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Comment by RandomLensman | Hacker News Reader

If it is quite profitable to get a certain education, why would it need the tax payer to provide the loan for it? Shouldn't that be easy to fund from the private sector?

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Student loans aren't your standard private sector loan though. They are a special legal category, which is why they can't be discharged in bankruptcy. All the usual borrowing standards don't apply either. No commercial lender would give that size of loan to an 18 year old with no collateral. The collateral is effectively a claim on the person's future earnings. What a crazy contract to have young people routinely pressured into.

You can discharge them through bankruptcy but it's not automatic. You have to prove repayment would cause "undue hardship".

https://studentaid.gov/manage-loans/forgiveness-cancellation...

Interesting, but that seems to be for exceptional circumstances ... A few hundred cases per year apparently. But maybe this route could grow substantially. Interesting reading-

https://www.ablj.org/bridging-the-student-loan-bankruptcy-ga...

What that page doesn't tell you is the precedence courts have set for those tests is so high that nearly no one qualifies for them, and thus it is the case that the loans are virtually impossible to discharge even if it means losing your home and all your possessions.

lol no. They were designed initially so that law and medical students wouldn’t be able to skip out on loans as was common early on.

There are the paths out: repayment, death and fleeing the country.

> The collateral is effectively a claim on the person's future earnings

Back in the Russian empire a person could buy themselves out of serfdom if they could come up with the money… which was difficult for obvious reasons.

And this feels like a modern reincarnation of the system.

It’s categorised as ‘ Unfree Labour’

Its the same too with renouncing citizenship.

If you have federal student loans, you are trapped as being a US serf. And with usurious interest rates, you will never be able to buy your freedom.

Are federal student loans at usurious interest rates?

From what I could find [1], the caps look fairly reasonable. The unaffordability seems to come from the financed amount.

[1] https://mohela.studentaid.gov/DL/resourceCenter/DLInterestRa...

These are for government loans. I really wish my private loan north of 13% was capped.

I don't think private loans are federal loans?

I'm not convinced it's necessary but it sure as hell is nice. I got through undergrad with subsidized loans and it was nice to not worry about interest while I wasn't working yet.

The private sector does fund some loans but I think the current program just needs re-working. Forgiving all these loans is a no-go so this measure is a step in the right direction. I'd like them to lock down the interest rate to 2% + inflation next. The government does need to incentivize a certain degree of higher education for innovation.

Assuming you’re not talking about a loan to do this (at which point you’ve reinvented indentured servitude), back when there was a smaller pool of college graduates it was easier to find a company that would pay for your education, some even offering bonuses if you completed it.

Not sure I understand: why would a loan be indentured servitude if it funds an education (not binding employment etc.)?

If there is no expectation of future income or employment, and no collateral since you don't have any. Then who would lend you the money?

I don't think anyone is stopping the private sector from extending "student loans" if they were such a good business.

Of course, there would be an expectation for loan repayment (most likely from employment somewhere). Is any unsecured/uncollateralized loan indentured servitude for you then?

So company A pays for your education to go work for company B (their competitor) and all they get is a lousy interest rate with no security? If they don’t get ten years (or whatever amount) of your output, why waste the time and energy when someone else will do it for them?

Lending is a business in itself, no?

Sure. Maybe in the future we can just add a years tuition to the Apple Card when buying the Macbook for college.

Why not make education free(ish) then?

If what you're imagining is a zero equity zero income dischargable unsecured consumer loan to 18 year olds, then nobody is going to provide that loan.

I think the point is that it’s so beneficial to society for people to get these degrees that we should lower the barrier even further. I think you are right that having the private sector fund it is a good base state, I suspect you’d find that you can improve on that base by funding it with some public money. We’ve probably gone a little too far in that direction though.

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