans through bankruptcy.
(Excerpt) Read more at online.wsj.com ...
I’d agree. A person (or couple) filing for bankruptcy is doing so for a reason. Having an inescapble student loan debt would: 1) Give preference over other unsecured debts which is unfair to those creditors, 2) Possible effect of treating other secured creditors as unsecured, and 3) Fail to help the distressed debtor acheive a fresh start and possibly continue to have financial difficulties.
I’m not looking for bankruptcy to be an entirely free ride, but bad things can (and do) happen to good people.
Paid for with other people's money. Notice that student loans to the Federal Government aren't covered, only loans to private lenders. So lenders who loaned money assuming that they could not be discharged by bankruptcy, now find themselves getting screwed like GM senior creditors.
GREAT.
Writing down debt, has an impact across the board.
You can’t do this sort of thing and not spread pressure elsewhere.
Here we go again, Obama flipping another domino with reckless disregard.
January, 2013 can’t come soon enough.
I do hope you don’t think current credit card rates are anything but usury.
See the subtle difference ~ co-signing a note. BTW, the rates on those loans should have gone to historic lows, but they didn’t.
Student loans are mostly prohibitively expensive at market rate when bankruptcy is allowed.
Look how many students don’t pay up and are generally an expensive hassle to track down. Those rates on guaranteed loans are still way below what they’d be on such an open market.
The incredably “not street samrt” republicans can’t seem to tell the American college student that all the reasons why loans for college are set up the way they are is because that is how Democratically controlled congress wrote the bills. The present loan “company” in NOW the US Government instead of private companies...thanks Nancy Pelosi and Harry Reid - but where are republicans on this message?
Time for the year of jubilee where all debt is wiped clean.
Precisely. And remember Zero's proposal that people who take jobs with the government should have their loans forgiven.
Like government having the power to decide whether a particular medical treatment is permitted to be paid under an insurance policy, Zero wants to move to a situation where government has the power to decide which students get loans and which students will later have their loans forgiven, as a way to exert political discipline and control over the population.
Americans lost about 60% of the value of their accumulated wealth.
Existing debts were not reduced 60% of course, so there's less collateral to pledge.
Congress has let the credit crisis languish entirely too long.
A zillion other things.
Tell you what, Obama has got to go ~ sure wish the Republicans thought that way too.
I knew that I would a certain amount of grief for my post.
I have a son that did a stupid thing and will be paying for it all of his life.
A scam/sham school loaned him $90,000 for a 2 year associates degree in “Recording Arts” when he was 18 years old.
It just strikes me as odd that a person can do a stupid thing...
and borrow more money than they can afford to pay back for
houses,
cars,
boats,
businesses,
or just general unsecured credit card debt,
and they are allowed to file bankruptcy and be forgiven of those debts,
but if a person does a stupid thing...
and borrows more money than they can afford to pay back for a student loan, there is no relief available for them.
Geese and ganders should have the same sauce, that’s all I’m saying.
I see the whole blooming thing as a big scam run by a bunch of grifters.
Somebody from our side needs to come clean with the American people about “Big Education”:
Provide unlimited subsidized loans to students
Colleges raise tuition and fees to scoop up available funds
Colleges pay big bucks to admins and profs
Admins and profs donate to Democrats
and repeat
This applies for people with or without collateral ~ which is making all the arguments related to collateral look specious in the extreme (as if they weren't already).
Tracking down debtors can be a problem in a country that doesn't even care to track down illegal alien serial killers ~ I can see where you're coming from on that ~ but eventually they trip up and the internet reveals their presence in some manner.
I think it's just a case of lenders not caring to pay the top dollar to the best track and trace folks. They imagine they can get by for cheap ~ maybe spin off that job to some call center in India or something (not to sound cynical, but isn't that what they do these days?)
and America takes another one in the........
When were your loan debts made? Have you compared the costs of when you got your education to the costs now? I don’t care how many jobs a student must work to pay their college costs—there’s no way they can work/earn enough to pay for college any more.
Where can you borrow money at 4% without collateral? Or even 5%? I know of a few stock exchange listed companies that would like know your secret. In fact, it seems to me that you could make a bit of money by helping to connect lenders who are willing to make multi-decade loans at 4% and students who want loans at less than 6.8% (more or less the current private lender student loan rate).
Exactly. The same pattern in so many areas.
One addendum:
Provide unlimited subsidized loans to students
Colleges raise tuition and fees to scoop up available funds
Colleges pay big bucks to admins and profs
Admins and profs donate to Democrats
Democrats win votes by promising to forgive loans (at a loss to taxpayers)
and repeat
“When were your loan debts made? Have you compared the costs of when you got your education to the costs now? I don’t care how many jobs a student must work to pay their college costs—there’s no way they can work/earn enough to pay for college any more.”
True. See post above about how government influence has distorted the market. Even public university tuition is outrageous, with the funds use to support liberal programs across the school.
However, there are several ways in which a student can pay for school, and here are ways of which I have first hand knowledge from very decent young adults currently doing this: 1. scholarships (of course); 2. start at a local community college for two years (living at home); 3. CLEP the first two years or more (living at home—this example is a young lady of 18 who expects to graduate at age 20, she already has over 60 hours); and 4. military service (can earn college credits while in the military, and there are federal $$ available for college, and in Texas, all public universities are tuition free, period, undergrad and grad schools, including business schools and law schools or whatever). I know two young men pursuing route 4.
Actions have consequences. If you equate education loans to home or car loans, then exactly what collateral does the borrower provide? Homes, cars, businesses etc. can be repossessed.
Interest rates will soar on education loans if people can just walk away from them. And funding will become scarce because who is going to loan money under those circumstances. Maybe the parents can co-sign such loans and be responsibile for repayment.
Again, this move by Obama to allow student loans from private lenders to be subject to bankruptcy laws is just a poltical ploy gain votes and make the Federal government more powerful. And will this be done retroactively? Is that fair to change the conditions of a contract after the fact?
And then they’ll bitch and moan where they issue fewer loans.
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