NY Times Editorial: Let Students Discharge Private Loans in Bankruptcy

[bobbyw24]

Legislation is pending in both houses of Congress that would make private school loans dischargeable through bankruptcy, as most of them were before Congress changed the law in 2005. It had long been the case that federally backed student loans were protected during bankruptcy proceedings. That is reasonable, since those loans were backed by taxpayer dollars and flexibly structured so that borrowers could receive deferment in tough times and resume payments when their finances improved.

The country has a compelling interest in making it as difficult as possible for student borrowers to elude payment for federal loans. There was no reason for extending that protection to private lenders of student loans.

http://www.nytimes.com/2011/08/27/opinion/relief-for-student-debtors.html?_r=2&nl=todaysheadlines&emc=tha211

[angelatc]

Hey Bobby, I'm not arguing because obviously you're much more familiar with the law than I am....but I remember thinking that student loans weren't dischargeable in bankruptcy much earlier than 2005, the logic being that the "provate" loans were federally insured.

Where did I get that impression?

And by the way, this statement is bred of pure evil:
"The country has a compelling interest in making it as difficult as possible for student borrowers to elude payment for federal loans. There was no reason for extending that protection to private lenders of student loans. "

[bobbyw24]

Hey Bobby, I'm not arguing because obviously you're much more familiar with the law than I am....but I remember thinking that student loans weren't dischargeable in bankruptcy much earlier than 2005, the logic being that the "provate" loans were federally insured.

Where did I get that impression?

And by the way, this statement is bred of pure evil:

Right not since Oct. 1 1998

and yes that quote is B.S.

[Gumba of Liberty]

God this would save a lot of people. I hope it passes.

[specsaregood]

God this would save a lot of people. I hope it passes.

And it screws over the taxpayers, many of whom are people that paid their way through school on their own dime.
If they are gonna allow this, then lets get rid of the federal subsidized loans completely. We can't have both.

[Gumba of Liberty]

And it screws over the taxpayers, many of whom are people that paid their way through school on their own dime.
If they are gonna allow this, then lets get rid of the federal subsidized loans completely. We can't have both.

How does bankruptcy of PRIVATE students loans screw over the taxpayer? If you go bankrupt and cannot pay your bills in the United States, under the Constitution, you file for bankruptcy. Why does this apply to any loan but student loans? You think it is better to make these people indentured servants of the State who have to pay back fractional reserve banks that had neither the funds or the the lending standards that the free market would provide?

[angelatc]

How does bankruptcy of PRIVATE students loans screw over the taxpayer? If you go bankrupt and cannot pay your bills in the United States, under the Constitution, you file for bankruptcy. Why does this apply to any loan but student loans? You think it is better to make these people indentured servants of the State who have to pay back fractional reserve banks that had neither the funds or the the lending standards that the free market would provide?

I'm guessing you have a student loan, and you want a bailout?

Servants? Screw that. They weren't forced to take out loans, and if they hadn't been so eager to accept the easy money tuition rates wouldn't have skyrocketed. Those of us that worked our way through school and graduated without a dime in student loan debt have absolutely no sympathy for them.

The banks made those loans with a government that told them the loans would be excluded from bankruptcy. (Might I point out that they were also loaned to people who were fully aware that they would not be dischargeable in bankruptcy.)

In the meantime, the government has seized control of the student loan market. If I understand it correctly, banks aren't even allowed to write private student loans any more.

This is the government changing the terms after the fact, and using their power to drive even more banks into bankruptcy, therefore giving them the opportunity to seize even more control of the nations financial and educational system.

Note that not all student loans would be dis-chargeable - just those that aren't "enslaving" the debtor to the government.

[heavenlyboy34]

I'm guessing you have a student loan, and you want a bailout?

Servants? Screw that. They weren't forced to take out loans, and if they hadn't been so eager to accept the easy money tuition rates wouldn't have skyrocketed. Those of us that worked our way through school and graduated without a dime in student loan debt have absolutely no sympathy for them.

The banks made those loans with a government that told them the loans would be excluded from bankruptcy. (Might I point out that they were also loaned to people who were fully aware that they would not be dischargeable in bankruptcy.)

In the meantime, the government has seized control of the student loan market. If I understand it correctly, banks aren't even allowed to write private student loans any more.

This is the government changing the terms after the fact, and using their power to drive even more banks into bankruptcy, therefore giving them the opportunity to seize even more control of the nations financial and educational system.

Note that not all student loans would be dis-chargeable - just those that aren't "enslaving" the debtor to the government.
Fair points, but why should this sort of debt be different than other debt that can be discharged in bankruptcy? No one goes into debt without knowing the possible consequences. The lenders made foolish decisions by lending money without collateral (or any other indication that the borrower could repay)which is called predatory lending in other industries. Actions have consequences.

[TheBlackPeterSchiff]

I'm guessing you have a student loan, and you want a bailout?
.

I do :D

Banks got one, why cant I.

[newbitech]

The problem with student loans is the same problem with all loans. The "lender" gets to keep the collateral, while also compelling the "borrower" to continue to pay. If the collateral is repossessed, then the loan should be discharged. In the case of student loans, the collateral is the degree and the promise that the degree will help land a job, and good paying ones at that.

So if the person owing the money does not have a good paying job and a degree, then the persons student loan debt should not exist either.

[angelatc]

Fair points, but why should this sort of debt be different than other debt that can be discharged in bankruptcy? No one goes into debt without knowing the possible consequences. The lenders made foolish decisions by lending money without collateral (or any other indication that the borrower could repay). Actions have consequences.

If we view the bankruptcy protection as a form of a subsidy, I think that we can agree that nobody in these parts ever thought that federally subsidized student loans were a good idea precisely because they create exactly the situation that the original article condemns - a bubble.

But if we view laws as a type of social contract, this is a government changing the terms of a contract after the deal is already in effect. If they were proposing that newly written student loans would be dis-chargeable in bankruptcy, I wouldn't care.

This is part of the movement to kill off private education, and also example of people willing to throw their principles out the window when it benefits them personally.

[angelatc]

The problem with student loans is the same problem with all loans. The "lender" gets to keep the collateral, while also compelling the "borrower" to continue to pay. If the collateral is repossessed, then the loan should be discharged. In the case of student loans, the collateral is the degree and the promise that the degree will help land a job, and good paying ones at that.

So if the person owing the money does not have a good paying job and a degree, then the persons student loan debt should not exist either.

Who gets to define "good paying?" What if the person racks up huge debts pursuing a law degree, clerks for 5 months then decides to quit and become a writer? Or somebody who graduates with a masters in finance, but then refuses to accept an entry level position because he feels its beneath him? (That's my uncle, who decided to work as an exterminator rather than to accept a 50k starting salary on Wall Street.)

What about people who pursue their passions by seeking out degrees in liberal arts, when the whole world knows those degrees don't translate into high salaries in the real world?

Seriously, maybe we ought to just make a 4 year college degree an entitlement. Heck, we can just make it mandatory for American business to pay a minimum salary of $75,000 to anybody with a college degree. That will fix everything.

[Gumba of Liberty]

I'm guessing you have a student loan, and you want a bailout?

I have students loans but I also have a career in my profession. What happens to the millions of students who cannot find work? They went to college because they were instructed to since kindergarten.

Servants? Screw that. They weren't forced to take out loans, and if they hadn't been so eager to accept the easy money tuition rates wouldn't have skyrocketed. Those of us that worked our way through school and graduated without a dime in student loan debt have absolutely no sympathy for them.

So it's the students fault that tuition prices skyrocketed, just like we should blame the housing bubble on homeowners. By the way, it's impossible to work your way through school these days. What year did you graduate, 1992?

The banks made those loans with a government that told them the loans would be excluded from bankruptcy. (Might I point out that they were also loaned to people who were fully aware that they would not be dischargeable in bankruptcy.)

Taking out loans and going to college vs. not going to college is not a choice for most people especially in our culture and in this economy. Yeah, some students made bad decisions (and chose worthless majors) but the facts were not laid out for them the way they should have been. Parents, grand parents, guidance councilors, and teachers made college an end all be all salvation that could save them from a life of poverty. In our cruel and twisted world it did just the opposite.

In the meantime, the government has seized control of the student loan market. If I understand it correctly, banks aren't even allowed to write private student ans any more.

Agreed.


This is the government changing the terms after the fact, and using their power to drive even more banks into bankruptcy, therefore giving them the opportunity to seize even more control of the nations financial and educational system.

Possibly but I am less concerned with banks than young people who were suckered into loans they can never pay back. When people, even young people, lose everything they become a danger to society, especially educated ones. Remeber the impact these loans can have on parents as well.

Note that not all student loans would be dis-chargeable - just those that aren't "enslaving" the debtor to the government.

Federal Students loans can be payed through income based repayment plans over the course of 25 years. Private loans cannot. People with private student loans that they cannot pay back are screwed for life.

[newbitech]

Who gets to define "good paying?" What if the person racks up huge debts pursuing a law degree, clerks for 5 months then decides to quit and become a writer? Or somebody who graduates with a masters in finance, but then refuses to accept an entry level position because he feels its beneath him? (That's my uncle, who decided to work as an exterminator rather than to accept a 50k starting salary on Wall Street.)

What about people who pursue their passions by seeking out degrees in liberal arts, when the whole world knows those degrees don't translate into high salaries in the real world?

Seriously, maybe we ought to just make a 4 year college degree an entitlement. Heck, we can just make it mandatory for American business to pay a minimum salary of $75,000 to anybody with a college degree. That will fix everything.

I know, it's a pain in the ass to try and figure out, I watched the standards for loaning huge amounts of money collapse in the mortgage market from a first person perspective.

I guess, what I am saying is that if someone takes out a "loan" for say 20k for 4 years of school with the collateral being a degree, and the promise of a good paying job, then those 2 things should be worth $20k. If those two things are not worth 20k, then the loan should not have been made.

So the person doesn't or can't pay for whatever reason. Take away their degree. This also has the effect of taking away their prospects for good paying job, however you want to define. There problem solved.

Of course, now, we have to ask, where did that money come from to pay the professor, the facility, etc etc... Well, the teacher kept the money, not the student. So the collector should go after the person who kept the money. See schools, like banks are apparently not doing their jobs very well and still getting paid for it.

Not blaming the schools or those people for someone who failed to earn their degree or use it properly. But, how are you going to get your money back from a bad investment? How are you going to make that person pay something for nothing?

It could be said that the person made the professor and the school work for free, but if you work your ass off and at the end of the day, have a pile of crap, why should you be paid?

[Endgame]

There is going to have to be some sort of bailout or mass default on student loans at some point. College is an incredible bubble that has ripped off an entire generation.

[angelatc]

There is going to have to be some sort of bailout or mass default on student loans at some point. College is an incredible bubble that has ripped off an entire generation.

But I'm not convinced you're reading the article right. They're not talking about forgiving the loans that are insured by the government, which is what most students have anyway. They're basically using their unique power to rewrite lontracts to screw their former competition.

[jack555]

My story is this. I went through undergrad without any debt. However to get my doctor of pharmacy degree after interst during school my debt will be 200,000 dollars in government loans. There is not really a way for people in most states to go to pharmacy school cheaper then that. If you can live with your parents and get accepted into a public school the debt might be half that but there are only maybe 250 spots a year in California public schools and it probably would have taken me an extra 3 years to get into a public school. While it was my choice to go into this insane debt I felt I really didn't have a choice. That was the cost of getting a good job. If I live off about 25000 a year for five years I can probably pay off my debt but if anything goes wrong I will be a government slave for the rest of my life. I think the answer is to get rid of federal loans so an education doesn't cost 200,000 and possibly outlaw private student loans as predatory. ?

[angelatc]

I'm guessing you have a student loan, and you want a bailout?

I have students loans but I also have a career in my profession. What happens to the millions of students who cannot find work? They went to college because they were instructed to since kindergarten. Today's entitlement mentality. Newsflash - the market doesn't owe anybody a job.


Servants? Screw that. They weren't forced to take out loans, and if they hadn't been so eager to accept the easy money tuition rates wouldn't have skyrocketed. Those of us that worked our way through school and graduated without a dime in student loan debt have absolutely no sympathy for them.


So it's the students fault that tuition prices skyrocketed, just like we should blame the housing bubble on homeowners. By the way, it's impossible to work your way through school these days. What year did you graduate, 1992?


Exactly. It's like blaming an alcoholic for drinking. While it's true that the sale on PBR at the corner store was the temptation, the decision to pop the cap and be sober later is a personal choice and the drinker bears the sole responsibility for it.

It is certainly not impossible to pay your way through school these days. There are a couple of kids here on the forums who are doing just that. The kicker is that they will probably take longer than 4 years to graduate.



The banks made those loans with a government that told them the loans would be excluded from bankruptcy. (Might I point out that they were also loaned to people who were fully aware that they would not be dischargeable in bankruptcy.)

Taking out loans and going to college vs. not going to college is not a choice for most people especially in our culture and in this economy. Yeah, some students made bad decisions (and chose worthless majors) but the facts were not laid out for them the way they should have been. Parents, grand parents, guidance councilors, and teachers made college an end all be all salvation that could save them from a life of poverty. In our cruel and twisted world it did just the opposite.
That's the most ridiculous statement in this thread. HOw anybody can believe in personal responsibility and spew "It's their fault - they didnt do their homework!" is an opinion, and one that I sternly disagree with on several levels. What lesson are we teaching society here - if you cry long enough you'll get your way?



]quote] This is the government changing the terms after the fact, and using their power to drive even more banks into bankruptcy, therefore giving them the opportunity to seize even more control of the nations financial and educational system.

Possibly but I am less concerned with banks than young people who were suckered into loans they can never pay back. When people, even young people, lose everything they become a danger to society, especially educated ones. Remeber the impact these loans can have on parents as well. How very liberal of you. We have to give them money, or else they're going to hurt somebody. That's a form of terrorism, and I for one refuse to cater to it. THey made bad decisions - the only value in that decision is destroyed by forgiving the loan

But you'd don't care that the government is going to seize control of the nations secondary educational system, as long as they're screwing the banks to do it?


Students loans can be payed through income based repayment plans over the course of 25 years. Private loans cannot. People with private student loans that they cannot pay back are screwed for life. No, they're only screwed until they pay back their debt. Even if we ignore the trend of earnings to rise over the life of any worker, inflation alone almost guarantees that they'll be able to pay them back eventually.

I have no tolerance for the concept that we should "help" people who are stupid. These people are greedy - they went to college specifically because they wanted to make more money than they would have otherwise. THere's alot of them who went for advanced degrees specifically because they wouldn't settle for less than they thought they should be making 4 years ago. Now we're going to give them big hugs and tell them that it's not their fault they graduated college without the ability to reason and use simple simple math when looking at their finances.

This is how to keep the sheep stupid.

[beerista]

The problem with student loans is the same problem with all loans. The "lender" gets to keep the collateral, while also compelling the "borrower" to continue to pay. If the collateral is repossessed, then the loan should be discharged. In the case of student loans, the collateral is the degree and the promise that the degree will help land a job, and good paying ones at that.

So if the person owing the money does not have a good paying job and a degree, then the persons student loan debt should not exist either.
Now you've got me thinking how I can arrange a "strategic default" of my degree. I'll gladly let them repossess that useless POS. I promise never to mention on a job application or a resume that I have one if they promise to write off what I owe. Fair?

[angelatc]

My story is this. I went through undergrad without any debt. However to get my doctor of pharmacy degree after interst during school my debt will be 200,000 dollars in government loans. There is not really a way for people in most states to go to pharmacy school cheaper then that. If you can live with your parents and get accepted into a public school the debt might be half that but there are only maybe 250 spots a year in California public schools and it probably would have taken me an extra 3 years to get into a public school. While it was my choice to go into this insane debt I felt I really didn't have a choice. That was the cost of getting a good job. If I live off about 25000 a year for five years I can probably pay off my debt but if anything goes wrong I will be a government slave for the rest of my life. I think the answer is to get rid of federal loans so an education doesn't cost 200,000 and possibly outlaw private student loans as predatory. ?

So you opted for immediate gratification in lieu of personal responsibility. That's fine, but you did indeed have a choice. You chose not to wait for a better deal.

[Austrian Econ Disciple]

Not sure what the problem is here -- in every other case where you are unable to repay your debts you can declare bankruptcy. Why the void with this particular loan? I'm pretty glad we got rid of debtors prisons and indentured servitude. By not having bankruptcy you are basically taking all the risk away from the loaners, and is it then no wonder that there are nearly no loan standards in this particular market? Besides, it isn't like bankruptcy has no consequences.

[TCE]

So you opted for immediate gratification in lieu of personal responsibility. That's fine, but you did indeed have a choice. You chose not to wait for a better deal.

Most of your points are dead-on, but there is one thing you aren't considering: the new Student Loan law (http://thechoice.blogs.nytimes.com/2010/03/22/loan-q-a/). Basically, all colleges now have extra administrative fees and the burden is on them to deal with loans. While this was hailed as a great step forward for student loans, it is a serious step back for everyone - except for governmental control over education. In 2009, I knew what tuition would be and knew I could afford it. However, that was before this law passed. Now tuition has jumped because my school is claiming all of these new regulations on them require a higher tuition. This is one example of how the government screws us.

As for your other points, for some, I think the victims are more so the kids and in others, I don't feel bad for the students at all. The moral hazard portion I was alluding to is the government offering 18-year olds loans at fixed interest rates that aren't set by the market and kids think they're great because the government, the savior of everything, is offering them. They are pushed by propaganda that these loans are actually good things and of course, with the government's seal of approval, they take them. As for the kids going to high-line schools and the expensive out of state schools for a premium, well, they deserve what they get by taking out tens of thousands in private loans.

[TCE]

Not sure what the problem is here -- in every other case where you are unable to repay your debts you can declare bankruptcy. Why the void with this particular loan? I'm pretty glad we got rid of debtors prisons and indentured servitude. By not having bankruptcy you are basically taking all the risk away from the loaners, and is it then no wonder that there are nearly no loan standards in this particular market? Besides, it isn't like bankruptcy has no consequences.

+Rep. If loans were able to be discharged in bankruptcy, banks would tighten their lending standards and the market would be better for it.

[ghengis86]

Not sure what the problem is here -- in every other case where you are unable to repay your debts you can declare bankruptcy. Why the void with this particular loan? I'm pretty glad we got rid of debtors prisons and indentured servitude. By not having bankruptcy you are basically taking all the risk away from the loaners, and is it then no wonder that there are nearly no loan standards in this particular market? Besides, it isn't like bankruptcy has no consequences.

Agreed.

More bankruptcy due to student loans where the student loans is discharged and after a few thousand similar judgements the private banks will be less eager to make student loans.

The only thing that screws the above scenario is government involvement in the student loan market. It really distorts the market signals, incentives, disincentives, etc.

[cindy25]

why stop with private loans; govt loans should be no different than private loans.

[jack555]

So you opted for immediate gratification in lieu of personal responsibility. That's fine, but you did indeed have a choice. You chose not to wait for a better deal.

I don't know how old you are but try being in your late teens to early twenties and making much more then minimum wage, and that's with a college degree. I saw an opportunity to make 100,000 plus a year whereas my friends are unemployed or making less than 25,000 a year. I was accepted into a private school many people try and never get into any pharmacy school. Waiting 3 years to maybe get into a public school and go into 125000ish debt didn't seem like a good plan. If I had to do it all over again I'd try to find a degree like engineering where you don't need a doctorate and can still get a cheap degree. However a pharmacy degree should not cost 125000 to 200000. Yes I had a choice only time will tell if it's a good one. Again I don't think there should be federal loans and I'd definitely entertain the thought of outlawing private loans as being predatory. I am aware I chose to go into debt but if you want to be a pharmacist there really isn't much choice ( with a few exceptions for people who live in certain states).

[CaptainAmerica]

People who make poor decisions get bailed out.Pathetic.

[Anti Federalist]

There is going to have to be some sort of bailout or mass default on student loans at some point. College is an incredible bubble that has ripped off an entire generation.

Truth.

[LibForestPaul]

so dems are buying votes, thats cool...

but who is making money?

are colleges being targeted, and why? RP and his stance against Dept of Ed?

[LibForestPaul]

+Rep. If loans were able to be discharged in bankruptcy, banks would tighten their lending standards and the market would be better for it.

than what do all those liberal ed "doctors" do, who will they teach. we already have high unemployment and you want to make it go higher?

[TCE]

This feels like such a misdirected attack on people. Government creates loans and other incentives to artificially increase price of college---->Students go to college and enter into a system where the government has virtually guaranteed failure------>Government changes rules in the middle of the game and also makes sure loans cannot be discharged, condemning students who are victims of the system to a potential lifetime of debt slavery------>Moral assault is waged on students for being irresponsible. Something isn't right with the above.

Again, on a purely moral argument, some students are simply trying to get a degree as cheaply as possible and that's it. Others are taking out tens of thousands in private loans to go to fancy colleges with a ton of extra amenities and cry that they can't pay their student loans back. The former and latter cases are extremely different.

[angelatc]

I don't know how old you are but try being in your late teens to early twenties and making much more then minimum wage, and that's with a college degree. I saw an opportunity to make 100,000 plus a year whereas my friends are unemployed or making less than 25,000 a year. I was accepted into a private school many people try and never get into any pharmacy school. Waiting 3 years to maybe get into a public school and go into 125000ish debt didn't seem like a good plan. If I had to do it all over again I'd try to find a degree like engineering where you don't need a doctorate and can still get a cheap degree. However a pharmacy degree should not cost 125000 to 200000. Yes I had a choice only time will tell if it's a good one. Again I don't think there should be federal loans and I'd definitely entertain the thought of outlawing private loans as being predatory. I am aware I chose to go into debt but if you want to be a pharmacist there really isn't much choice ( with a few exceptions for people who live in certain states).


Lord, won't you buy me a Mercedes Benz. Believe it or not, your is the first generation that feels entitled to earn more money than 75% of the workforce right out of college. The whole reason I don't go back for my Masters is because at my age, I'll likely never recover the investment. But heck, if it's not really my investment, why should I care?

[TCE]

than what do all those liberal ed "doctors" do, who will they teach. we already have high unemployment and you want to make it go higher?

With the current system, loans are artificially easy to get. If lending standards are raised, less people will be able to afford higher degrees. As a result, higher degrees won't be required for as many things. Since I am in the education field, I can tell you that this is what happened. Getting a doctorate became too easy to achieve. All one needed to do was take out a loan and take the required courses, and voila, a doctorate. This became a requirement and pretty soon, the education field was saturated. The "doctors" had to begin teaching at community colleges and pretty soon, anyone with a Masters degree is out of a job.

Is your argument that we need to keep lending standards artificially low to make sure unemployment stays low?

[TCE]

Lord, won't you buy me a Mercedes Benz. The whole reason I don't go back for my Masters is because at my age, I'll likely never recover the investment. But heck, if it's not really my investment, why should I care?

That is why I likely won't be getting my Masters even though I am over-qualified to get into a school. I'll never make the money back.

[angelatc]

As for your other points, for some, I think the victims are more so the kids ...., Yep, that's what America has involved into. A nation of victims.

[angelatc]

That is why I likely won't be getting my Masters even though I am over-qualified to get into a school. I'll never make the money back. One of the curses of getting a degree in a business class is actually understanding these things, right?

[TCE]

Yep, that's what America has involved into. A nation of victims.

In this case, yes. In today's times, try spending 12 years in a public school, hearing everyday how important it is to get a college degree and having your parents pushing you to get the degree. Society says only failures, rejects, and addicts don't get degrees and you say it costs too much so you're going to take the only job you can get, a minimum wage position in retail. Can't see many 18-year olds choosing that path.

[Anti Federalist]

http://www.ronpaulforums.com/showthread.php?305004-NYT-The-Master’s-as-the-New-Bachelor’s

[Gumba of Liberty]

Yep, that's what America has involved (I think you mean evolved) into. A nation of victims.

What was your tuition rate when you went to college? I would really like to know because from your posts and general attitude I do not think you understand how the college bubble formed. Hint hint, it was caused by the government and the banks, NOT by 18 year-old kids. By the way, allowing students to bankrupt their loans is not a bail out, it is the Constitutional method for the liquidation of debts. Are you in favor of bring back debtor prisons as the British had prior to the Revolution?

[Austrian Econ Disciple]

First time I've ever heard that bankruptcy is being bailed out. It's not my fault that decades of Government intervention into the educational field prior to my birth has increased tuition beyond levels where one could pay for them while going to college, and made accessibility so lax that it has become almost a requirement for many jobs. It's a system that is insidious. Ron Paul never personalizes and frankly I can't believe someone would attack people for making the best decision given their limited options. I have all the sympathy in the world for my generation being brutalized by such a destructive system. I am sure when you went to school you could afford to pay your tuition through work (and if not it wasn't that long ago you could), and a college degree actually meant something. It wasn't my generation that originated Government intervention into education.

For those astute enough not to want to go into debt to go to school, either you have to get a scholarship (which aren't exactly too commonplace), or join the military. It's a horrid system where the banks, MIC, and Government work to either make you a debt-slave, or a pawn in their global hegemonic system. If you notice it's my generation whom has the most support and admiration for Dr. Paul. Perhaps you shouldn't blame those trying to fix the situation.

[Ricky201]

Yep, that's what America has involved into. A nation of victims.

As someone that has paid for their college tuition in full let me tell you that it's hard for me to not get pissed off at this. Though American's seem to be prone to martyrdom I wouldn't throw many college students under the bus. They're doing what society expects them to do. I don't find it that gratifying to tell a bunch of 20-year-olds that "well serves you right" as if someone has been telling them that this is a scam there whole lives, because in reality who has!? Some of us had the luxury of running into the message of liberty before making such grave mistakes, but for the majority of students they're not so lucky.

Honestly, I get sick of people saying "well serves you right" to people that bought homes they couldn't afford (because they didn't really understand what a scam an ARM is) and then they go into foreclosure leaving there credit in shambles. Did they make a mistake? Of course, but many people that I have worked with just wanted their family to have a nice home and a backyard for their kids to play in. Good intentions have unintended consequences, but everyone wants to ride on their goddamn high horse just to tell everyone else around them that they deserved having their hopes stomped on.

Let the bubble burst already and allow the bankruptcy's to take place for god sake. It's been a long time coming.

[endwellmom4RON]

I'm not sure how I feel about this proposal. I understand and agree with many of the comments suggesting that college has been pushed on students by everyone (parents, teachers, society) since they were old enough to talk; however I think many of these students would be able to pay back these loans if they made better decisions with their finances.

For example I incurred $135,000 in debt to go to law school. I earn $70,000 a year and my student loan payments are $800 per month (this is more than my mortgage payment by the way). I also have 6 children (from 1-22 years old) that need diapers, braces, tuition, etc. What I don't have is a cell phone, a fancy car, a pricey house or new clothes. It has been almost ten years that I have been paying these loans and I still owe $110,000. Am I frustrated and disappointed that I made such a poor investment? Yes, but I am able to pay the loan, I am just not able to live the lifestyle of a lawyer.

In contrast, another person I work with has no children, borrowed more than I did to go to a law school that wasn't as good as the one I went to and she doesn't pay her loans because she says she can't afford it. She does however afford many things I consider luxuries.

If this proposal were to become law I am certain that she would file for bankruptcy and be able to walk away from her debt whereas I wouldn't. I know that life isn't fair but this in some ways really ticks me off.

[Rael]

So I guess we should also not allow bankruptcy to discharge taxes since the "taxpayer gets screwed". :rolleyes:

[frodus24]

Federal Student Loan debt (Stafford Sub/UnSub and PLUS) will most likely pass 1 TRILLION by the end of the year. There is a student loan bubble that possibly could burst that some collective personalities are speaking about.

After the 2008 collapse, private student loans changed their "lending parameters" for lending and it became more difficult to obtain a student loan.

I personally see kids graduate with 40-60,000 in student loan debt. It's insane!

[Anti Federalist]

Before the banksters, globalists, politicians and "free traders" de-industrialized us, deliberately, you could make a decent middle class living without having to go into a quarter of a million dollars worth of debt for an increasingly worthless degree.

[Bordillo]

If they do this they should just not grandfather in past student loans, otherwise there are going to be a shit load of bankruptcy claims

[Sean]

You should be able to discharge all debt in bankruptcy. The threat of bankruptcy itself makes loaning money based on sound practices. If all student loans were subject to bankruptcy there would be stricter lending standards and also the cost of education would probably also decreased. I don't see how the government should even be involved in loaning money.

[bobbyw24]

In contrast, another person I work with has no children, borrowed more than I did to go to a law school that wasn't as good as the one I went to and she doesn't pay her loans because she says she can't afford it. She does however afford many things I consider luxuries.
If this proposal were to become law I am certain that she would file for bankruptcy and be able to walk away from her debt whereas I wouldn't. I know that life isn't fair but this in some ways really ticks me off.

Hmm--might not be a good move to ignore loans in some states under certain cirumstances

Lawyer Disbarred for Defaulting on Student Loans

A Texas appeals court has upheld the disbarment of a lawyer for defaulting on student loans: Texas appeals court revokes attorney's license for failing to repay student loan, other debts.

This is not an isolated decision. Some years back a Minnesota lawyer was disbarred for defaulting on student loans. In that case, the lawyer was living the high-life while stiffing the student loan administration.

In the Texas case the court's ruling stems from several chances given to the attorney. He was warned and given a provisional license on condition of paying down debts. He was given at least one extension. Ultimately, as reported by Law.com, the judges found:

that because Santulli, a Houston solo practitioner, did not adhere to a previous order requiring him to pay his debts, he lacked the trustworthiness necessary to represent clients.

http://www.smallfirmsuccess.org/ethics/small-firm-ethics-issues/lawyer-disbarred-for-defaulting-on-student-loans

[bobbyw24]

If they do this they should just not grandfather in past student loans, otherwise there are going to be a shit load of bankruptcy claims

Yep-it would be the Bankruptcy Attorneys Welfare Act

[Brooklyn Red Leg]

First time I've ever heard that bankruptcy is being bailed out. It's not my fault that decades of Government intervention into the educational field prior to my birth has increased tuition beyond levels where one could pay for them while going to college, and made accessibility so lax that it has become almost a requirement for many jobs. It's a system that is insidious.

Thank you. I notice a few people in this thread are of the stripe that would climb to the top of the ladder to get to the next level and then kick the ladder out from under the rest of us. Its apparently all well and good to deplore 'stupid college students who racked up loan debt' when you entered the marketplace before the mass distortion. Its the type of statements that makes people truly think Ron Paul supporters are heartless fucks and would let their grandmother die in front of them cause 'hey, survival of the fittest'. Its no different than the other Statist slime who excuse the system for being evil.

[bobbyw24]

thank you. I notice a few people in this thread are of the stripe that would climb to the top of the ladder to get to the next level and then kick the ladder out from under the rest of us. Its apparently all well and good to deplore 'stupid college students who racked up loan debt' when you entered the marketplace before the mass distortion. Its the type of statements that makes people truly think ron paul supporters are heartless fucks and would let their grandmother die in front of them cause 'hey, survival of the fittest'. Its no different than the other statist slime who excuse the system for being evil.

right--people here need to listen to that Ron Paul guy who always says if you are failing financially, go bankrupt

[minuteman76]

My assessment is that this is quickly becoming a generational conflict. As several posters have pointed out, Millenials in particular were encouraged/pushed their entire life to go to college. In fact, it was pitched as the only way to success. When I was seventeen and deciding to go to college, I relied on the advice of my parents and teachers in making important decisions - including how to finance that education. Now, I see the folly in the "everyone should have a bachelor's degree" philosophy. I got through my undergraduate studies through a combination of working and loans, but I tell anyone I know who is thinking of going to college, not to do it.

I think blaming 17/18 year old children for making life-altering decisions based on the advice of their parents is a tad bit unfair. Also, making these loans dischargable would help cut back the malinvestment on the front end and prevent the bubble from getting any bigger. I don't think anyone is looking for a handout, but I can tell you that I feel a little cheated when baby boomers are starting to get their social security checks, while I live under the threat of wage garnishment. How about letting me opt out of that system and I'll be happy to use that extra income to pay down my student loans?

[bobbyw24]

The next massive debt bubble to crush the economy – 10 charts examining the upcoming implosion of the student loan market. $1 trillion in student loans and defaults sharply increasing.

In the land of predatory bubbles it looks like higher education is now fully caught up in the credit market implosion. In the same debt produced vein as housing, college used to be a relatively cheap bet with decent results in the long-term. Even if you went to public universities and picked up a degree in a field with low job prospects, at least you didn’t have the cloud of student loans hanging over your head when you graduated. Today it is a very different ballgame and the mythology behind college is being used to lure people into institutions that are little more than paper mill factories. Even quality institutions are having a harder time justifying tuition and fees that cost upwards of $50,000 per year (or the median household income of an American family). Can the next major crisis come from the student loan market? There is currently close to $1 trillion in student loan debt outstanding. During this crisis most debt sectors contracted except for student loans. Let us examine 10 charts to see why a bubble in student loan debt is about to implode.

http://www.mybudget360.com/wp-content/uploads/2011/08/student-loan-balance-by-state.png


http://www.mybudget360.com/student-loan-bubble-next-massive-debt-bubble-to-crush-the-economy-student-debt-higher-edudation-bubble-bust-crash-credit-markets/

[bobbyw24]

Troubling long-term trends have gotten even worse as schools, government, and families cut back and student loans skyrocket.

This week’s credit check: Average student debt can spiral up to $100,000 with interest and late payments. Room and board charges at colleges have doubled in actual dollars since 1982.

It’s no great secret that student loan debt is exploding. The total amount is set to top $1 trillion, more than total credit card debt. But accompanying that post-recession surge in student debt (as all other consumer debt is being paid down) is a surge in delinquencies. As The Wall Street Journal reports, “In the second quarter, 11.2% of student loans were more than 90 days past due and the rate was steadily rising, according to data from the Federal Reserve Bank of New York. Only credit cards had a higher rate of delinquency — 12.2% — but those numbers have been on a steady decline for the past four quarters.”

The rise in student borrowing is a longtime trend, but things have clearly gotten worse in the recession. A lot of it is because of decisions schools are making. In a recent Atlantic Monthly article, Andrew Hacker and Claudia Dreifus explain that higher tuition — paid for by student loans — “keeps most colleges going.” Private colleges Loyola University and Franklin Pierce see 77 and 85 percent of students enroll with loans, respectively. Historically black colleges, which tend to have lower endowments and a poorer population, are closer to 90 percent. Part of this, they report, is not because the actual education is more costly, but because “room and board charges have doubled in actual dollars since 1982 to enhance campus life.” That’s a long-term trend. But part of it is unique to the recession: As endowments tanked, priorities changed. They note:

http://www.newdeal20.org/2011/08/24/recession-has-lit-the-fuse-on-explosive-student-debt-56271/