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I'm not sure what forum would be best to post this... but here goes...
Judges Wouldn’t Consider Forgiving Crippling Student Loans—Until Now
For decades, college debt was immune from the bankruptcy process. Judges are actively seeking ways help to debtors
The article begins (just a teaser - I don't want to accidentally violate C-D copyright rules):
Quote:
For decades, bankruptcy judges refused to consider reducing student loans. That is now changing, and some judges are throwing lifelines to people struggling to repay their debt.
In interviews with the Wall Street Journal, more than 50 current and former bankruptcy judges, frustrated at seeing borrowers leave federal courtrooms with six-figure debts, say they or their colleagues are more open to chipping away at the decades-old guidelines that determine how such debt is treated.
“If the law’s not going to be improved by Congress, we have to help these young people who are drowning in student loan debt,” said U.S. Bankruptcy Court Judge John Waites in South Carolina.
The article goes on to give many instances of flexibility on the part of bankruptcy judges and various banks.
Good. Originally it was far too easy to use bankruptcy to get rid of student loan debt. That needed to be changed, but in doing so we swung too far in the other direction. We need to move more to the middle, and allow the debt to be discharged after sustained and honest efforts on the part of the student to pay the loans off have clearly shown that this just isn’t going to be realistically feasible.
Ideally, 18 year olds would never be allowed to take on so much debt in the first place. There should be a limit on how much debt people can take on based on field of study, etc.
They also need to slow down the "giving" of student loans.
I used to pay as you go, but then it got more expense than I could pay. But I was back to finish a degree. Living well on my own, no parental help, So they herded me into the loan lines.
Now I wasn't stupid by then either, but....
Need a loan for tuition? Here's money
Need a loan for books? Here's money
Need a loan for housing? Here's money
Need a loan for transportation? Here's money
Need a loan to cover living expenses? Here's money
By the end of just one semester, after grants, I owed about $12k at a 2 yr school!! The money was "just there ". When I saw the total, and due to medical conditions, I withdrew the next semester.
They say the average student loan amount is $24k, for a 4 year university, in NOT buying it. I think it's got to be more. It would have cost me more that $24k to do the whole two year bit.
Thsts,where the bleeding needs to start stopping. Making it so easy to just borrow what is needed.
Then the repayment needs to be structured so they can afford it. Took me 5-6 years to pay off that money.
If the degree tgey get only pays x amount per year and the cost of living is y to get x, then repayment should be based on z, the amount affordable.
They DO have income based repayment, but that too, can last for years.
If I go for this degree, and the average pay is only that, tgen my repayment total should only be z. Make 're colleges responsible for the costs associated with earning a certain degree. If let's say lpn ( licenced practical nurse) can only expect to earn $15-20 , then their degree should only cost this amount of dollars total, not the same amount a $100k/yr STEM degree also COSTS. If that makes any sense. make the cost of the degree fit it's expected payout.
The problem is that then colleges will drop less paying curricula in for of the higher paying ones, and thered be a job shortage in the lower paying degrees.
Thats,one reason why N.Y. state has,made it "free" to go to college. If you can jump through those hoops too.
The only way students are going to get cheap (low interest loans) is if the debt is non dischargable. Non secure loans like credit cards charge higher interest and also limit credit based on income and credit score. Who would give a loan to a college student with no income or credit without it being secured by the student’s future income. If judges open the door to discharging student loans it would be like opening pandora’s box.
Student loans are part of the reason college tuition has gone up tremendously over the last 30 years. If everyone can go to college then tuition will rise based on the higher demand. If student loans in the future were eliminated completely you’d have a lot less people wasting their money when their line of work doesn’t necessitate a degree.
I think the availability of loans needs to decrease and cost will have to come down as the available credit does. Additionally I don’t think the loan proceeds going to the student is a good option as it can then be spent on anything. It’s a double edge though as most teenagers wouldn’t be able to get loans based on their own creditworthiness and/or certainly not at the interest rates comparable to what’s there in no discharge form
Ideally, 18 year olds would never be allowed to take on so much debt in the first place. There should be a limit on how much debt people can take on based on field of study, etc.
exactly. the abundance of easy borrowed money has driven up the cost of education and saddled so many with crippling debt.
Maybe if people could file for bankruptcy on their student loans, then the loans would actually have risk factored into the rate? You know...things like where you went to school...what major you choose, or your potential career earnings...
It’s almost like the government interfering in student loans distorted the risk, leads to skyrocketing costs, and economic suffering.
I can't get past the pay-wall on the article. If this is the same thing that I heard about on the radio, this isn't what it seems. This isn't about a kid from Dallas going to UT Austin and bankrupting to fly away unencumbered.
It referred to someone that went to Brownsville Barber College, or South Harmon Institute of Trucking, or a for-profit type school.
But its a worthwhile discussion as to the relative value and cost of an education. Maybe a certain limit to the amount a student could bankrupt, or a modification as to when/why they could bankrupt. IE, if the state school costs $45K for a four year degree in sociology, then that amount might be non-bankruptable, but if a bank wants to take the risk on loaning someone $100K to go to a private school, so be it, but $55K is bankruptable.
Or, the institution itself gets graded on whether or not the school is loan-worthy. So, a school that charges Beucoup Bucks for basketweaving degrees, and doesn't do a good job with getting kids done in four years (making sure the demographics are appropriate for that, such as a residential college with full time students,) anyone that lends on their education is bankruptable.
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