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Nearly 5M Americans in Default on Student Loans

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Re: Nearly 5M Americans in Default on Student Loans

#131

Post by rectang »

lightbyte wrote: post #119
rectang wrote: post #26

The relief of bankruptcy: only for entrepreneurs, not for students. Another instance of utterly corrupt selective application of theoretically sound conservative principles. Just like "deregulation" and Net Neutrality.

There is a reason for that. If your business goes bankrupt it can be liquidated to settle debts. Once that is done you are left with nothing. The same cannot be done with an education. You can't "give back" knowledge to your school, or sell it to someone else.

Liquidation of course is often insufficient to pay back all creditors. The risks which have to be assessed before making student loans vs. business loans differ by degree, not kind.

The systems of laws in our society are constructed. A choice has been made to privilege entrepreneurs over students.

Re: Nearly 5M Americans in Default on Student Loans

#132

Post by ianai »

csense wrote: post #120
ianai wrote: post #2

In the US people can’t clear student loans in bankruptcy. It’s a shame, I think, given the constant upward tick in tuition and lack of resulting careers. They can even go after the students parents.

Most people starting college are 17-20 year old young adults with income and assets far below what would be needed to take out $30K-$100K+ in loans. Not enough lenders would want to take that risk, unless they have the taxpayer to back them up in case the borrower defaults. If the borrower's allowed to wipe their debt in bankruptcy, then a lot of students will simply declare bankruptcy as soon as they leave school. T…

I’d rather society “waste” resources on young peoples educations than many other things. For reasons similar to why I’d like to see NASA with DOD funding.

Re: Nearly 5M Americans in Default on Student Loans

#133

Post by lotsofpulp »

SeoxyS wrote: post #125
amorphid wrote: post #39

Earlier quoted context omitted.

USA checking in. I declared chapter 7 bankruptcy in 2010. Chapter 7 bankruptcy eliminates 100% of your dischargable debt. When the bankruptcy process had completed, I still owed ~200,000 USD, which was 140,000 USD in student loans and 60,000 USD in back taxes that were less than 3 years old, neither of which were dischargable.

At this point, couldn't you just arbitrage it, and take out loans / mortgages / cash advances / credit cards just to pay off student loans and back taxes, after after which you'd actually declare bankruptcy.

If a lender is going to approve a sufficiently large loan to someone with $200k in student loans and tax debt, and without a high income, they would not be in business for long.

Re: Nearly 5M Americans in Default on Student Loans

#134

Post by notfromhere »

SeoxyS wrote: post #125
amorphid wrote: post #39

Earlier quoted context omitted.

USA checking in. I declared chapter 7 bankruptcy in 2010. Chapter 7 bankruptcy eliminates 100% of your dischargable debt. When the bankruptcy process had completed, I still owed ~200,000 USD, which was 140,000 USD in student loans and 60,000 USD in back taxes that were less than 3 years old, neither of which were dischargable.

At this point, couldn't you just arbitrage it, and take out loans / mortgages / cash advances / credit cards just to pay off student loans and back taxes, after after which you'd actually declare bankruptcy.

That's called fraud and you will go to prison for it.

Re: Nearly 5M Americans in Default on Student Loans

#136

Post by verylongname »

amorphid wrote: post #39
ianai wrote: post #2

In the US people can’t clear student loans in bankruptcy. It’s a shame, I think, given the constant upward tick in tuition and lack of resulting careers. They can even go after the students parents.

USA checking in. I declared chapter 7 bankruptcy in 2010. Chapter 7 bankruptcy eliminates 100% of your dischargable debt. When the bankruptcy process had completed, I still owed ~200,000 USD, which was 140,000 USD in student loans and 60,000 USD in back taxes that were less than 3 years old, neither of which were dischargable.

In order to owe $60,000 in back taxes, you had to have income. Where did that income go? Were the original loan amounts even higher? Loans of $140,000 sound awfully high for an undergraduate degree. Did you attend a professional school (law school/dental/medical)?

Re: Nearly 5M Americans in Default on Student Loans

#137

Post by redblacktree »

thaumasiotes wrote: post #91
slg wrote: post #88

Earlier quoted context omitted.

Those things are easy scapegoats but they aren't the biggest cause of tuition increases. States simply aren't spending the money on colleges like they did in the past. [1] This is likely because of all the guaranteed loan money available so the states don't feel the same pressure to fund universities. For the specific case you linked above, $25m for athletic upgrades is really not that expensive for a school the size…

> Those things are easy scapegoats but they aren't the biggest cause of tuition increases. States simply aren't spending the money on colleges like they did in the past. [1] This is likely because of all the guaranteed loan money available so the states don't feel the same pressure to fund universities. I have seen the model stated that there are two Official Views on why college prices are up: 1, the Democratic View…

Nah, it's both-and. States feel less pressure to fund colleges because of easy availability of student loans.

Re: Nearly 5M Americans in Default on Student Loans

#138

Post by sekh60 »

japhyr wrote: post #60

I'm a high school math teacher. As part of their high school math education, I encourage all of my students to do one of their projects on analyzing loans. I ask them to pick an item they might take a loan out for, such as a car, a boat (we live in a small fishing town in Alaska), a house, or a student loan. They pick a realistic loan amount, APR, and term length. Then they run the numbers on the loan. I demonstrate…

That is really wonderful. Schools everywhere, regardless of country, should really have a mandatory basic financial literacy course. So many people fall into various debt cycles and I feel such a course would be very beneficial at preventing a lot of people getting trapped.

Re: Nearly 5M Americans in Default on Student Loans

#139

Post by mcntsh »

notfromhere wrote: post #134
SeoxyS wrote: post #125

Earlier quoted context omitted.

At this point, couldn't you just arbitrage it, and take out loans / mortgages / cash advances / credit cards just to pay off student loans and back taxes, after after which you'd actually declare bankruptcy.

That's called fraud and you will go to prison for it.

How is that fraud?

Re: Nearly 5M Americans in Default on Student Loans

#140

Post by jmcqk6 »

thaumasiotes wrote: post #91
slg wrote: post #88

Earlier quoted context omitted.

Those things are easy scapegoats but they aren't the biggest cause of tuition increases. States simply aren't spending the money on colleges like they did in the past. [1] This is likely because of all the guaranteed loan money available so the states don't feel the same pressure to fund universities. For the specific case you linked above, $25m for athletic upgrades is really not that expensive for a school the size…

> Those things are easy scapegoats but they aren't the biggest cause of tuition increases. States simply aren't spending the money on colleges like they did in the past. [1] This is likely because of all the guaranteed loan money available so the states don't feel the same pressure to fund universities. I have seen the model stated that there are two Official Views on why college prices are up: 1, the Democratic View…

That's an incredibly simplistic view and betrays own biases. For example, point 1 could better be described as "per capita state spending" and that completely annihilates your point.

In the same way, for point 2, you would have to calculate the percentage of funding change per student, not the macro view alone.

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