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It always astonish me to think it can be seen as normal, even more equitable, to require people to get so huge debts before even being trained to work.
I always hear people say things like "we don't have debtors prisons in the U.S.". If enough people start doing this, I have a very strong feeling that that will change. As student loans become more of a crisis, we're sure to see more people simply deciding not to pay. What recourse to lenders have if this happens on a large scale?
Is this the start of the student-loan bubble bursting? From what I have read student loan debt, despite it's size, doesn't threaten the rest of the economy in the same way that housing loans did. Hopefully that is the case.
Mass defaults (which you could argue we're already seeing at ~20%) would be terrible for lenders (private and public), and probably the schools involved, so there'd be an impact, but you wouldn't have the massive loss of aggregate wealth we saw impacting the middle class five to ten years ago.
Earlier quoted context omitted.
They can start garnishing your wages, so unless you never want to hold a job again, creditors will get their money.
You can leave the country. Most of the people deeply in debt with degrees or training that won't pay the debt would find, for example, teaching English in China a relatively comfortable living. If you have the imagination to look beyond Europe, finding a gig that's better than debt slavery isn't too difficult.
As a US citizen (or Green Card holder) you must a file an annual tax return wherever you live in the world, plus disclose foreign bank accounts. Failure to do so can have very harsh penalties.
https://americansabroad.org/issues/taxation/us-taxes-while-l...
A relative of mine works there and said they were about to be sued by the Department of Education over fraud in their student loan department. The settlement forced the company to sell or close all of it's colleges and no senior management or administrative staff is allowed to stay with any of the colleges.
It seems pretty clear that Corinthian did some bad things, and it's likely the clause the article mentions in federal loans might give _some_ students an way out of debt:
“In some cases, you may assert, as a defense against collection of your loan, that the school did something wrong or failed to do something that it should have done.”
IANAL, but I think it's pretty unlikely the government would let all of the students off the hook. (For a billion dollars!)
Is this the start of the student-loan bubble bursting? From what I have read student loan debt, despite it's size, doesn't threaten the rest of the economy in the same way that housing loans did. Hopefully that is the case.
I dunno about that - it's probably just a lot more insidious and less panic-y.
Adults repaying student loans aren't spending that money on other things. If you're paying $300 a month to Sallie Mae, that's $300 you're not spending on:
1) Savings/retirement/etc
2) Goods and services
3) Capital investment
4) Etc.
Given the compounding nature of some of these things, and the fact that these payments constitute a higher % of your income early on (assuming steady career progression), it's a problem that may just slowly unravel as time goes on.
Don't forget we live in a service economy - adults not spending money on a diverse set of services (as opposed to say, just student loan services) will hurt us in the long run.
So basically students enroll in a scam college to trick people into thinking they are well educated, and then complain when the scam is revealed. What's next, people who scam money from the elderly by pretending to be their grandchildren sue after only getting 25 cents with their birthday cards? I realize these colleges are also using high pressure sales tactics to trick vulnerable populations into enrolling and then…
Why didn't you mention that these colleges need to take some responsibility as well?
It's a bit disingenuous to claim that you shouldn't pay back any of the debt incurred in earning your degree because the educational program was worthless when you're still seeking a career in the field requiring that degree. I agree she shouldn't have to pay all of the debt, but surely the degree isn't totally worthless.
That doesn't follow at all. The program could have been deficient. The placement program could have been fraudulent. And yet the student could make up the deficiency with other training and compete, as hopeless as that might be, against others in the same boat.
It isn't unusual for schools to defraud students by gaming placement by, for example, providing a pitiful amount of seed money for business majors to set off in a leaky lifeboat, or by forcing law students in lower-tier law schools to drop out before graduating.
You also have to consider that debt repayment in constant payments pays down very little principle at first. A student may have paid a lot of interest, but their debt remains high.
Earlier quoted context omitted.
She got ripped off by a school, so should now give up her dreams of becoming a nurse. Great argument.
No, she should start a career in whatever field she's best positioned to start one in. Oh is that nursing? I wonder why.
Is this the start of the student-loan bubble bursting? From what I have read student loan debt, despite it's size, doesn't threaten the rest of the economy in the same way that housing loans did. Hopefully that is the case.
> doesn't threaten the rest of the economy in the same way that housing loans did I dunno about that - it's probably just a lot more insidious and less panic-y. Adults repaying student loans aren't spending that money on other things. If you're paying $300 a month to Sallie Mae, that's $300 you're not spending on: 1) Savings/retirement/etc 2) Goods and services 3) Capital investment 4) Etc. Given the compounding natu…