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Comment by edmcnulty101 | Hacker News Reader

One is not able to bankrupt out of student loans, unlike any other loan in existence.

So the problem is not the student loan amounts. It's how they're treated.

Life is long and filled with unforseen circumstances, that's why bankruptcy exists.

Businesses bankrupt all the time, Trump bankrupted I think 7 times?, We bailed out the banks for their faulty financial decisions.

But somehow we think it's ok to trap students who made the decision at a young age, and needed an education/job skills to survive, into a world of debt?

I understand that it's a way to be able to give loans to young people with low or no credit.

However, there's so many OTHER ways to deal with this, other than making students slaves to debt for a huge part of their life.

There's a bill introduced to address exactly this.. however it's been stuck in committee for over a year and is probably pretty hopeless.

https://www.congress.gov/bill/117th-congress/senate-bill/259...

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I agree with this take. The student loan is only one where the lender faces almost no risks. It does not seem fair or precedented to put 100% of the risk for the loan on the borrower.

I had a self-proclaimed "yellow dog democrat" professor in college that regularly bragged about intentionally wracking up student loan debt and then declaring bankruptcy to get out of it. He encouraged his students to do the same. There's a good reason student loans are protected from bankruptcy.

I know someone who's dad died from a brain aneurysm a bit after she graduated from college. It was a bad situation involving his mental health, and a court-appointed power of attorney stopped making payments to her student loans and didn't say anything. She found out when the loan defaulted. It sucked for her for a while, but she had an engineering degree. Her financial woes acted as a bit of a catalyst for her to actually go out in the world and get a good job, and she dug herself out.

This is pure anecdata. Based on the government's own numbers discharge of loans through bankruptcy was not a big issue when it was outlawed:

> The Commission on the Bankruptcy Laws of the United States recommended to Congress that educational debt be exempt from discharge in bankruptcy. The Commission made this recommendation despite evidence showing that less than 1% of federal student loans had been discharged in bankruptcy.[1]

Meanwhile, corporate America seems to have no moral qualms about stripping assets from a company, loading it with debt, and then going into chapter 11 to screw the creditors[2]. I don't see why we should hold students to a higher standard than highly paid executives.

[1] https://www.tateesq.com/learn/student-loan-bankruptcy-law-hi...

[2] https://www.retaildive.com/news/the-story-of-toys-r-us-bankr...

This article from that time period talks about an increase in student loan defaults, with 12-18% of loans not being paid back. That's probably right around when that professor was in college!

https://www.nytimes.com/1974/06/04/archives/default-rise-fea...

It also talks about a general trend to federalize student loans. Does it really make sense to compare students taking federally secured loans to corporations taking private investments?

> intentionally wracking up debt and then declaring bankruptcy to get out of it.

American Airlines, GM, Kodak, Texaco, Sbarro, Six Flags, all went bankrupt.

Business do this all the time.

Donald Trump did this 7 times.

Apple almost went bankrupt until MSFT saved it.

The federal government literally is in more debt than at anytime in history.

Debt funds literally everything in the world.

Saying that it's ok for these businesses to go bankrupt, and some even get govt bailout, but not a student, is an hypocritical nutty take.

It seems like you are putting words in my mouth.

I think government bailouts are a bad idea.

If a private entity invests money into a business and the business fails, that sucks for them but I don't really care. Bankruptcy seems like a necessary legal tool to reconcile otherwise unsolvable accounting. I think the idea of using bankruptcy frivolously is disgusting.

It would be great in my opinion for society to hold corrupt business leaders and politicians personally accountable for intentionally making irresponsible choices that externalize the consequences.

It's arguable that a student who works full time but still can't pay the loan back is not frivolous and deserves to bankrupt out of the loan by the same yardstick you're applying to other situations.

Youre bringing the argument down to a tribalistic subjective standard rather than a rational level headed law to be applied across the board.

Frivolty is subjective and based on who you determine is frivolous.

This is expected based on your original sensational example.

You're arguing off of emotion.

The only to win this argument for you is to leave rationality on the wayside.

You're once again putting words in my mouth. It seems like you are looking for an argument, and making assumptions about my opinions. I don't think you are arguing in good faith and you are turning quite rude.

You're confusing secured debt and unsecured debt. Student loans would almost not exist if they weren't secured by assets or guaranteed by someone with the assets to pay them off should there be a default. Since student loans have no collateral and most student don't have a credit record that makes loaning them $50,000 a rational risk, the only way for them to make sense from a risk point of view is for them to not be dischargeable. If you disagree, you are free to lend out your assets to every and anyone who wants to take college classes and as a personal loan, they will be dischargeable in bankruptcy. When they default, you will have no way to get your money back. Since you're advocating for others to take this risk, why haven't you done it yourself?

> Since you're advocating for others to take this risk, why haven't you done it yourself

35% of my paycheck is spent taking risks.

My taxes fund risky business loans via SBA.

My taxes fund risky first time home buyers via FHA.

My taxes fund risky PPP loans that got forgiven via COVID laws.

My taxes fund Financial institutions making risky decisions leading to bank bailouts.

My taxes fund risky bombing of brown people in middle east for literally no reason risking losing costly military equipment.

My taxes fund losing literally billions in the middle east wars with ZERO accountability.

My taxes fund old peoples healthcare and welfare who spent their whole lives, not exercising and eating poorly.

Student loans shouldn't exist.

And universities should just be either funded as much as all these other areas or subject to the laws of supply and demand like the rest of the world.

Student loans will be 15% interest if they're dischargeable. Practically every 22 year old will graduate with $50k in debt, declare bankruptcy for a free $50k, and then in 7 years will be off the record and be able to buy the cars and house they want.

Good. The school should have been paid for by taxes anyway in the first place.

If banks no longer want to offer huge student loans because of the risk, universities will have to lower their tuition or their classrooms will sit empty. This seems like a problem that will solve itself in a few years.

Eh, there's easily enough rich parents to co-sign/pay their kids loans to fill the top 50 schools and I doubt any of the top schools would cut costs and risk lowering their perspective ranking so you'd effectively screw kids with poor parents from being able to go to the top schools.

I have a feeling tuition would drop dramatically if you remove all this easy government gravy train funding as universities trim the abundant administrative and useless degree fat.

So even at 15% interest it would still be cheaper to go to university.

either the government needs to fund the university or the universities need to be subject to the laws of supply and demand like the rest of the world.

None of this half-ass naieve young enslaving kids in debt forever in order to hire an 10 questionable administrators and a degree program in scuba diving.

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