Some U.S. Colleges Cut Tuition

The problem isn't the banks. The problem is needing a college degree to have any semblance of a middle class life in America.

> Allowing student loans to be resolved through bankruptcy after 10-15 years is enough time so that most graduates have assets, and are probably looking for a mortgage on a home in the near future. Going through bankruptcy at 30 or 35 is a much bigger deal than doing so at 21. In this situation, the student can't easily exploit the lender. But at the same time the lender still has the potential for loss if they try to loan to a student studying basket weaving at a university with a 98% acceptance rate.

So instead of trying to solve the problem of crushing student debt, we let people at 30-35 tank their credit score so they can never buy anything again. So we're doing NOTHING for people 22-30, and we're ruining the 30+ year old's credit so they can't actually buy a house. It doesn't help anyone. That's our point. It does nothing to solve any real problem, it just makes everything worse.

This is precisely why it makes sense to restrict ability to default on student loans for a certain duration. Even if you have six figure salary as a new grad, it'd still make sense to default on your student loans immediately after graduation and plan your life around having a terrible credit score until your 30s. Pay for cars in cash, and don't plan on buying a house until one's 30s. Everyone would do this because it's basically getting money for free. And consequently nobody would issue student loans, even to students going to good schools and studying in demand majors, because students can effectively just walk away from the loans.

Yes, it's not doing anything for people 22-30. This is deliberate. The point is to make sure students who can pay off their loans do pay off their loans. We make recipients of student loans wait until 30-35 to be able to default on loans so that only the ones who are genuinely stuck with loans they can't pay off go through with the default. Yes, their credit score will tank. But that's the consequence of defaulting on a loan. If you could default on a loan without impacting your credit score, you'd be a fool not to default on every loan you have right now - but you wouldn't actually have any loans because nobody would lend money under sucha scenario.

>So instead of trying to solve the problem of crushing student debt, we let people at 30-35 tank their credit score so they can never buy anything again.

Seriously. The inability to discharge debt is the primary source of crushing debt. Predatory lenders can turn you into a debt slave through student loans and you have zero recourse. Since student loans are guaranteed by the government it doesn't matter to the lender whether you are able to pay the loan back or not. They can just give a $100k loan to someone who is 100% going to drop out. It doesn't even have to be your fault. Universities are incentivized to spend money on student retention and basically zero money on actual education.

>So we're doing NOTHING for people 22-30, and we're ruining the 30+ year old's credit so they can't actually buy a house. It doesn't help anyone. That's our point. It does nothing to solve any real problem, it just makes everything worse.

Except lenders are not going to hand out $100k loans willy nilly anymore. They will actually have to look at what and where you are studying. If students can discharge their debt then it's possible for lenders to make losses and do you know what businesses hate the most? Damn losses. Those losses will have to be covered higher interest rates and do you know what happens when people are faced with greater interest rates? The maximum principal they can borrow shrinks and there will be no more infinite flood of money that inflates tuition costs year by year. What about people that can't afford the loans? They can always choose a cheaper degree. If getting a CS, EE, civil engineering, law, medicine, whatever degree improves your employment chances so that you can pay off your loan without trouble the interest rates are going to be way down and thereby make it extremely obvious which degrees and schools are the most lucrative. You'll be able to measure the quality of a college and its degrees by the interest rates the lenders charge and even in the worst case you can get rid of the loan trivially. Collges will be able to make money off of good education instead of just admitting as many students as possible by luring them in with an expensive lifestyle.

It's funny how Americans keep telling me about the advantages of hire and fire and how it increases economic efficiency while simultaneously they have the most socialized private education industry on the entire planet which means they get none of the benefits of socialized education and none of the benefits of private education. Seriously your current system is so broken even abolishing it completely without a replacement would still lead to better outcomes than whatever crap you currently have.