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Comment by hdgvhicv | Hacker News Reader

Companies do this all the time, then declare bankruptcy and move on.

Totally agree - there's a lot of double standards here:

Bankruptcy is good for entrepreneurial risk, but not for human thriving apparently...

Bankruptcy is great for human thriving, and the extensive US bankruptcy system is one of the best tools our legal system has for people who wind up in bad situations. It's a complete shame that we decided that student loan debt was ineligible for most forms of bankruptcy once it became clear that federal guaranteeing of loans would generate a lot of high risk loans.

But fleeing to another country and/or simply refusing to pay your debts, regardless of whether or not you are able to are is not bankruptcy. It's simply refusing to pay your debts.

I see them as morally equivalent in our current system - ie an illegitimate democracy without recourse for common people.

If companies can do strategic bankruptcies, transfer pricing, etc., then regular people can do the consumer equivalents.

I don't think any of us should shill for corporate interests.

Student loans should also get discharged in bankruptcy and the schools who are benefiting from predatory lending should take the bath.

People investing in companies do so knowing that it might be a poor investment.

But if a company borrowed the money and never had the intention to make enough to pay it back or return on investment, we have a different word for that. That word is fraud. Just ask Elizabeth Holmes.

Its not bad intention from the start. Im sure the succesful ones who land well pating jobs after school do pay off their loans.

People are corporations too.

That’s intentional to foster the growth of entrepreneurship. It’s the ability to do something without being personally liable. It’s a good thing.

How does your argument fail to also apply to student loans?

When companies declare bankruptcy they have to liquidate their assets and pay back as much as they can. How is it different from student loans?

The difference is you _can't_ do that for student loans. There is no option to get rid of them via bankruptcy.

So, this happens instead.

Yeah because then most students would graduate and declaring bankruptcy would be the first thing they do out of school. People have almost no assets at that point that they can lose, no real income. They would ride out the 7 years of bad credit while building out their early career and essentially would get a free education. The financial system wouldn’t be able to manage that at the pure scale of the number of people that use student loans.

I did not suggest that you could just turn on bankruptcy with no rules.

> [...] essentially would get a free education.

How horrible, imagine the world.

People can decide on what terms they want to loan money to, or invest in, a business, based on how likely they think it is to succeed. And if they guess wrong, tough luck, they should've been smarter. The incentive structure here is to make it easier to raise money with good ideas and harder to raise money with stupid ones.

This incentive structure doesn't exist with student loans: student loans are unconditional, and with terms that don't take into account likelihood of payback.

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