Lew Rockwell calls for repudiation of student loans

[matt0611]

Who's gonna be on the hook for this? The taxpayers?

I majored in electrical engineering, took out 60k loans and payed them all back, why do I get screwed for being responsible?

No, this idea is BS, sorry. No bailouts.

 

[LayZayFaire]

Who's gonna be on the hook for this? The taxpayers?

I majored in electrical engineering, took out 60k loans and payed them all back, why do I get screwed for being responsible?

No, this idea is BS, sorry. No bailouts.

No bailouts.

Sure, the government was at fault. We ALL know that. This is Ron Paul Forums.

But it takes two to tango. The housing market wasn't created just by the federal reserve. It had an equal counterpart of broke-ambitious-fool-ass suckers. The solution is to not bail ANYONE out. The banks learn their lesson and the people that were suckers learn their lesson. Anything else simply feeds what we term now as "moral hazard".

Same thing with higher education. Except dumbass students took out loans to study worthless stuff. They took out a mortgage without the house, LOL. At least you can see your house and live in it. Higher ed relies on the hope of future gains. No house that people bought in housing bubble is worth zero. Can't say the same about college degrees. Wow, and it took four or more years to realize this. If scamming is this easy, I'm an idiot for working a day job.

 

[nobody's_hero]

I see a lot of talk about whether or not the students should have to pay off the debt.

I haven't seen a lot of talk about whether or not the students can pay off the debt.

That's the thing about bankruptcy, you can't just file it because you don't want to pay someone back; you have to show that you can't pay someone back. The problem is that the government has gotten involved so heavily in loans (not just student, but housing, credit card, etc. loans as well) that bankruptcy has become a thing of the past.

Why? Because banks can't make interest off debt that has been liquidated, and the largest banks own the government. I'm not sure how much has changed on this since the Federal government stopped allowing student loans through banks. I would not be surprised if the major banks played a role in handing over the responsibility of making student loans to the government; perhaps the banks realized that even they were in over their heads.

Here's a bigger question for you:

We have so much debt in this economy (education, housing, plastic), is it even possible to pay the principal amount back with interest? Are we to the point that we might actually have to print more money, just so there's enough in existence to pay interest (which grows regardless)? If we aren't there yet, do we really want to push people to remain committed to paying back their (impossibly inflated) debts with interest, if it could have repercussive effects on our currency?

In other words, if you want to restore the purchasing power of the dollar, there may be a silver lining when it comes to erasing a few $billion from existence.

In summary, it is not enough to argue this issue from a moral/immoral standpoint. We might be better served if we view things in terms of what is economically and mathematically possible.

What do you do when it actually becomes more detrimental to economic growth to keep debt on the books, rather than allow bankruptcy and liquidation to occur? (not just referring to student loans, here)

Also keep in mind that bankruptcy is not a painless process for the debtor, nor should it be, since both the debtor and the lender played a role in forming the bad loans.

 

[frodus24]

Student loan debt will surpass 1 TRILLION dollars at the end of this year. Defaults are up and students are placing loans into deferment or forbearance status which means that they are not making payments. Many financial aid administrators agree that there is a student loan bubble looming in the near future. This scares the hell out of me.

 

[Endgame]

Who's gonna be on the hook for this? The taxpayers?

I majored in electrical engineering, took out 60k loans and payed them all back, why do I get screwed for being responsible?

No, this idea is BS, sorry. No bailouts.

Hey what if you bought gold and then it crashed 25% over the next month? Or paid off a mortgage and your home equity crashed?

What you paid has no bearing on anything.

 

[Danke]

Since you seem to want to make this personal for whatever reason, no, I have never thought SS would be available by the time I retired.

I think you are being ridiculous, however, with your claim that SS is voluntary. It is taken out of your paycheck by your employer, at the government's directive. So how exactly is that voluntary?

I think you made it personal by giving your personal opinion on both subjects.

 

[Ricky201]

I see a lot of talk about whether or not the students should have to pay off the debt.

I haven't seen a lot of talk about whether or not the students can pay off the debt.

That's the thing about bankruptcy, you can't just file it because you don't want to pay someone back; you have to show that you can't pay someone back. The problem is that the government has gotten involved so heavily in loans (not just student, but housing, credit card, etc. loans as well) that bankruptcy has become a thing of the past.

Why? Because banks can't make interest off debt that has been liquidated, and the largest banks own the government. I'm not sure how much has changed on this since the Federal government stopped allowing student loans through banks. I would not be surprised if the major banks played a role in handing over the responsibility of making student loans to the government; perhaps the banks realized that even they were in over their heads.

Here's a bigger question for you:

We have so much debt in this economy (education, housing, plastic), is it even possible to pay the principal amount back with interest? Are we to the point that we might actually have to print more money, just so there's enough in existence to pay interest (which grows regardless)? If we aren't there yet, do we really want to push people to remain committed to paying back their (impossibly inflated) debts with interest, if it could have repercussive effects on our currency?

In other words, if you want to restore the purchasing power of the dollar, there may be a silver lining when it comes to erasing a few $billion from existence.

In summary, it is not enough to argue this issue from a moral/immoral standpoint. We might be better served if we view things in terms of what is economically and mathematically possible.

What do you do when it actually becomes more detrimental to economic growth to keep debt on the books, rather than allow bankruptcy and liquidation to occur? (not just referring to student loans, here)

Also keep in mind that bankruptcy is not a painless process for the debtor, nor should it be, since both the debtor and the lender played a role in forming the bad loans.

+ rep

Thanks for putting some sense in this topic.

 

[Jake Ralston]

Folks here are missing something.

Friend A. takes out very large loans to go to the more prestigious schools like Berkeley, Stanford, or UCLA. That kind of "name brand" education comes with a high price.

Friend B. decided to work part-time and pay their own way through community college and perhaps take a few minor loans to finish up the BA at a state school like SJSU.

Friend A. takes a large risk.

Friend B. takes a small risk.

Now the government has arrived to forgive Friend A. his debts with little to no repercussions. All the while Friend B. (the wiser, more responsible one) has paid off every cent of both education and debts. Is this how our economic society should work?

When reading the advice of sound economists like Peter Schiff, are we taught to conduct business this way?

And people wonder why we are on the brink of Socialism, everyone wants their own personal handout, and personal responsibility is eroding away...

 

[Endgame]

Fuck Sallie Mae and their government-gotten gains. Take away the government protection of their bad debt. Let them go bankrupt.

 

[Zippyjuan]

So it is saying that people who willingly borrowed money and signed an agreement to pay that money back should be able to steal that money and not bother paying it back? Then all financial contracts should be voidable at the whim of either side. Let us apply that to the housing market as well. Those who don't want to (or are unable to) pay back their mortgages should be then able to keep their homes for free.

 

[CaptainAmerica]

I'm ok with it as long as they return their degrees and aren't allowed to claim them for employment purposes. You want to claim them then you gotta pay for them.

YEAH seriously what the HELLL is going on!? I work,and I live an honest life, I DONT pull loans that I cant pay for and these assholes are going to get free ride scholarships because they decided they can't pay the loans off? Rewarding people who can't even keep their end of the contract is just STUPID

 

[CaptainAmerica]

Lew Rockwell is advocating a "Too big to fail" policy,this is bS

 

[LibertyEagle]

I think you made it personal by giving your personal opinion on both subjects.

Everyone is giving their personal opinion. You are the one, however, that chose to personally attack.

 

[loveshiscountry]

Quote Originally Posted by Anti Federalist
You can get a degree in stripping?

Why, you interested?

I'd just like to audit the class.

 

[heavenlyboy34]

Lew Rockwell is advocating a "Too big to fail" policy,this is bS

Is it significantly different than RP's opinion that the national debt should be repudiated?

 

[CaptainAmerica]

Is it significantly different than RP's opinion that the national debt should be repudiated?

Yes since the government gets their line of credit directly from the Federal Reserve and against the will of the people.

 

[heavenlyboy34]

Yes since the government gets their line of credit directly from the Federal Reserve and against the will of the people.

Sometimes. The Gov'ment also borrows from foreigners. (the Chinese being the biggest debt holders, last I checked) The government borrows 41 cents of every dollar it spends (latest stats I can find)

 

[LibertyEagle]

The student loan bubble isn't the only debt bubble where we need repudiation. Washington's blog has covered this before.

Federal aid to higher ed has enriched the administrators and the professoriate, but decimated the kids, who end up with huge debts for dumbed-down lectures in huge, anonymous halls. Student debt now totals $1 trillion. If we want a rationalization of higher-ed, and to free the slaves, let's repudiate these debts, and end all student aid. Once again, smart kids could work their way through school, their academic overlords in (fewer) colleges and universities would earn market salaries, and the taxpayers would be partially freed, too. (Thanks to Robert Hiett)

This is posited along with the assumption that there will be no more student aid.

 

[heavenlyboy34]

Such as? I thought we were for letting the market decide.

That's not an excuse, hb. If they don't pay, it is the American people who are stuck with the bill. Be honest. You know that.

Absolutely. But, that means some students will likely not be able to get student loans, you realize.[/QUOTE]

The market should absolutely decide. If the market were truly allowed to decide, it would not choose the model that most people use. (just as rational people don't grossly overpay for other products. As others have noted on RPFs, with a traditional college education, you wind up with the equivalent of a mortgage without the house.)

We would see tremendous growth in organizations like http://www.earlycolleges.org/ in which a student can earn a BA while still in high school at a fraction of the cost of a University. As people move away from the old-fashioned college model, colleges would (and will) be forced to find ways to lower costs. This will allow the people who won't be able to get loans (as you mentioned) to pay for the education without resorting to student loans.

It is primarily due to government intervention in loans and subsidization of public (and some "private") colleges that costs remain so high. Then there's the silly anti-discrimintation laws which prevent employers from testing for intelligence-forcing them to require a degree, thus driving up demand for a degree (and tuition) artificially.

 

[LibertyEagle]

I agree with the government getting out of the education business, hb. I just do not agree with bailouts for people who willingly borrowed money via student loans.