This is a possible solution, but it's not simple.
If you do this, the current system of student loans we have will collapse completely. Now, maybe that would be good...but it's not simple.
If you do this, the current system of student loans we have will collapse completely. Now, maybe that would be good...but it's not simple.
Not easy, but simple.
This is the solution. It works for all other industries. If I loan you money to buy a house or buy a car, without doing due diligence to that loan, the courts tell me "tough luck" if you file for bankruptcy. But if I lend you $250,000 for an arts degree, the power of the state will force you to pay me.
That's insane!!!
That's not the case with college loans.
Which is why they are fundamentally different.
Perhaps it's good there are some things that are different. Some things are property. Some are not.
In history there always seems to be a trend for those in power to try and enslave those not in power, by putting property laws on people.
This student loan bankruptcy exception is one example. Intellectual slavery laws like copyright and patents are another.
That may be a good thing, as 'harryh said. But that's not the point: the point is, at the point where you make student loans dischargeable, you might as well just concede that you're eliminating them altogether.
"at the point where you make student loans dischargeable, you might as well just concede that you're eliminating them altogether."
Have you ever gone through bankruptcy? Luckily I have not, but from what I've read it's a horrible thing to go through with serious consequences to your finances that takes a minimum of 7 years to overcome.
I think the cost of college would drop 10x. I went to Duke, and the gardens and pools were lovely, really, but perhaps some tables and books would have been the more appropriate use of my tuition money.
I do agree the IS bit was somehwhat a non sequitor, but there is a common thread here I think when people try to put property and ownership rights on things that nature doesn't make that easy.
Why would the state not use the power of the state to make sure you pay back money it lent you?
The mafias of old are nothing in size when compared to the student loan industry.
If they loans are predatory, make the loans harder to qualify for. It won't fix the predatory nature if they are easy to get rid of; if anything it will make them more predatory by likely increasing the interest rate to compensate for the increased risk to the lender.
> It won't fix the predatory nature if they are easy to get rid of
Yes, it will. People will stop hunting for more students to go to their schools with expensive landscaping if there were no government guarantees to ensure they get paid.
This is a very simple issue. Any attempts to complexify the issue I suspect are merely attempts to divert attention from the question of human rights and equality. I paid all my student loans and personally have only to lose if they change the laws, but it's the right thing to do.
I'm failing to see the difference. The government should not guarantee the debt and people should be allowed to discharge the debt in bankruptcy. The responsibility should shift to the lenders, not the government. The price of colleges should tumble. Some should have to close their doors. There should be a great reshuffling in the education space.
> "For every complex problem, there is an answer that is clear, simple, and wrong."
This is a great quote, thanks for sharing. I would say a more accurate quote would be: For every complex problem, there are infinite answers that are clear, simple, and wrong, but also a few that are right.
I don't think you're wrong, I think you're just focusing on the wrong aspect. Its the supply of easily incurred debt that is incentivizing high tuition. The laws regarding discharging of that debt are predictable blowback.
It sounds like what you're advocating is a return to the way higher education was treated prior to the 1980s, a time when many less people had degrees. The problem is that return is no longer a simple solution, especially when we live in a society that now requires 4 year and even graduate degrees to be competitive, regardless of whether the position necessitates it
It's an unjust law enacted in the 1970's at the behest of dishonest people. It needs to be fixed. Pretending it's a more complicated issue is just a tactic to delay doing the right thing.
From my experience in an organization specially tasked to help redesign problem processes, I can only say that every single time someone thought a simple solution would cure a complex issue, they were wrong. I'm sure there's an occasional case that could be the exception to prove the rule, but it became such an inside joke that my boss had a desk placard that read (tongue-in-cheek), "All you've got to do..."
Unfortunately, for those adamant about their idealized simple fix, they could only be convinced by seeing it fail.
I still think simplicity is the thing to fight for. Corruption hides in complexity.
You undermine your own point with your assertion that that government guarantees are the issue, not the inability to discharge debt that provide the abundance of students.
Allowing the discharge of debt will not impact schools if the government still guarantees loans. If anything, it will exacerbate the problem by incentivizing more debt by reducing the risk to the borrower. It seems like you are conflating multiple issues in a complex problem in an effort to provide a simple solution.
Good grades and signing up for pre-med? Here's a year of cash, you'll get your next payout if you're on the honor roll next year.
Planning on majoring in Homeopathic Nutrition Science? Denied.
Sounds like it'll make people a lot more focused on ROI and studying and that strikes me as a good thing. If it cuts down on a lot of frivolous choices, it'll also reduce the overall regret from those.
Bankruptcy isn't a free get out of jail card. You're not going to find many people who study a very expensive degree like medicine only to then work at McDonalds for 7 years so they can avoid paying the full sum back.
There are severe consequences to filing for bankruptcy. That is on your record for 7 years, minimum.
There are annoying consequences to having a BK on your record --- it would be harder (though not impossible) to get a credit card, and your first couple apartment lessors might want cosigners (though it is extremely possible to get a lease with terrible credit). The problem is that these consequences are far less onerous than shouldering student debt, which takes most people decades to repay.
What's worse is, the incentive would likely be to default as quickly as possible, since that's what starts the recovery countdown. Not defaulting right after graduation would be a significant gamble on your ability to either repay or practically default later in life, when you're more exposed to the credit system.
Obviously, an important part of this analysis is that student loan amounts have gotten significantly larger in the last 2 decades. Another easily-made observation is that student loans stopped being dischargeable because of widespread ruthless default, even with tuition rates less than 1/3rd what they are now.
Four decades ago student loans started becoming undischargeable (1) and the price of college has gone up over 6x, and I have never seen evidence that prior to that there was "widespread ruthless default", as you stated. Not to mention, times have changed and with the Internet and it would be much harder today than back then to hide a previous bankruptcy.
1.https://info.legalzoom.com/did-laws-effect-preventing-bankru...
College should cost 10x less, easily. If I graduated with $5K in debt instead of $50K (or to take the national current average of $2,400 instead of $24,000), there would be no need to even consider bankruptcy.
We're referring to the same time period, by the way. Have you looked for evidence of defaults in the late 60s and early 70s? Where did you look?
During the housing crisis, a material number of people defaulted ruthlessly on their homes. There was even slang for it --- "jingle mail", for people mailing their keys back to their lenders. That is, defaults were a problem even when lenders actually had a valuable asset to seize.
Later
A more tenable suggestion would be to restore the status quo ante of the 98 Bankruptcy Reform act, making loans dischargeable in bankruptcy after 7 years. It'd be interesting to go look for the rationale for the '98 act's indefinite non-dischargeability provision.
This is an interesting paper, one you'll probably like as it's skeptical of arguments against non-dischargeability, that goes into some detail about what other countries do (they do address what the paper calls "opportunistic" default):
https://repository.law.umich.edu/cgi/viewcontent.cgi?article...
Thanks! Appreciate the lesson. That's a pretty cool technical term, btw.
> Have you looked for evidence of defaults in the late 60s and early 70s? Where did you look?
Yes. Semantic Scholar. No luck for things in earlier than the 1980's. Have you found anything?
Later, after reading the paper you cited
`the Chairman of the House Subcommittee on Postsecondary Education who oversaw the Education Amendments of 1976 (Rep. James O'Hara) objected to the introduction of a student loan nondischargeability rule. 15 O'Hara protested bitterly that Congress was "fighting a 'scandal' which exists primarily in the imagination" and that the amendment "treats educational loans precisely as the law now treats loans incurred by fraud, felony, and alimony dodging".'"`
...
"The evidence of a lower than 1% discharge rate of federally insured student loans in bankruptcy did not block the nondischargeability provision from entering the Bankruptcy Code - this even so under a comparatively liberal Congress that passed the debtor-friendly 1978 overhaul of the Bankruptcy Code."
So indeed, there was never a real problem, and the law was enacted in the 1970's at the last minute on behalf of frauds and felons.
Thanks very much for the reference. This is an issue I care about deeply (clearly), but my arguments are a bit sloppy.
That being said, it's very much a military tactic being employed by people who want to preserve the status quo to pretend this is a complex issue, when it's really pretty simple.
Also: super graceful response in a touchy thread! Cheers!
But these things aren't a big deal for most 21 year olds. Certainly they are smaller considerations compared to paying back a high 5 or 6 figure debt.
If student loans became dischargeable through bankruptcy, I imagine that could put pressure on bankruptcy laws in undesirable ways (e.g., the current 7 year period might get extended to 20 years).