Comment by cryoshon | Hacker News Reader

Comment by cryoshon | Hacker News Reader

"A report issued late last month by the Consumer Financial Protection Bureau supports this view. Even though the economy and labor market have improved, student loan borrowers are experiencing high distress levels compared with borrowers with other types of consumer debt, the government report found. More than one in four student loan borrowers are delinquent or in default on their obligations."

1 in 4 are delinquent or in default. Read that again.

This situation is a failure mode, and is only fail-safe for the lenders who forced it there. This means that on some level, the lenders knew their interest rates were impossible to keep up with, yet knowingly went forward anyway because they knew they could get away with it. The USA's system is utterly bought out against the common good. At this point, I think we'd be better off with a widespread boycott of student loan payments in order to bankrupt the lenders. They can't call collections on all of us, and there would be riots if they tried.

I know that a lot of people are jaded as a result of societal failure to address the student loan crisis. These intentional failures for the sake of profit have long term consequences, as nearly everyone can blatantly see.

"Some 41 million Americans owe $1.2 trillion in student loan debt. The median debt burden among borrowers was $20,000 in 2014, up from $13,000 in 2007."

This is an entire generation worth of people that have been cursed to start their adult lives with an anchor around their neck. As though the brutally competitive ultra-hostile economic depression they graduated into wasn't enough to weigh them down to begin with.

To top it off, the boomers find a way to hold us in contempt.

This is dangerous. Just as dangerous as, say, the government taking over a bunch of uncollectable housing loans. Or the United States federal government renouncing all its public debt.

If there has been illegal acts, they should be rectified. But saying "I really don't want to follow through on what I agreed to" just because minds changed is not justifiable, and sets a an ill-advised precedent.

> But saying "I really don't want to follow through on what I agreed to" just because minds changed is not justifiable

Great attempt at a moral hazard. It's a business contract. Default on the contract, face the consequences. There is no "right" or "wrong" about it.

If at anytime you can default on a debt without consequence, or minimal consequence, it behooves you to do so.

Best argument here.

>Great attempt at a moral hazard. It's a business contract. Default on the contract, face the consequences. There is no "right" or "wrong" about it.

You can't default on student loans, right? So we're all good.

You can actually! It's just a bit harder than traditional debt. I just helped a friend walk away from ~$120K in student loan debt.

Any link? This is news to me.

Illegal activity takes place on the side of the originators and the services, and you still argue that the loan recipient hold the moral weight of compliance?

No. As this article clearly shows, and as was the case with the subprime lenders, many of the originators and the servicers acted illegally, it's not a simple argument about 'what I agreed to'. There are two parties to that agreement, and if anyone acts contrary to the contract, the other party has a right to respond, and not be morally required to follow through on their end of the agreement. In fact, they are morally required to respond to those changes by the people on the other side of the negotiating table.

Lastly, these loans were not just provided for fun. They were provided to the students with the promise of higher income. If that doesn't happen, and the jobs and income are not there to support it, that promise becomes false, and both parties to the agreement have to face the consequences, not just the student.

They were provided to the students with the plausibly deniable implication of higher income. I think you'll find, should you actually look at any printed material, that nowhere is there any promise of higher income. (That's how you know it's a long con.)

I love that people understand the long con. It's almost one of the defining characteristics of the current system. Sure everywhere you look, we promised you greater success, but not at the moment when you signed, then it was up to you to believe it. A classic long con move.

Nope. No promise or guarantee of any job/income level is ever included in loan documents. Both parties are only bound to whatever is included in the contract.

Have you ever heard the term 'caveat emptor'?

> Have you ever heard the term 'caveat emptor'?

Which is exactly why these borrowers should default. The risk of default is priced into the interest rate. Tough love time for lenders.

Again, great point.

> "I really don't want to follow through on what I agreed to"

Another commenter points out that this is a business contract, not a morally codified vow.

However, even if you want to assess the moral implications of the agreement, and the matter of whether to renege is justifiable, remember that the students who took these loans weren't fully informed of the circumstances that lead to their issue.

A college education was presented as a smart choice whose free market value had risen as the result of insatiable demand. However, we now know that public colleges - arms of the governments of which these students are constituents, colluded with private lenders to increase fund availability and force tuition prices up.

If the entirety of the deliberations between these groups had been known, as is proper in matters of public policy, students might well have made a different choice.

> "I really don't want to follow through on what I agreed to"

See that's funny. That mentality _is_ part of the scam. When banks break the law and get a fines as a slap on the wrist, that seem like a joke, and those fines seem to just be a caclulated risk they expected to handle, vis-a-vis the profits that operation made then it's "just business".

If a person desides, fuck it, this doesn't make sense, the downside of defaulting on (house, student loan, other contract) seems to be better than keep paying, then it is "moral outrage", "serious character flaw issue", the label "criminal" is thrown around and so on.

_This_ is one of the fundamental elements of the scam -- to apply moral blame and personal character flaws to less empowered individuals but to selectively choose to not apply those to large business entities.

I remember during the housing crisis, there were a few cautionary articles in high brow economics journals, about how the real shit will hit the fan when high income people, who are not showing distress signs on being able to pay their mortage, will nevertheless, put the keys in an envelope, mail it to the bank and walk away from their million dollar mansions. Simply because they'll see they are under water, and numbers simply don't add up business-wise to keep paying that interest rate on that property. So there was this fear that some of these more "rational" actors will well ... start acting.

Anyway to make long story short, it seems to me your comment that is "dangerous" is coming from the same propaganda mentality.

I agree with this line of thinking entirely.

The propaganda of implying we should have debtors prisons in this country is foul.

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