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White House rolls back protections for people in default on student loans

washingtonpost.com

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Re: White House rolls back protections for people in default on student loans

#61

Post by loeg »

nhangen wrote: post #21
HarryHirsch wrote: post #17

Earlier quoted context omitted.

Of course debt can be written off. Out there in the real world contracts are renegotiated all the time. More of that would be advantageous in the face of information asymmetry, the party with better insight would be less tempted to exploit their position.

You're talking about corporate debt not personal debt. Show me an example of personal date that is frequently discharged (outside of bankruptcy) and I'll adjust my position. If you're referring to the fact that it can't be discharged as part of bankruptcy, then I tend to agree with you. It should be.

Bankruptcy is exactly the vector for discharging most personal debt. The problem is that student loans are exempt from bankruptcy.

Re: White House rolls back protections for people in default on student loans

#62

Post by dkrich »

UpDownLeftRight wrote: post #24

There's a trillion dollars of liability we're talking about. I'm OK with some forgiveness, but if and only if the Government gets out of the student loan business. (Watch tuition drop like a rock if this happens!)

And if guarantees for the loan companies are removed and the inability to free yourself from it in bankruptcy. Essentially move the 100% of the risk that borrowers currently have and move a nice portion of it to the lenders so they both bear the burden of the loans can't be repaid.

Imagine if banks had zero risk when providing home loans. I don't think it would be too difficult to buy a house you couldn't afford and quickly the price on homes would be driven up. The student loan industry is so completely fucked and needs to be reformed before it ruins our economy.

Re: White House rolls back protections for people in default on student loans

#63

Post by nhangen »

brianwawok wrote: post #36
nhangen wrote: post #10

I'm surprised by the comments here. I am a fiscal conservative, but having taken and struggled to pay for student loans, and having hired people in the same situation, find that the lending programs are predatory by nature in that they know students will be unable to service the high monthly payments, and eventually default as a result. Do I think people should pay their debt? Yes, but these lenders are the same lend…

> The only reason I was able to pay my loans was because the Army paid them for me after I completed my term of service. I tried for years to find employment that could help me escape a life of poverty but could not. Okay, so then I must ask: What did you major in, what was your total debt, and did you research the career prospects of your major BEFORE going to college? Sometimes I think a basic mandatory form that c…

I got a B.S. in Psychology and a minor in religion. Total debt around 25-30k. I went to school at age 20 and graduated at age 25. I did not go straight from High School.

I did not want to be a shrink. I wanted to focus on research. Unfortunately, I could not afford to continue on to graduate school. My grades weren't good enough to get a scholarship. I was working as a cook at the Olive Garden, and had kids at home, so I tried a few careers that didn't work out. I wound up in the Army because it seemed like the right thing to do. I'm glad I did it.

Re: White House rolls back protections for people in default on student loans

#64

Post by nhangen »

Retric wrote: post #46
brianwawok wrote: post #36

Earlier quoted context omitted.

> The only reason I was able to pay my loans was because the Army paid them for me after I completed my term of service. I tried for years to find employment that could help me escape a life of poverty but could not. Okay, so then I must ask: What did you major in, what was your total debt, and did you research the career prospects of your major BEFORE going to college? Sometimes I think a basic mandatory form that c…

The trap is far less obvious. 150K $ 4% = 500$ per month which seems doable. But, many things can also snowball. First intrest rates can rise, second unemployment can rapidly increase loan amounts when either the student after graduation or the parents during collage. Loans are often 50+% higher than initially expected for a huge range of reasons.

$500/month is a ton of money when it's competing against groceries, utilities, healthcare, etc.

Re: White House rolls back protections for people in default on student loans

#65

Post by Kluny »

brianwawok wrote: post #47
Kluny wrote: post #44

Earlier quoted context omitted.

That would be a great idea. Universities won't do this unless they're legally required to. Student ignorance drives their business model.

Of course, but I had to sign stuff like this to get a mortgage. A bunch of mandated forms about worst case payments. Seems an easy law to help reform loans.

It's easy and it should be done, but I don't think it will be that effective. Mortgages come with other rules. If you can't come up with 20% down, you pay mortgage insurance. If you have limited ability to pay it off, you don't qualify for as much cash. If you have a bad credit history, you pay higher interest. All these things are meant to keep mortgage debt from getting out of control. No such rules exist for student loans.

Re: White House rolls back protections for people in default on student loans

#66

Post by mindslight »

UpDownLeftRight wrote: post #39
BucketSort wrote: post #5

After a few years of unemployment and being treated for bipolar depression my loans were in default. Due to the grace of the system at the time, I was able to bring my loans out of default and I now pay them like everyone else. This type of thing punishes the downtrodden even more. There must be a set of checks and balances that at least attempts to differentiate between deadbeats and broke people that don't need a h…

I don't pay student loans. Do you know why? I don't have them. I went to an inexpensive local school, worked while going to school, and took the public bus to and from it. (I was fortunate enough to be able to live with my parents.) While I don't know your situation, it's hard for me to feel sorry for someone who went to an expensive private school, lived on campus in a "country club" atmosphere, and then expects the…

Talking about "taxpayers" is disingenuous at best - the private loan holders are the ones that made the unwise loans and should be directly losing out. To the extent that these private parties have agreements with USG guaranteeing they'll be bailed out, then the proper time to object to that corrupt arrangement was when it was being made!

Debt, in general, must be dischargeable in bankruptcy. Otherwise the practice is equivalent to the gradual reinvention of slavery. Student loans already run afoul of this principle - let's not double down on the corruption merely to delay writing down losses that have already occurred.

Re: White House rolls back protections for people in default on student loans

#67

Post by neves »

This USA student loan scheme is one of the most brilliant machines of social control ever devised.

People get of college already owing a lot money, now they have to work for shit, and put up with their asshole bosses do. They can't have the option to spend couple of months searching for jobs or they will have to default their debt and mess all their future life.

Nothing like a well behaved society where the workers can't complain.

Brilliant!!

Re: White House rolls back protections for people in default on student loans

#68

Post by metaobject »

UpDownLeftRight wrote: post #39
BucketSort wrote: post #5

After a few years of unemployment and being treated for bipolar depression my loans were in default. Due to the grace of the system at the time, I was able to bring my loans out of default and I now pay them like everyone else. This type of thing punishes the downtrodden even more. There must be a set of checks and balances that at least attempts to differentiate between deadbeats and broke people that don't need a h…

I don't pay student loans. Do you know why? I don't have them. I went to an inexpensive local school, worked while going to school, and took the public bus to and from it. (I was fortunate enough to be able to live with my parents.) While I don't know your situation, it's hard for me to feel sorry for someone who went to an expensive private school, lived on campus in a "country club" atmosphere, and then expects the…

You say you don't know anything about his situation but then you go on to heavily speculate about his situation.

I'm in your situation btw. I worked through undergrad and grad school and had my work pay for almost all of my school so I never had any debt. But I realize I was lucky and had a good situation lined up and not everyone has the same opportunities. Some people need more assistance than others, and I don't mind if the govt helps those folks out.

Re: White House rolls back protections for people in default on student loans

#69

Post by rsync »

cromwellian wrote: post #53

Costs of increased military spending in Trump's budget: $54 billion Estimated costs to make college tuition free for every citizen: $62 billion

Cost of second Iraq War = 2+ Trillion and counting:

https://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War

Re: White House rolls back protections for people in default on student loans

#70

Post by nhangen »

PKop wrote: post #38
nhangen wrote: post #10

I'm surprised by the comments here. I am a fiscal conservative, but having taken and struggled to pay for student loans, and having hired people in the same situation, find that the lending programs are predatory by nature in that they know students will be unable to service the high monthly payments, and eventually default as a result. Do I think people should pay their debt? Yes, but these lenders are the same lend…

Removing loan guarantees, and forcing students to scrutinize the value of the degree they are pursuing will improve the problem of students blindly doing what they've been told to do. If they don't suffer the consequences of buying a useless degree, why wouldn't they keep doing it? Any possible improvement of the status quo is going to involve pain. Certainly universities themselves could start feeling some of it, as…

Give me an example of a useless degree.
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