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Unpayable debts are unpayable, and unsustainable bubbles will pop. It's as simple as that. You can scream at the debtors all you want to repay the unrepayable, but the smarter response would be to manage the bubble's explosion and the fallout that comes along.
There simply aren't enough jobs paying enough money to enough new graduates for those grads to pay anywhere near the student loan debt that is owned to the banks and to Sallie Mae. It's as simple as that.
Now - we have to figure out how to deal with this fact. Option One is to yell at the indebted kids to pay their debts, and keep yelling until your voice goes out. This option will fail. But feel free to keep doing it, if you don't need your voice for other purposes.
Otherwise, it's time to start coming up with more options than Option One.
All private companies and businesses are cutting jobs, scaling back and then cutting more. Its not one field, its all across the board. Then, states are cutting back their employees. Next, the federal government is pressed to cut jobs. But if you do that from wall to wall, there is no place left that hires young people. Every way to employment has been blocked.
I agree with you mainly. But, the reasons that businesses are skiddish is political. Road blocks have been presented by Democrats in Congress..Period.
I've had enough of this argument. But, it's true. And screw minnows that block entire cities from prospering.
Unpayable debts are unpayable, and unsustainable bubbles will pop. It's as simple as that. You can scream at the debtors all you want to repay the unrepayable, but the smarter response would be to manage the bubble's explosion and the fallout that comes along.
There simply aren't enough jobs paying enough money to enough new graduates for those grads to pay anywhere near the student loan debt that is owned to the banks and to Sallie Mae. It's as simple as that.
Now - we have to figure out how to deal with this fact. Option One is to yell at the indebted kids to pay their debts, and keep yelling until your voice goes out. This option will fail. But feel free to keep doing it, if you don't need your voice for other purposes.
Otherwise, it's time to start coming up with more options than Option One.
Nope, they have to pay it off. What? Let them get credit cards too, and never pay off their balances. Let them purchase a home and then forgive their mortgage? You are unhinged.
But I would support the right to bankruptcy. It seems to me that a college degree is like the start-up cost of any new business. It's a gamble that it will pay off in increased income down the road. But sometimes the economy goes bad, or the plan isn't very good, etc. So you may have to eat the bad credit rating and file for bankruptcy.
Exclusion from bankruptcy discharge is a quid-pro-quo for low interest rates and no "blacklisted" majors. No bank in their right mind would give an unsecured dischargeable $50-$100k loan to a highschool senior seeking a degree in philosophy or hungarian poetry. But if that's what they want to do, we let them and we let them borrow the money at a shockingly low rate.
Universally allowing bankruptcy discharge of student loans would result in a substantially higher risk profile for the lenders and/or treasury. This higher risk would have to be offset by either higher interest rates or taxpayers absorbing the losses. So the responsible (tax payers and those who actually pay their loans) end up further subsidizing the poor decisions of others.
"A job" is not going to service a $100K debt at 6% interest. Certainly not after living expenses. At best, the money would merely slow the rate at which they fell deeper into the debt hole.
And the collateral effects would be comically-bad for the rest of the economy outside of the student loan cartel. All their money would be (and often is) going into debt service. That means younger folks aren't buying houses, funding their retirement plans, getting married, having kids, buying consumer goods, etc.
I think you can see why a lot of debtors are not going to go along with the notion of lifetime servitude to loan companies. When the options are unreasonable, the reception won't be very enthusiastic. And gauging by the ever-rising default rates, that appears to be happening at the moment.
So - that brings us back to the question of how to actually manage this trend, as opposed to screaming at individual debtors within the trend. Which, as I have pointed out, doesn't actually work as a management strategy.
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