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These loans should not be dischargeable. However, the student should be given a projected repayment schedule, showing the months of paymenets over the full 25 years, and the monthly and annually summed amounts, before signing for the loans.
It amazes me that students smart enough to get into great schools are shocked that a $150k student loan means payments mirroring a typical mortgage payment.
If student loans were dischargeable, they would no longer be called loans. Students would simply graduate and promptly file bankruptcy. Ultimately, the money would be thought of as a gift by students and their families.
Other than a mortgage, student loans is the biggest debt anyone will ever have. We don't go into debt with the explicit intention of never being accountable for the money we borrow. It's a responsibility we have in exchange for the education we receive.
If it was as easy as filing for bankruptcy, what would stop anyone from graduating from college after borrowing an enormous amount of money, buying a car, then a nice house, and promptly filing? What kind of society would we have?
But what makes a student loan so special? You can just go out "buy" a car, pay on it a year or whatever(whatever the court says would be the minimum or so), declare bankruptcy and keep the car. Or live in house you "bought" with nothing down, and walk when they start calling about paying the mortgage, the bank won't get all of its investment back.
Either all debt is dischargeable or none of it is, whether its a house, car, business or student loan whatever. That's what bankruptcy is. I guess we really don't have real bankruptcy anymore.
Its just a loan that is riskier to the bank since its unsecured, or in the case of student loans, the federal government. If the government cannot "lose" money maybe the government shouldn't be in the loan "business". I would have been fine had they not taken that loan from that bank. My family has done business with that bank for over a hundred years, they wouldn't have messed up my credit just because I was behind. They would have worked with me. UNLIKE the DOE. The people working there don't even know the rules.
And no, most students wouldn't declare bankruptcy. Most didn't before they changed the law. But it is far more tempting if the costs continue to skyrocket. That is the real issue with student loans. There is no reason any school costs as much as it does. And no 17 or 18 year old should be making a decision on spending that kind of money. Every school on the face of the planet, not just the for profit ones, are shining way too much sunshine on their worth.
Actually, Rich, since the laws were revamped, you are wrong, discharges are not as common now as revised payment plans (different chapters of bankruptcy). And 1 year of school loans equals a full car loan; quite frankly, in the past deadbeat grads threatened the existence of future student loans. That is why "no discharge" is the prudent course of action. Todays students owe honoring the debt to the next generation of students, and the next one to the one that follows, ad infinim.
To be perfectly clear the federal government has no business loaning people money!!!!!! How many people do they need to ruin financially before they stop!!!!
Its a bad deal for taxpayers, for the students, the colleges and universities, everybody!
Had I known what I was getting into I would have found a different way to pay for school. Period. I don't like screwing other taxpayers, but here we are. Of course I didn't plan on the bank being muscled in on by the government. When I got my loans it wasn't part of the deal.
I will NEVER borrow from the federal government again!!!!!!
And by the way, the default rate was never higher for student loans then any other kind of loan. The vast majority would never think of defaulting. If there are people abusing the system they need to go after those people. They don't need to put people who got caught in true financial problems to not be able to discharge debt. Debt is debt.
Actually, Rich, since the laws were revamped, you are wrong, discharges are not as common now as revised payment plans (different chapters of bankruptcy). And 1 year of school loans equals a full car loan; quite frankly, in the past deadbeat grads threatened the existence of future student loans. That is why "no discharge" is the prudent course of action. Todays students owe honoring the debt to the next generation of students, and the next one to the one that follows, ad infinim.
The issue here is private loans which do not have the government protections of Direct Dept. of Ed loans. Less than 1% of private student loans were brought up for discharge by bankruptcy before the law was changed in 2005 to include private loans that have none of the government protections of direct loans in the no discharge policy. It's bank propaganda that every other student just wants to graduate, and declare bankruptcy to get out of their loans, in truth most graduates understand bankruptcy has serious ramifications and fully intend to pay their loans.
Whenever I ask someone with a loan if they would simply declare bankruptcy to end their student loan every single one says "of course not," yet if you ask people do they think others would they say "of course." The truth is most wouldn't declare bankruptcy, it would be for very serious special circumstances. Without bankruptcy as a protection there is no incentive to be more careful in giving loans, or working with borrowers who have trouble, it's much easier to garnish their wages and tack on never ending fees than to create a reasonable payment plan, payoff amount, or lower interest to reasonable rates.
Since our economy has been financialized there are only two things guaranteed – Debt and Taxes. These days every American Citizen has a duty to be in debt and student loans and mortgages are very important ways of doing this duty.
I propose that, as apparently has happened, the entire system of educational finance be done by the Federal Government. They would issue the loans with interest at a small fraction over the Federal Discount Rate and collect by placing a surcharge on the student’s income tax for the rest of their lives. Thus the government assumes the risk that the student will not have a means of payment after graduation for whatever reason. On the positive side any student that becomes very successful would have to pay more. I believe this to be a more reasonable method as the monetary value of the education is not very much to a graduate bussing tables at a fast food joint so they do not pay very much. Their payments might not even be a much as they borrowed. On the other hand the student that gets a job a major bank because of his finance major the value of the education to this graduate is quite high. Because of his high income and a, hopefully, progressive tax rate he would be paying in proportion to the actual value of his education.
This system would balance actual payments with actual value. There would be little additional stress on the low income graduate and the high income graduate can afford the increased taxes. This would also eliminate the necessity of bankruptcy for all the borrowers.
Anecdote: I paid for my college education (1998-1972) with family generosity, part time work and the GI Bill. You do not want to know how much the GI Bill cost me and others as I earned it in ‘Nam.
But what makes a student loan so special? You can just go out "buy" a car, pay on it a year or whatever(whatever the court says would be the minimum or so), declare bankruptcy and keep the car. Or live in house you "bought" with nothing down, and walk when they start calling about paying the mortgage, the bank won't get all of its investment back.
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And no, most students wouldn't declare bankruptcy. Most didn't before they changed the law. But it is far more tempting if the costs continue to skyrocket. That is the real issue with student loans. There is no reason any school costs as much as it does. And no 17 or 18 year old should be making a decision on spending that kind of money. Every school on the face of the planet, not just the for profit ones, are shining way too much sunshine on their worth.
First, a student loan is an investment in the future earning power of the individual. IMO. Because of it, you are put in a higher income bracket. Because of it, you have greater earning power.
That's probably not their reasoning, but it makes perfect sense.
Secondly, no one holds a gun to the head of a 17 or 18 year old making that kind of decision besides him and his parents. There is no rule that everyone who graduates from high school go directly to college and accumulate debt they will take years to pay off. It's a choice people make. You borrow, you pay back.
Quote:
Originally Posted by richb
To be perfectly clear the federal government has no business loaning people money!!!!!! How many people do they need to ruin financially before they stop!!!!
Its a bad deal for taxpayers, for the students, the colleges and universities, everybody!
It isn't the federal government that ruins people financially. The federal government doesn't push that money in each student's face and require them to go to college right out of high school. If they can't afford it, they shouldn't go until they can.
Anecdote: I paid for my college education (1998-1972) with family generosity, part time work and the GI Bill. You do not want to know how much the GI Bill cost me and others as I earned it in ‘Nam.
Thank you, Greg, for your service to our country.
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