Should student loans be dischargeable in bankruptcy court?

[Fr3shjive]

As you know student debt has been in the news a lot lately because of all the OWS protests. While I certainly don't think that you're entitled to a free education I also don't think that you should be saddled with debt for the rest of your life because of poor choices you made in your teen and early 20s. Every other form of debt can be discharged in bankruptcy court except for student debt, why shouldn't that be included?

What do you think RPFs: should student debt be eligible to be discharged in BK court?

[satchelmcqueen]

thats a toughy!

on one hand i think a person should pay any and all debts they owe just because its being responsible. however hardships do occur and there should be a way to get help in some form or another, maybe charity based.

on the other hand, wall street got bailed out on massive waste and fraud type debt so if its good enough for them, then student loans based on that should be up for bankruptcy court.

[Danke]

Jubilee, the Christian thing to do.

[Sematary]

As you know student debt has been in the news a lot lately because of all the OWS protests. While certainly dont think that you're entitled to a free education I also dont think that you shoud be saddled with debt for the rest of your life because of poor choices you made in your teen and early 20s. Every other form of debt can be discharged in bankruptcy court except for student debt, why shouldn't that be included?

What do you think RPFs, do you think student debt should be eligible to be discharged in BK court?

They could have done what my two oldest children did - Join the military and EARN their education!

[CMoore]

Of course they should be dischargeable. The whole idea of filing for bankruptcy protection is to get a fresh start. There are so many exceptions to discharge today that the fresh start is moribund. In 2005 the bankruptcy laws underwent major changes making it harder for everyone to file. It could be argued that the unavailability of bankruptcy relief is one of the reasons we are so choked on debt today. Even Ron Paul says we must liquidate debt. Well that is what bankruptcy does. It liquidates debt. With the stroke of a gavel, debt just disappears. I have heard it speculated that the changes in the laws in 2005 precipitated the housing crash. Of course that bubble would have popped eventually anyway, but when people could not discharge their credit card debts in a bankruptcy, they fell behind in their mortgages trying to keep up the credit card payments.

[cindy25]

student loans should be the same as any other debt, same for IRS and state/local govt debt

[jkr]

yes


PLEASE!

[jkr]

They could have done what my two oldest children did - Join the military and EARN their education!

sorry
selling my soul to go to school isn't my way

i think killing is wrong

[Keith and stuff]

As you know student debt has been in the news a lot lately because of all the OWS protests. While certainly dont think that you're entitled to a free education I also dont think that you shoud be saddled with debt for the rest of your life because of poor choices you made in your teen and early 20s. Every other form of debt can be discharged in bankruptcy court except for student debt, why shouldn't that be included?

What do you think RPFs, do you think student debt should be eligible to be discharged in BK court?

That rates should be increase 2-4% because they are way to low. Make the folks pay way more. They are totally screwing everyone over in the US.

For example, the NH government already paid the least into the NH government colleges this year. However, this year, NH cut government spending in government colleges by at least 45% this year, more than twice as much as any other state. Of course, the government shouldn't pay a penny in your college education. Oh, and I recommend you don't waste your time going to college, either.

[Keith and stuff]

Bailouts are always a 100% wrong. The vast majority of folks (somewhere around 80%) in the US are Christian. Of course, it goes against Christianity to not pay 100% of your debt off. But of course, government should completely get out of the student loan biz ASAP.

[Danke]

Bailouts are always a 100% wrong. The vast majority of folks (somewhere around 80%) in the US are Christian. Of course, it goes against Christianity to not pay 100% of your debt off. But of course, government should completely get out of the student loan biz ASAP.

lol, you are not a Christian are you?

[specsaregood]

Bailouts are always a 100% wrong. The vast majority of folks (somewhere around 80%) in the US are Christian. Of course, it goes against Christianity to not pay 100% of your debt off. But of course, government should completely get out of the student loan biz ASAP.

Who owns the debt? Just wondering.

[BattleFlag1776]

Who owns the debt? Just wondering.

Bingo! Since Uncle Sam provided me with that unsecured loan, he will happily allow me to put that obscure degree I have to good use in one of his military branches in order to settle that debt! My not being able to get the job I want, where I want to live, is not the same as my not being able to find a job at all.

As Thompson said: Buy the ticket, take the ride.

[specsaregood]

Bingo! Since Uncle Sam provided me with that unsecured loan,

where did the dirty uncle get the money to make the loan?

[Danke]

where did the dirty uncle get the money to make the loan?

It wasn't money. Just credit out of thin air, created by your signature. Lovely system we have.

[specsaregood]

It wasn't money. Just credit out of thin air, created by your signature. Lovely system we have.

thats what i thought. well since it was all monopoly money then might as well let them discharge it.

[Blueskies]

Yes.

Bankruptcy is an integral part to the free market. People forget this.

Lenders need to know that there's a risk they won't be repaid. Then, they will be more cautious with who they lend to.

Then you won't have a bunch of 22 year olds with $100k in debt and a sociology degree--because they never would've gotten lent the money in the first place.

[AceNZ]

It should definitely be possible for borrowers to discharge student loans through bankruptcy, just as with any other form of debt.

One of many problems that the current system has is that it removes the need for lenders to adequately qualify borrowers -- which was, of course, the whole idea in the first place. This encouraged more people to borrow. The idea was that "all education is good," and that somehow just because people had a degree, they would be able to quickly pay back their debt, no matter what type of degree or how much debt; it's economic nonsense.

By allowing student loans to be discharged through bankruptcy, and by not providing government guarantees, lenders would be forced to look at traditional borrower qualifications, which would be a Good Thing all around.

[VBRonPaulFan]

Yes.

Bankruptcy is an integral part to the free market. People forget this.

Lenders need to know that there's a risk they won't be repaid. Then, they will be more cautious with who they lend to.

Then you won't have a bunch of 22 year olds with $100k in debt and a sociology degree--because they never would've gotten lent the money in the first place.

A++ post, would read again.

The FedGov backing every jackass that wanted to go to school at 'the best possible school' (read: most expensive) for a $#@!ty liberal arts degree in historical art, womans literature, etc, definitely helped to create this problem. When a lending company can make loans with 100% of its capital and all of it will be insured by some outside party - of course they are going to be extremely reckless with their lending.

[jack555]

They could have done what my two oldest children did - Join the military and EARN their education!

Yep killing brown people for free education is the new American way! We should all give it a try!

[AuH20]

I say let them sit in the crap that they voted for. They love education subsidized so let them experience firsthand the product of their own hand. Maybe they'll even learn something about the business cycle and how manipulative the government and their special interest cronies are.

[Kludge]

Remove gov't protections under bankruptcy altogether. Individual A can't pay Individual B, let Individual B decide how to handle it, including going to court for breach of contract. Corporation can't pay Bank? Let Bank call the loan up to 100% the value, and take the entirety of Corporation's assets when they can't raise the money for it, shareholders be damned. Loans/bills aren't some type of soft agreement where you agree to pay what you can, and they shouldn't be treated as such with gov't bankruptcy courts. Without the moral hazard created by bankruptcy laws, you can bet far fewer people will take loans out. Consumers constantly complain about banks, but in many cases, they have the bulk of unfair regulations in consumers' favor. In a free market, banks would be able to call loans in any amount for any reason if their contract permits. There wouldn't be a "bankruptcy protection" from a bank calling a corporation's or individual's loans. Banks simply aren't allowed to react to credit score changes as-is, and that's a big problem.

[Becker]

No, ideally I would prefer no debt to be dischargeable, and a person not allowed to have too much debts, no debt stacking...etc.

But student debts really shouldn't be dischargeable, because there's nothing to "take back".

I suppose a person can surrender his claim to an education, but the time, resources have been spent, to say he therefore walks away without paying for what he took, (however unreasonably overpriced) is an insult to people who chose to be responsible.

[EvilEngineer]

Sure, the debt can be liquidated.

They want their college debt erased, then in trade they need to lose their college degree.

If you are not going to pay the institution for you attended for your degree, they have no reason to honor your degree.

Or... just don't go into debt for college in the first place.

[Becker]

Sure, the debt can be liquidated.

They want their college debt erased, then in trade they need to lose their college degree.

If you are not going to pay the institution for you attended for your degree, they have no reason to honor your degree.

Or... just don't go into debt for college in the first place.

strange how nobody complains "they let me lend money, how dare they not turn me down when I wanted to go to college!"

[heavenlyboy34]

They could have done what my two oldest children did - Join the military and EARN their education!

That's not earned money. It's a transfer of wealth/bribery for soldier loyalty program. (every dollar the MIC spends comes from you and I)

[heavenlyboy34]

I say let them sit in the crap that they voted for. They love education subsidized so let them experience firsthand the product of their own hand. Maybe they'll even learn something about the business cycle and how manipulative the government and their special interest cronies are.

It was a scam to begin with, unlike a rational free market decision. I know if the market signals had been in place when I went a decade ago I would've skipped college altogether or found a different way of paying for it. It's possible that some people knew exactly what they were getting into, but the majority could not predict the inevitable crash. (it is not reasonable to expect an 18 year old to understand the business cycle and how markets work) The student loan business reminds me more of usury/predatory lending than a legitimate loan. You don't even have to put down any collateral for the loan.

[heavenlyboy34]

In regards to the OP, college debt should be dischargeable like other debt. (This would give lenders incentive to loan responsibly as well)

[Becker]

In regards to the OP, college debt should be dischargeable like other debt. (This would give lenders incentive to loan responsibly as well)

every other debt, takes back the collateral, am I wrong?

[Fr3shjive]

In regards to the OP, college debt should be dischargeable like other debt. (This would give lenders incentive to loan responsibly as well)

I agree. I just wanted to pose the question to RPFs. The tightening of lending standards would mean less money, which means tuition costs would fall too. It doesn't mean that people wouldn't be able to go to school they just wouldn't be able to finance as much as they want under the guise of going to school. Unfortunately they may need to go to a community college and a state school instead of some 50k a year liberal arts school.