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Is student debt dischargeable in bankruptcy?
Is student debt dischargeable in bankruptcy?
It's hard to imagine a worse policy. It penalizes responsible behavior while doing nothing at all to address the root causes. Are we stopping making more of these loans? Of course not!
• Gets people talking about higher education payments.
• Eases the financial burden of higher education for some. It should be all, but this is still objectively better than none, provisionally.
• Provides good publicity for the political party more inclined to do anything about the root causes (Democrats).
It's hard to imagine a worse policy. It penalizes responsible behavior while doing nothing at all to address the root causes. Are we stopping making more of these loans? Of course not!
Of course root causes should be addressed (chiefly, I believe that tuition should be gratis for public universities), but in the meantime I think this is a perfectly fine policy. It achieves three goals: • Gets people talking about higher education payments. • Eases the financial burden of higher education for some. It should be all , but this is still objectively better than none , provisionally. • Provides good pub…
This is not only illegal but morally wrong, though.
Lenders are incentivized to loan as much out as possible because their risk is so low, and so there is no reason to NOT approve a $150,000 loan to a student earning a degree which will realistically net them $40,000 a year.
As soon as you let borrowers default, the math starts to make sense again. Lenders will have to evaluate how much they are willing to lend a student based on their expected earnings post-graduation. Universities won't be able to increase tuition at such an inflated rate since there wouldn't be infinite money being pumped into the system. College may actually become affordable again over time.
It's not a mystery what the actual problem is here.
edit: corrected "lenders" to "borrowers"
We should really take a few minutes to consider what this means for not just our future but our future generations.
I think arguments that go along the lines of "I worked extremely hard to minimize my loans and now I felt betrayed" is missing the bigger evil lurking in the shadows: schools in the U.S. don't teach what really needs to be taught and political tricks like this further distort the feedback loop.
Schools should teach logical thinking, clarity of mind, decision making that includes knowledge of finances and projections so you can answer the question "out of all the things I can do, what should I be doing right now?"
"Follow your passion" worked when the U.S. was enjoying extreme wealth growth right off WWII - at that time you could shine shoes and own a single bedroom house away from the city. Weaving baskets and selling them could be the only thing you did and rent half a home for the rest of your life.
This is a cheap political trick that makes things worse. This is a perfect example of why a government shouldn't be trusted to allocate resources efficiently.
I am also concerned that this now opens an expectation that this current party will periodically forgive loans in the future - so, as long as you keep voting them into power, it doesn't matter what decisions you make, you won't have to suffer too terribly for them.
The right call would have been to invest these dollars in reworking education and schooling so that our future generations don't repeat the same mistakes we did and end up looking for handouts because we failed to learn how to make the right decisions.
While the intentions for this might not be evil, the effect is terribly so and disempowering for future generations.
To those who got some relief from this subsidy - I hope this helps you feel a bit better but hold those who put you in this situation accountable. Don't let politicians take advantage of you like this. Take a few minutes to write a letter to your school and college and tell them how they failed you and what you wish they had done instead.
The future of our country depends on your feedback
My biggest issue with these cancellations is that they don't seem to be fixing the underlying issue at all — that you can't default on your student loans. Lenders are incentivized to loan as much out as possible because their risk is so low, and so there is no reason to NOT approve a $150,000 loan to a student earning a degree which will realistically net them $40,000 a year. As soon as you let borrowers default, the…
Furthermore, the entire premise of federal student loans is that they're not technically spending. Of course if they allow these loads to be defaulted, then this is ultimately a spending program.
At least this loan forgiveness seems to be targeted at low-income people. That’s much better than the government’s blanket pause on student loan payments for almost two years, which saved many rich people tens of thousands of dollars in interest.
Yay equity.
1) Biden's polling numbers must be abysmal with key demographics if he's doing this 7 months out from the election.
2) This does nothing to solve the underlying problems which are that loans are handed out with absolutely zero check to see if they'll get paid back, and that they aren't dischargable in bankruptcy.