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If someone fails their degree and doesn’t have the earnings boost, and all the cost, or never landed in their feild, how long is sufficient to punish someone? It could easily be reviewed by a financial expert or bankruptcy attorney to determine when people need relief just like they do in other situations.
Actions have consequences. By cancelling their debt, you deny them the dignity of working their way out of the hole they, themselves, dug.
Student loan bankruptcy being (mostly) barred is a wonderful thing. I knew people long ago whose plan, at 18 years of age, was to borrow as much as possible in Federally Insured Student Loans throughout a lengthy college tenure with the intent of filing for bankruptcy protection upon graduation.
I know one in particular who, after graduation, took wonderful trip to Nepal, and wrote back to Sallie Mae that he had decided to become a Tibetan Buddhist Monk and live a life of poverty in Nepal with no income. With no income for the rest of his life, he wrote, he'd not be able to pay a penny of his student loans. But he did profuse thank them for the wonderful college experience.
It is that type of moral hazard we must guard against.
Oh - that Buddhist Monk? He recently retired from Goldman Sachs.
Fraud is fraud. It’s why bankruptcy is usually reviewed by a financial expert and/or judge.
There’s morale hazard in every type of bankruptcy. The same types of thing happen with credit cards, cars, people owning homes they shouldn’t, and business loans.
Systems can be designed to punish the bad actors while also protecting those that may actually need and deserve bankruptcy protection on their student loans.
Actions have consequences. By cancelling their debt, you deny them the dignity of working their way out of the hole they, themselves, dug.
Do you feel the same for business owners that take a risk and fail?
I’d also ask if those consequences should extend to the lender? Their lack of decision process and review of risk by blanket lending could be improved if the risk hadn’t been transferred off the schools to start with and then off the government as well.
Last edited by Thatsright19; 03-08-2022 at 07:56 AM..
Faced with losing the House and Senate in the next election, he will do something to buy the votes of those deep in student debt.
My son said he voted for Biden because he thought he would forgive student loan debt (not that he's in deep debt). Only a kid would fall for that, and I think my son learned his lesson. But plenty of kids will fall for it every time.
The cherry on top was you helping or paying YOUR kids off. You were grumbling about people wanting handouts and kids not wanting responsibility or something?
And as far as bankruptcy, I’m not going to get too far into it because there was another student loan thread about 10 threads down past the 8 doomsday threads….but student loan bankruptcy being (mostly) barred is another reason the system is toxic and broken.
People declare bankruptcy every day with credit cards. Cards they racked up with clothes, vacations, Entertainment, experiences, ect that can never be taken from them. People fail businesses and are relieved. Why? Because sometimes a fresh start is reasonably warranted. Someone failing to launch in their career, how long should they be financially hamstrung and punished? 10 years? 20? 40? Obviously this would be carefully limited and be monitored by a bankruptcy judge, but the system we have now distorts risk, cost, ect and is an abomination.
I'm torn. On the one hand, it doesn't seem to make sense that you can discharge credit card, medical, personal loan, utility, and other debt via bankruptcy but not student loan debt. On the other hand, the average student loan debt is significantly higher than the average debt of what is generally dischargeable via bankruptcy. We're talking about almost $40k in the average student loan debt (even the median student loan debt is close to $20k) vs. $2.5k for average medical debt vs. $6.3k for average credit card debt from what I'm finding. So there is a degree of magnitude in difference.
Some folks may look at this and say that the significantly higher, on average, student loan debt is all the more reason why such be dischargeable in bankruptcy as crushing student loan debt (or any crushing debt) can make it all the more difficult to lead productive lives. But, from where I stand--and apart from the conversation over who is going to pay for this all--the reason why I remain opposed to allowing student loan debt to be dischargeable as a general matter is that the average student loan debt is no where close to being the cost of higher education. Indeed, there are state/city schools that offer education at significantly lower rates than private or out of state schools. I do not think that taxpayers should foot the bill for people's unnecessary financial decisions.
Now, understanding that what I wrote above isn't inherently true for every student loan borrower, a compromise I'd be willing to consider would be a cap in the amount of student loan debt one would be allowed to have discharged in bankruptcy. But this would be an amount far lower than the average student loan debt amount (probably less than $10k).
Biden can extend the pause but he can't relieve student loans, Congress can, but not the President. Even Pelosi acknowledged that.
“The President can’t do it…That’s not even a discussion,” Pelosi said.
Thanks, I had not seen that anyone even gave the answer on whether he could or not in every article I've read. I didn't think he could.
Quote:
Originally Posted by prospectheightsresident
I'm torn. On the one hand, it doesn't seem to make sense that you can discharge credit card, medical, personal loan, utility, and other debt via bankruptcy but not student loan debt. On the other hand, the average student loan debt is significantly higher than the average debt of what is generally dischargeable via bankruptcy. We're talking about almost $40k in the average student loan debt (even the median student loan debt is close to $20k) vs. $2.5k for average medical debt vs. $6.3k for average credit card debt from what I'm finding. So there is a degree of magnitude in difference.
Some folks may look at this and say that the significantly higher, on average, student loan debt is all the more reason why such be dischargeable in bankruptcy as crushing student loan debt (or any crushing debt) can make it all the more difficult to lead productive lives. But, from where I stand--and apart from the conversation over who is going to pay for this all--the reason why I remain opposed to allowing student loan debt to be dischargeable as a general matter is that the average student loan debt is no where close to being the cost of higher education. Indeed, there are state/city schools that offer education at significantly lower rates than private or out of state schools. I do not think that taxpayers should foot the bill for people's unnecessary financial decisions.
Now, understanding that what I wrote above isn't inherently true for every student loan borrower, a compromise I'd be willing to consider would be a cap in the amount of student loan debt one would be allowed to have discharged in bankruptcy. But this would be an amount far lower than the average student loan debt amount (probably less than $10k).
The thing is that some student loans can still be discharged on bankruptcy. It isn't popular because it's time consuming. It's easier if the person is elderly, living on a fixed income or disabled, I have seen younger people that decided to not use their degree, have it discharged.
I posted about one guy who had a law degree that decided he didn't want to do that any more when COVID hit. He successfully got his loans zeroed out. His grew to $400k.
There's something called the Brunner test, if that can be satisfied, loans will be discharged in bankruptcy.
You have to read the first article to get the guys whole story. Obviously he didn't need an attorney because that's what his degree was in.
Last week, the Wall Street Journal featured the story of Kevin Rosenberg (also covered here), a former attorney who did what every student loan debt slave thought was almost impossible — he convinced the bankruptcy court to discharge his student loans in full.
What was your total student loan debt at the time of your bankruptcy?
In total about $400,000. $220,000 were federal loans and $180,000 were private loans but the combined principal was around $200,000 total without deducting the payments I made
A lawyer managed to get own his massive, years-old student debt thrown out in New York bankruptcy court this week, after he was able to prove the burden was so huge he could never afford to pay it.
Kevin Rosenberg took out student loans from 1993 to 1996 to pay for college, spent five years in the Navy, then took out more loans to attend law school from 2001 to 2004.
By the time he was done, he owed more than $116,000 -- but over the years, that ballooned to more than $221,000 as of last November, according to court papers.
In his bankruptcy filing, Rosenberg said that he was earning so little, and owed so much, that he was left with negative income of $1,500 a month.
The company, in an Oct. 2019 brief, argued that Rosenberg did not meet any of the prongs of the Brunner test -- in part, they said, because he had chosen not to earn a living as an attorney and take advantage of the education he borrowed to fund.
If we forgive them we can't give them to people anymore, that's just an uncomfortable fact nobody wants to talk about. I don't know what's going to happen but I assume most people will just start paying.
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