The student loan problem.

[craig]

I believe the student loan problem was created by a change in the bankruptcy laws. The changes removed moral hazard from lenders. Easy loans created a vicious circle of inflating college costs. Scammers with for profit schools took advantage of the easy money. And government security for the loans crashed the system. The bankruptcy law changes should be repealed and the problem will fix itself but it will be expensive. (Same should be done for credit card debt and payday loans.)

Discharging Student Loans in Bankruptcy: A Brief History

Except in rare cases of severe financial hardship, for federal and private student loans, Discharging Student Loans in Bankruptcy isn't possible. Here's why it ended up that way, along with what changes are likely in the future.

studentloanhero.com

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[swing_voter]

As a tax payer, I don't want to have to pay off someone's student loans. They took these loans out on their own.

Have them open up a gofundme. Left wingers can donate to the gofundme to pay off someone's student loans.

Leave me and mine out of it.

 

[gdgyva]

So a nitwit goes to college, accrues 80k in debt, while partying like a rock star....and leaves with a degree (if their lucky) that will garner them a job paying 35-40k annually and it's someone elses fault?

Where is the responsibility of the student? The parents?

Millions of us went to college with little or no debt...or paid it off. Why? Because we were sensible, and actually had parents who gave a damn.

My kids have zero college loans....ZERO.....

There is no one forcing these kids to sign for these loans....no one forcing them to go for history, and arts degrees.

If we want to change the system, fine. But what is done...is done. And those debts need to be paid.

As for where we go....this program in Tennessee seems to be working really well

The whole idea of free college in America is a linchpin of progressive politics, pushed by Bernie Sanders in his 2016 campaign and endorsed by any candidate trying to burnish his or her progressive credentials. In Washington, it’s a key item on House Democrats’ wish list for higher education. But as Republicans nationally have grown increasingly hostile toward universities they see as elitist, Republicans in Tennessee have gone precisely the opposite direction.

The state’s free-college program, called Tennessee Promise, has been offering two years of tuition-free community college or technical school to all high school graduates, regardless of income, since 2014.

The red state that loves free college

How Tennessee is making Bernie Sanders’ favorite education idea a reality.

www.politico.com

 

[craig]

As a tax payer, I don't want to have to pay off someone's student loans. They took these loans out on their own.

Have them open up a gofundme. Left wingers can donate to the gofundme to pay off someone's student loans.

Leave me and mine out of it.

March 2019 annual bankruptcy filings totaled 772,646 which includes many businesses so they can start again and you want misguided young people to never have that chance?

 

[craig]

So a nitwit goes to college, accrues 80k in debt, while partying like a rock star....and leaves with a degree (if their lucky) that will garner them a job paying 35-40k annually and it's someone elses fault?

Where is the responsibility of the student? The parents?

Millions of us went to college with little or no debt...or paid it off. Why? Because we were sensible, and actually had parents who gave a damn.

My kids have zero college loans....ZERO.....

There is no one forcing these kids to sign for these loans....no one forcing them to go for history, and arts degrees.

If we want to change the system, fine. But what is done...is done. And those debts need to be paid.

As for where we go....this program in Tennessee seems to be working really well

The whole idea of free college in America is a linchpin of progressive politics, pushed by Bernie Sanders in his 2016 campaign and endorsed by any candidate trying to burnish his or her progressive credentials. In Washington, it’s a key item on House Democrats’ wish list for higher education. But as Republicans nationally have grown increasingly hostile toward universities they see as elitist, Republicans in Tennessee have gone precisely the opposite direction.

The state’s free-college program, called Tennessee Promise, has been offering two years of tuition-free community college or technical school to all high school graduates, regardless of income, since 2014.

The red state that loves free college

How Tennessee is making Bernie Sanders’ favorite education idea a reality.

www.politico.com

March 2019 annual bankruptcy filings totaled 772,646 which includes many businesses so they can start again and you want misguided young people to never have that chance?

 

[Integrityrespec]

I believe the student loan problem was created by a change in the bankruptcy laws. The changes removed moral hazard from lenders. Easy loans created a vicious circle of inflating college costs. Scammers with for profit schools took advantage of the easy money. And government security for the loans crashed the system. The bankruptcy law changes should be repealed and the problem will fix itself but it will be expensive. (Same should be done for credit card debt and payday loans.)

Discharging Student Loans in Bankruptcy: A Brief History

Except in rare cases of severe financial hardship, for federal and private student loans, Discharging Student Loans in Bankruptcy isn't possible. Here's why it ended up that way, along with what changes are likely in the future.

studentloanhero.com

.

Congress endorsed the student loan program and set up the rules by which colleges and lenders have gotten rich at the expense of students and their families. Nobody but Congress and their money friends are responsible for the mess, don't expect them to fix it.

 

[craig]

Congress endorsed the student loan program and set up the rules by which colleges and lenders have gotten rich at the expense of students and their families. Nobody but Congress and their money friends are responsible for the mess, don't expect them to fix it.

Congress represents all of us and that means we are all responsible.

 

[Captain Adverse]

So a nitwit goes to college, accrues 80k in debt, while partying like a rock star....and leaves with a degree (if their lucky) that will garner them a job paying 35-40k annually and it's someone elses fault?

Where is the responsibility of the student? The parents?

Millions of us went to college with little or no debt...or paid it off. Why? Because we were sensible, and actually had parents who gave a damn.

This part I agree with wholeheartedly.

The whole idea of free college in America is a linchpin of progressive politics, pushed by Bernie Sanders in his 2016 campaign and endorsed by any candidate trying to burnish his or her progressive credentials. In Washington, it’s a key item on House Democrats’ wish list for higher education. But as Republicans nationally have grown increasingly hostile toward universities they see as elitist, Republicans in Tennessee have gone precisely the opposite direction.

The state’s free-college program, called Tennessee Promise, has been offering two years of tuition-free community college or technical school to all high school graduates, regardless of income, since 2014

This part I do NOT agree with.

Every time someone uses the term "FREE" in conjunction with goods and services in order to be given to someone else for "free," I cringe.

This because it is NOT FREE! It has to be paid for, and serves to increase government involvement, spending, and debt. So you'd have to take money out of OUR pockets to pay for other people's wants, only this time through the process of direct taxation.

Moreover, when the government pays for something, they get more direct involvement in that something. Which serves to increase costs even more for all those government agents and agencies.

What needs to be done, IMHO is to simply go back to the way things used to be. NO student loans guaranteed by the Federal government.

People need to depend on savings, work, and scholarships. They need to realize by this process that going to college is a JOB, not a 4 to 8 year paid vacation! That effort will eventually reward you with a level of education which makes you marketable.

Meanwhile, this should shave away all those "gut courses" teaching "underwater basket-weaving" and issuing worthless diplomas in "grievance studies."

 

[SheWolf]

So a nitwit goes to college, accrues 80k in debt, while partying like a rock star....and leaves with a degree (if their lucky) that will garner them a job paying 35-40k annually and it's someone elses fault?

I know doctors working in ERs with over 100,000 in loans, and I wouldn't stereotype them as partying like a rock stars. It's one thing to study a useless degree, but being a doctor, medical professional, and many other areas of profession actually does benefit the rest of society. Many of them worked hard in college.

I do think it's sad that young working doctors are having difficultly affording to buy a home.

It's absurd. This country could do more or at least make an effort to address the rising costs.

 

[gdgyva]

March 2019 annual bankruptcy filings totaled 772,646 which includes many businesses so they can start again and you want misguided young people to never have that chance?

if i declare BK on my business, i will guesstimate a loss to me personally of 400-500k of my own money. it is happening to people all over the country because of COVID-19, and has little to nothing to do with how well the business was being managed beforehand. the loss to them is substantial, and they will have to rebuild or start over with poor credit, and little or no resources.

life isnt fair....never has been, and never will be. But we all took our chances....the kids taking loans for school, and the business people taking loans for their start-ups.

i am not giving a get out of jail free card to the kids who screwed up, partied hard, and ended up with huge debt and bad degrees if any. Now maybe, there is a middle ground. Maybe we can lower the monthly payments to a % of income where it isnt such a burden. Even if doing so wont get the debt completely paid off, i am okay with that....at least they are paying something on it.

 

[Waddy]

As a retired public college professor, let me explain what happened.

At the college, we always knew, almost to the penny, how much money our prospective students would have available for college. So each time the government increased the size of PELL grants and student loans, we could increase tuition. We could also count on hitting up the state legislature for more money every year. And we lobbied hard to get those increases.
At a planning meeting, I once asked why we couldn't just buy classroom sets of textbooks for those classes which didn't really need to change books every year (about 60% of the classes) and simply check them out free to students for the semester like they do in high schools. I was told in no uncertain terms that the book store was a major money maker and that wouldn't change. BTW; American students pay way more for textbooks than students in most other developed countries.

Note; the college book store serves one other prupose; faculty (professors) need to publish. It figures heavily on whether they get tenure, and what positions they may achieve. One way is to require your material as part of the class book list. You also require works that were written by your friends; they will riciprocate and require your writings in their classes. Sort of a good old boys college club.

And you know that college provided mentor and counselor that helped you decide what classes to take and what major to choose; they work for the institution, not you. Their job is to get kids into the classes and majors that need them. Keep programs up and running with enough students that they won't be closed down. You see, job security is paramount with colleges and universities. They know full well that there may be few jobs out there for English majors and what is out there will be low paying. But if the English dept needs new recruits, they'll work hard to steer students that way. Kids are sooooo gullible.

The government backs student loans, so there is no risk for the lending institution. Defaulted loans are sold to private companies who like them because the loans can't be discharged in bankruptcy. So they follow a student for life. Adding up interest all the while.
FYI; most colleges and universities have endowments large enough that students could attend tuition free for the next century. These endowments are that large. And you know public colleges, and probably private ones as well, pay almost no taxes.

Higher education is a sweet deal.

 

[craig]

As a retired public college professor, let me explain what happened.

At the college, we always knew, almost to the penny, how much money our prospective students would have available for college. So each time the government increased the size of PELL grants and student loans, we could increase tuition. We could also count on hitting up the state legislature for more money every year. And we lobbied hard to get those increases.
At a planning meeting, I once asked why we couldn't just buy classroom sets of textbooks for those classes which didn't really need to change books every year (about 60% of the classes) and simply check them out free to students for the semester like they do in high schools. I was told in no uncertain terms that the book store was a major money maker and that wouldn't change. BTW; American students pay way more for textbooks than students in most other developed countries.

Note; the college book store serves one other prupose; faculty (professors) need to publish. It figures heavily on whether they get tenure, and what positions they may achieve. One way is to require your material as part of the class book list. You also require works that were written by your friends; they will riciprocate and require your writings in their classes. Sort of a good old boys college club.

And you know that college provided mentor and counselor that helped you decide what classes to take and what major to choose; they work for the institution, not you. Their job is to get kids into the classes and majors that need them. Keep programs up and running with enough students that they won't be closed down. You see, job security is paramount with colleges and universities. They know full well that there may be few jobs out there for English majors and what is out there will be low paying. But if the English dept needs new recruits, they'll work hard to steer students that way. Kids are sooooo gullible.

The government backs student loans, so there is no risk for the lending institution. Defaulted loans are sold to private companies who like them because the loans can't be discharged in bankruptcy. So they follow a student for life. Adding up interest all the while.
FYI; most colleges and universities have endowments large enough that students could attend tuition free for the next century. These endowments are that large. And you know public colleges, and probably private ones as well, pay almost no taxes.

Higher education is a sweet deal.

This reminds me of the monasteries and abbeys that were broken up by Henry the VIII with their wealth confiscated after he started his own religion. They had become wealthy over generations through endowments and bequests. They were not taxed since they were part of the church and individual members did not actually own the property. They were secluded from the community and provided few services to it, at least not commensurate with the wealth they had acquired from it. The "brothers" and monks had a better standard of living than the community except for the ruling class. I guess they did help preserve western civilization and made good beer. Not making a comparison just noting some similarities.

 

[joko104]

There is no student loan problem. No one likes paying bills. Pay them anyway.

Remember the constant claim of how much more money a person will make with a college degree. Making people without college degrees at lower income paying the debts of their supervisors and bosses is nothing but welfare for the rich being paid for by the poor. But, then, the Democratic Party does exist to serve the rich and trash blue collar workers.

 

[craig]

There is no student loan problem. No one likes paying bills. Pay them anyway.

Remember the constant claim of how much more money a person will make with a college degree. Making people without college degrees at lower income paying the debts of their supervisors and bosses is nothing but welfare for the rich being paid for by the poor. But, then, the Democratic Party does exist to serve the rich and trash blue collar workers.

I think the problem is that when people are encumbered by debt they can never pay off, they will never be able to accumulate resources to better themselves and will be a burden on society forever. I think that is a justification for the bankruptcy laws.

 

[joko104]

I think the problem is that when people are encumbered by debt they can never pay off, they will never be able to accumulate resources to better themselves and will be a burden on society forever. I think that is a justification for the bankruptcy laws.

I'm ok with allowing bankruptcy - as long as the government stops making or guaranteeing the loans.

 

[craig]

This reminds me of the monasteries and abbeys that were broken up by Henry the VIII with their wealth confiscated after he started his own religion. They had become wealthy over generations through endowments and bequests. They were not taxed since they were part of the church and individual members did not actually own the property. They were secluded from the community and provided few services to it, at least not commensurate with the wealth they had acquired from it. The "brothers" and monks had a better standard of living than the community except for the ruling class. I guess they did help preserve western civilization and made good beer. Not making a comparison just noting some similarities.

Some of them did morph in to english public schools and universities.

 

[craig]

I'm ok with allow bankruptcy - as long as the government stops making or guaranteeing the loans.

I agree. Government guarantees are a major cause of the student loan problem. They were also part of the house mortgage collapse that precipitated the great recession of 2007 that exacerbated the student loan problem

 

[joko104]

Making college degrees paid for by government and otherwise free will make having a college degree worthless. There are already more people graduating with unmarketable college degrees than there are jobs for them.

 

[ttwtt78640]

I think the problem is that when people are encumbered by debt they can never pay off, they will never be able to accumulate resources to better themselves and will be a burden on society forever. I think that is a justification for the bankruptcy laws.

That is also the justification for charging higher interest rates for unsecured loans made to folks with no or shaky credit ratings. The lender (in this case, we the sheeple) must protect themselves from deadbeats by charging interest rates sufficient to cover their defaults.

 

[Helix]

there shouldn't be a paywall in between the student a college. it's resulting in a lot of undereducated people who are more susceptible to half baked carnival hucksters.

 

[craig]

That is also the justification for charging higher interest rates for unsecured loans made to folks with no or shaky credit ratings. The lender (in this case, we the sheeple) must protect themselves from deadbeats by charging interest rates sufficient to cover their defaults.

Yes. That is moral hazard.

 

[craig]

Making college degrees paid for by government and otherwise free will make having a college degree worthless. There are already more people graduating with unmarketable college degrees than there are jobs for them.

A college degree only has economic worth if it gets you a job that leads you to a career that pays back the cost and more. Education can make you a better citizen and that is worth something to society but this problem does the opposite,

 

[Waddy]

I think the problem is that when people are encumbered by debt they can never pay off, they will never be able to accumulate resources to better themselves and will be a burden on society forever. I think that is a justification for the bankruptcy laws.

I think the college or any type of post high institution where students borrow to learn should also be held at least partly accountable for the outcomes.

Anybody can attend a public university. That sounds like a great idea, and public universities love it because it greatly increases enrollment, and therefore income to the college. But it also means lots and lots of people who have no business going to college because they are so poorly educated, so low academically, or such a poor work ethic, that they have little chance of success. But the college will collect about a year and a half tuition out of them before they drop out. Some colleges will put them into majors where academics means little, and the college can collect on them for four or five years, and then shove them out into the real world where their "college" major in basket weaving has no market value. There are many, many students who started out to be brain surgeons but ended up with "communication" degrees, if they graduated at all. The universities know all this, but it's in their best interest to continue the fantasy.

Colleges will put students into majors they know will have little or no job openings, and that will pay very poorly. They need to keep classes filled and programs running. Job security is #1.

So why not make universities and colleges pay part of the cost if students fail to graduate or end up in low paying jobs not even in their field, and therefore they have trouble paying back those loans. Make colleges have some skin in the game. Give them a real reason why they shouldn't take unprepared students, and send them into the work world with unmarketable degrees.

Colleges have enough endowment money to make this idea work. This way everybody has a stake in the game.

 

[ttwtt78640]

Yes. That is moral hazard.

Yep, but it assures that other borrowers (not the general public) bear the cost of deadbeats.

 

[craig]

I heartily agree. For profit colleges and their owners that profited from student loan shoulds be vigorously investigated for fraud and forced to repay the government. Lending institutions should not be repaid for defaulting loans because of bankruptcy. Colleges should have their endowments and bequests taxed based on how much they raised their cost because of government backed student loans. Students who declare bankruptcy should suffer same punishments as other bankrupts. Politicians that supported laws that created this problem should suffer reproof at the ballot box.