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U.S. Stepping Up Enforcement on Delinquent Student Loans

bloomberg.com

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Re: U.S. Stepping Up Enforcement on Delinquent Student Loans

#41
post #32

Earlier quoted context omitted.

> Education has yourself as return. That is not something a lender can repossess.

Not as they currently do it, no, but I imagine (at least with future loans), it could have the penalty that the university would not issue your transcript or vouch for your degree when the loan became delinquent enough. That would be similar in spirit repossession (except that the bank couldn't sell it). But of course, they wouldn't get to take back any of that valuable knowledge and human capital you acquired there…

College degrees are mostly about signaling. Employers can already check your credit history, so this wouldn’t tell them much they don’t already know.

Re: U.S. Stepping Up Enforcement on Delinquent Student Loans

#42
post #10

Disclosure: I work as a blue-collar engine mechanic. Ive never been to college. That having been said, im familiar with debt after the 2008 housing collapse. I lost my truck and my trailer home, partly because of a shady home loan and partly because well, my employer went out of business. That having been said it was relatively easy to discharge these debts. the bank wasnt too upset about the home and offered to help…

Wait, why are people losing their driver's license because they can't pay a debt?

Re: U.S. Stepping Up Enforcement on Delinquent Student Loans

#43
post #10

Disclosure: I work as a blue-collar engine mechanic. Ive never been to college. That having been said, im familiar with debt after the 2008 housing collapse. I lost my truck and my trailer home, partly because of a shady home loan and partly because well, my employer went out of business. That having been said it was relatively easy to discharge these debts. the bank wasnt too upset about the home and offered to help…

Can you clarify if you meant "she lost her driver's license" or if you meant some kind of professional license?

Re: U.S. Stepping Up Enforcement on Delinquent Student Loans

#44
post #13

Earlier quoted context omitted.

Because students generally are poor and so don't have much to lose by declaring bankruptcy. They shrug off massive debts are left with an (ostensibly) valuable degree. Lenders are unable to secure the loan against the borrower's assets, as would generally be the case for a home, auto, or business loan. It's possible that if student loans were dischargeable in bankruptcy that, absent a government guarantee, the lender…

In the UK, student loans are not dischargeable via bankruptcy. But repayment is income based (9% of income), and is only due at all for people who are earning above a certain income (currently ~£21k). This seems like a decent way of dealing with this issue.

Same is true in the US.

Re: U.S. Stepping Up Enforcement on Delinquent Student Loans

#45
post #44

Earlier quoted context omitted.

In the UK, student loans are not dischargeable via bankruptcy. But repayment is income based (9% of income), and is only due at all for people who are earning above a certain income (currently ~£21k). This seems like a decent way of dealing with this issue.

Same is true in the US.

So, after the 6 months of "grace period", does only students with and a minimum wage get to pay it? I thought you just had to start paying after 6 months.

Re: U.S. Stepping Up Enforcement on Delinquent Student Loans

#46
For people struggling with paying their student loans, their federal loans offer the option of being able to go on an income based repayment plan[0]. I haven't done it personally.

The biggest problem with the US higher education system is that the universities have very little skin in the game. The government more or less prints money and 'loans' it out to students and props up the universities. If the government wasn't propping up the universities there wouldn't be a 1.3 trillion dollar student loan bubble[1] and the degrees that aren't worth the paper they're printed on would disappear.

[0]:https://studentaid.ed.gov/sa/repay-loans/understand/plans/in... [1]:https://www.bloomberg.com/news/articles/2018-12-17/u-s-stude...

Re: U.S. Stepping Up Enforcement on Delinquent Student Loans

#47

Earlier quoted context omitted.

Your thoughts on the value of a degree are indicative of the massive disconnect we have in our society between an education and a credential. The reason student loans can't be discharged during bankruptcy is because the value of the degree can't be repossessed by a bank like a house or a car if you default. You attend college to learn and grow, not to pass an HR screening. I could very easily acquire a job as a devel…

> You attend college to learn and grow, not to pass an HR screening. What? No. I attended college because it let me be hired nearly everywhere with much less hassle than having to "work my way up" - nearly everything I learned was useless or rapidly obsolete (if it wasn't obsolete as it was taught). >You don't attend college for a degree you attend it for the knowledge and experience you gain - a degree is worthless,…

It's not even close to mandatory for making above median wages. You can make over median being a mechanic, a firefighter, cop, truck driver, oil rig worker, plumber, carpenter, retail manager, salesperson, software developer etc etc.

Re: U.S. Stepping Up Enforcement on Delinquent Student Loans

#48
post #10

Disclosure: I work as a blue-collar engine mechanic. Ive never been to college. That having been said, im familiar with debt after the 2008 housing collapse. I lost my truck and my trailer home, partly because of a shady home loan and partly because well, my employer went out of business. That having been said it was relatively easy to discharge these debts. the bank wasnt too upset about the home and offered to help…

> Why is it I can ditch close to 90 grand in loans lickety-split but students cant? how is education any different?

Because most student loans are to the federal government (~93%) [0]. Generally if you owe money to the government, you're kind of on the hook. And even if you discharge your loans after 20 years of income based repayment, you still owe a tax bill on the amount written off since that's a windfall.

One argument to get the federal government away from making student loans. They offer a one size fit all interest rate regardless of the economic viability of the degree and ability to pay back. Private lenders offer better rates to students with lower risks (better schools and highly lucrative majors, mainly graduate degrees).

[0] https://www.nerdwallet.com/blog/loans/student-loans/student-...

Re: U.S. Stepping Up Enforcement on Delinquent Student Loans

#49

Earlier quoted context omitted.

Your thoughts on the value of a degree are indicative of the massive disconnect we have in our society between an education and a credential. The reason student loans can't be discharged during bankruptcy is because the value of the degree can't be repossessed by a bank like a house or a car if you default. You attend college to learn and grow, not to pass an HR screening. I could very easily acquire a job as a devel…

> You attend college to learn and grow, not to pass an HR screening. What? No. I attended college because it let me be hired nearly everywhere with much less hassle than having to "work my way up" - nearly everything I learned was useless or rapidly obsolete (if it wasn't obsolete as it was taught). >You don't attend college for a degree you attend it for the knowledge and experience you gain - a degree is worthless,…

> It sure would be nice if a college education was about learning and growth and discovering oneself and all the hoopla they feed you during visits and orientation, but it's a structured credentialing system that involves professors for some reason, and it's effectively mandatory for making an above-median wage.

College is what you make of it. It's 4 years to spend at least half of your waking hours learning new things. You can waste a bunch of that time and still get a credential with vanishing return, or you can invest all of that time in building highly valuable skills (while also getting the credential).

N=1: I was offered a $70K coding job out of high school. I made over 4x that amount at my first software job after graduation. They definitely weren't paying 4x more because of my degree, and most of my graduating class was making less than 100K. But it would have taken me longer than 4 years to get those skills and knowledge if I were working full time. More importantly, I would have had very few options a few years later when I got bored/burned-out with programming and decided to move into research.

College is a space to develop your human capital. The official curriculum is there as a guide and baseline, but it's your responsibility to use your course project time and especially free time in an effective way to build on top of that curriculum. Unfortunately, very few students understand this.

Re: U.S. Stepping Up Enforcement on Delinquent Student Loans

#50
post #44

Earlier quoted context omitted.

Same is true in the US.

So, after the 6 months of "grace period", does only students with and a minimum wage get to pay it? I thought you just had to start paying after 6 months.

If you enroll in income based repayment, you pay 10% of discretionary income for 20 years. I'm not sure how "discretionary income" is calculated but its probably similar to the UK threshold

[0] https://studentaid.ed.gov/sa/repay-loans/understand/plans/in...

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