In my opinion, there is no good reason to prevent people from discharging student debt. All types of debt ought to be eligible in bankruptcy court.
What gets me upset more than anything is that the federal government is the direct lender for a majority of the debt, charges interest, and on top of that prevents you from ever being able to discharge the debt until it's paid off. It's indentured servitude.
Which is exactly why you can't discharge it.
I agree - I think it should be dischargeable. (Trying so hard to set my opinions aside on the rest, but will do so because it's not the topic of the thread :lol
Set aside your opinions on whether college should be free, whether the government should provide any assistance at all, or your views on college at all. Currently, student loans cannot be discharged in bankruptcy. You can get rid of credit card debt and other types of debt, but you are forever stuck with student loans until you pay them off. Given that more and more are going into default on their loans and that the debt itself is massive, ought we allow student loans to be discharged in bankruptcy?
No because, unlike those other loans, student loans are subsidized by and/or granted directly from public funds such that by defaulting you are defaulting to turn that loan into a gift from the taxpayers to yourself.
Its not like a credit card default where the taxpayer is not obligated to make the lender whole on your behalf or defaulting on a secured loan where the lender can collect on the sale of the securing asset(s).
1) When I default on credit card debt, do I not in some sense turn the bank's loan into a gift from the bank to myself?
2) How are you going to collect if the funds were spent on things like luxury vacations, food, etc.?
I think a side effect of allowing you to discharge student loan debt in bankruptcies would be even more students either dropping out or getting economically worthless degrees.
1) Yes, but the taxpayers are not affected in the least - only other bank customers are. Paying taxes is mandatory while using that particular bank (for credit or loans) is optional which is a huge difference.
2) Those (unsecured loan) amounts are not collectable. Banks that issue unsecured (personal) loans with higher default rates, naturally, must charge much higher interest rates to negate those default losses. Your personal credit rating/risk is taken into account (as well as that of all others) to establish a more realistic actuarial risk based interest rate.
Suck it up..................... and pay your debt. :roll:
I think a side effect of allowing you to discharge student loan debt in bankruptcies would be even more students either dropping out or getting economically worthless degrees.
1) What does default do to interest rates?
2) Ah, so tell me, why is the government charging interest on a loan that, since it cannot be discharged in bankruptcy, necessarily collectible?
1) I thought that I made that clear before. The higher the default rate is then the higher the interest rate must be in order for the lender to not to go broke making those riskier loans.
Exactly, so the bank already has a way of dealing with the potential for default. That is what the interest rate is supposed to offset. So, since the government has no default risk from the borrower, what is the justification for charging interest? Or, if you are going to charge interest, why not allow the debtor to discharge the debt?
Given the kind of interest rates that the government can borrow with, what is the justification for charging an interest rate higher than that?
Student debt alone is currently more than 7% of GDP for this country. I don't think that people realize how big this problem is, and how insurmountable the debt is for many people. It's almost as if the people here want no bankruptcy for anything at all. You do all realize that without the possibility of bankruptcy, that taking on debt at interest is indentured servitude.
Student debt alone is currently more than 7% of GDP for this country. I don't think that people realize how big this problem is, and how insurmountable the debt is for many people. It's almost as if the people here want no bankruptcy for anything at all. You do all realize that without the possibility of bankruptcy, that taking on debt at interest is indentured servitude.
You obviously did not read (or comprehend) the TVM link that I provided. Would you lend me $10K today if I promised to pay you back $10K within ten years?
Then they should have gotten better degrees that gave them better jobs, shouldn't they?
Then they should have gotten better degrees that gave them better jobs, shouldn't they?
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