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Comment by googlryas | Hacker News Reader

It's a good thing that student loans cannot be defaulted on. That makes lenders more likely to give out loans, which helps marginalized people many of whom might be the first to ever attend college in their family. Will a bank normally give a loan to an 18 year old with no credit score, with no cosigners, whose parents either have awful or no credit?

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How are degrees without job prospects (which are actually capable of paying off the non-defaultable loans) helpful to marginalized people? It seems like just the opposite effect.

Why would a college graduate have no job prospects? I think you'll find people coming from marginalized backgrounds are much more likely to enter a field of study with plentiful job prospects.

Why do poor people disproportionately attend for-profit college and get non-STEM degrees then?

They attend for profit colleges because they are commonly duped by promises of a certain salary or job placement. And commonly not sophisticated enough to understand that not all debts are created equal and accreditation matters in education.

And yet student loans were actually a driver of racial inequality - not an equalizer [1].

Without the ability to default - the loans made the situation worse.

Some of that might be undone by forgiveness.

[1] https://studentloanhero.com/featured/student-debt-demographi...

I don't understand how that link shows student loans are a driver of inequality. Black people on average have a higher student loan debt because on average black people are poorer than white people in America. If black families are poorer than white families, it generally means they will need to take out a bigger loan to afford college.

The problem is largely due to people of color disproportionately attending for-profit colleges to get expensive non-STEM degrees which largely prove to be worthless: https://www.aspeninstitute.org/blog-posts/worse-off-than-whe...

It's almost as if you shouldn't be able to take on near unlimited non-default-able debt for something that is nearly worthless.

These people were put into a debt trap at 18, not saved by the government.

It's also interesting that finance is left out of most high school curriculum right before people are signing up for the second (and increasingly the first) most expensive purchase of their lives.

I mean, they actually are saved by the government. The government has forgiven billions in student loan debt from shady for-profit institutions.

After 20 years of trapping them in debt...

Should a bank give out a loan that cannot be escaped to someone incapable of returning it?

The idea is that they will be able to return it after going to college.

That's the principle, yea. But we wouldn't be having a student debt crisis if they was all there was to it. Enough people can't.

We build bankruptcy into debt systems not just to give people relief, but also to take the risk off of people and put them on lenders with actuarial resources.

Are we really having a student loan crisis? Interest rate has been zero and payment suspended for something like 2 years right?

There aren't any banks or other lenders involved (other than the government) and haven't been since way back in the Obama administration.

In this case, the government is who is giving out the loans, and it’s been that way since 2010.

Then they pay someone else to service the loan after origination.

The one servicing the loan is the student.

“Loan servicing” means the work of sending out statements, collecting payments, answering the help desk, tracking the accumulated interest, filing the tax forms, etc.

Interesting.

The (edit: one) meaning of "loan servicing" used to be only (edit: not only) paying - not (edit: also) collecting payments.

https://ahdictionary.com/word/search.html?q=service

3. To make interest payments on (a debt).

There's a difference between service payments and servicing / a debt servicer.

IIUC, "service payment" comes from the fact that you are paying for a service - someone is providing you with debt as a service... The debt servicer.

Definitely there is a difference between paying and collecting payments!

I was aware of "servicing a loan" as "paying the interests". But I've found that the "administrative" meaning also goes back many decades.

Yeah it’s a bug for sure. ‘Loan service processor’ got shortened to ‘loan servicer’ which definitely steps on the toes of ‘debt service’.

Someone should open a ticket.

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