NY Times Editorial: Let Students Discharge Private Loans in Bankruptcy

[Ricky201]

Yep, that's what America has involved into. A nation of victims.

As someone that has paid for their college tuition in full let me tell you that it's hard for me to not get pissed off at this. Though American's seem to be prone to martyrdom I wouldn't throw many college students under the bus. They're doing what society expects them to do. I don't find it that gratifying to tell a bunch of 20-year-olds that "well serves you right" as if someone has been telling them that this is a scam there whole lives, because in reality who has!? Some of us had the luxury of running into the message of liberty before making such grave mistakes, but for the majority of students they're not so lucky.

Honestly, I get sick of people saying "well serves you right" to people that bought homes they couldn't afford (because they didn't really understand what a scam an ARM is) and then they go into foreclosure leaving there credit in shambles. Did they make a mistake? Of course, but many people that I have worked with just wanted their family to have a nice home and a backyard for their kids to play in. Good intentions have unintended consequences, but everyone wants to ride on their goddamn high horse just to tell everyone else around them that they deserved having their hopes stomped on.

Let the bubble burst already and allow the bankruptcy's to take place for god sake. It's been a long time coming.

 

[endwellmom4RON]

I'm not sure how I feel about this proposal. I understand and agree with many of the comments suggesting that college has been pushed on students by everyone (parents, teachers, society) since they were old enough to talk; however I think many of these students would be able to pay back these loans if they made better decisions with their finances.

For example I incurred $135,000 in debt to go to law school. I earn $70,000 a year and my student loan payments are $800 per month (this is more than my mortgage payment by the way). I also have 6 children (from 1-22 years old) that need diapers, braces, tuition, etc. What I don't have is a cell phone, a fancy car, a pricey house or new clothes. It has been almost ten years that I have been paying these loans and I still owe $110,000. Am I frustrated and disappointed that I made such a poor investment? Yes, but I am able to pay the loan, I am just not able to live the lifestyle of a lawyer.

In contrast, another person I work with has no children, borrowed more than I did to go to a law school that wasn't as good as the one I went to and she doesn't pay her loans because she says she can't afford it. She does however afford many things I consider luxuries.

If this proposal were to become law I am certain that she would file for bankruptcy and be able to walk away from her debt whereas I wouldn't. I know that life isn't fair but this in some ways really ticks me off.

 

[Rael]

So I guess we should also not allow bankruptcy to discharge taxes since the "taxpayer gets screwed".

 

[frodus24]

Federal Student Loan debt (Stafford Sub/UnSub and PLUS) will most likely pass 1 TRILLION by the end of the year. There is a student loan bubble that possibly could burst that some collective personalities are speaking about.

After the 2008 collapse, private student loans changed their "lending parameters" for lending and it became more difficult to obtain a student loan.

I personally see kids graduate with 40-60,000 in student loan debt. It's insane!

 

[Anti Federalist]

Before the banksters, globalists, politicians and "free traders" de-industrialized us, deliberately, you could make a decent middle class living without having to go into a quarter of a million dollars worth of debt for an increasingly worthless degree.

 

[Bordillo]

If they do this they should just not grandfather in past student loans, otherwise there are going to be a shit load of bankruptcy claims

 

[Sean]

You should be able to discharge all debt in bankruptcy. The threat of bankruptcy itself makes loaning money based on sound practices. If all student loans were subject to bankruptcy there would be stricter lending standards and also the cost of education would probably also decreased. I don't see how the government should even be involved in loaning money.

 

[bobbyw24]

In contrast, another person I work with has no children, borrowed more than I did to go to a law school that wasn't as good as the one I went to and she doesn't pay her loans because she says she can't afford it. She does however afford many things I consider luxuries.
If this proposal were to become law I am certain that she would file for bankruptcy and be able to walk away from her debt whereas I wouldn't. I know that life isn't fair but this in some ways really ticks me off.

Hmm--might not be a good move to ignore loans in some states under certain cirumstances

Lawyer Disbarred for Defaulting on Student Loans

A Texas appeals court has upheld the disbarment of a lawyer for defaulting on student loans: Texas appeals court revokes attorney's license for failing to repay student loan, other debts.

This is not an isolated decision. Some years back a Minnesota lawyer was disbarred for defaulting on student loans. In that case, the lawyer was living the high-life while stiffing the student loan administration.

In the Texas case the court's ruling stems from several chances given to the attorney. He was warned and given a provisional license on condition of paying down debts. He was given at least one extension. Ultimately, as reported by Law.com, the judges found:

that because Santulli, a Houston solo practitioner, did not adhere to a previous order requiring him to pay his debts, he lacked the trustworthiness necessary to represent clients.

http://www.smallfirmsuccess.org/eth...yer-disbarred-for-defaulting-on-student-loans

 

[bobbyw24]

If they do this they should just not grandfather in past student loans, otherwise there are going to be a shit load of bankruptcy claims

Yep-it would be the Bankruptcy Attorneys Welfare Act

 

[Brooklyn Red Leg]

First time I've ever heard that bankruptcy is being bailed out. It's not my fault that decades of Government intervention into the educational field prior to my birth has increased tuition beyond levels where one could pay for them while going to college, and made accessibility so lax that it has become almost a requirement for many jobs. It's a system that is insidious.

Thank you. I notice a few people in this thread are of the stripe that would climb to the top of the ladder to get to the next level and then kick the ladder out from under the rest of us. Its apparently all well and good to deplore 'stupid college students who racked up loan debt' when you entered the marketplace before the mass distortion. Its the type of statements that makes people truly think Ron Paul supporters are heartless fucks and would let their grandmother die in front of them cause 'hey, survival of the fittest'. Its no different than the other Statist slime who excuse the system for being evil.

 

[bobbyw24]

thank you. I notice a few people in this thread are of the stripe that would climb to the top of the ladder to get to the next level and then kick the ladder out from under the rest of us. Its apparently all well and good to deplore 'stupid college students who racked up loan debt' when you entered the marketplace before the mass distortion. Its the type of statements that makes people truly think ron paul supporters are heartless fucks and would let their grandmother die in front of them cause 'hey, survival of the fittest'. Its no different than the other statist slime who excuse the system for being evil.

right--people here need to listen to that Ron Paul guy who always says if you are failing financially, go bankrupt

 

[minuteman76]

My assessment is that this is quickly becoming a generational conflict. As several posters have pointed out, Millenials in particular were encouraged/pushed their entire life to go to college. In fact, it was pitched as the only way to success. When I was seventeen and deciding to go to college, I relied on the advice of my parents and teachers in making important decisions - including how to finance that education. Now, I see the folly in the "everyone should have a bachelor's degree" philosophy. I got through my undergraduate studies through a combination of working and loans, but I tell anyone I know who is thinking of going to college, not to do it.

I think blaming 17/18 year old children for making life-altering decisions based on the advice of their parents is a tad bit unfair. Also, making these loans dischargable would help cut back the malinvestment on the front end and prevent the bubble from getting any bigger. I don't think anyone is looking for a handout, but I can tell you that I feel a little cheated when baby boomers are starting to get their social security checks, while I live under the threat of wage garnishment. How about letting me opt out of that system and I'll be happy to use that extra income to pay down my student loans?

 

[bobbyw24]

The next massive debt bubble to crush the economy – 10 charts examining the upcoming implosion of the student loan market. $1 trillion in student loans and defaults sharply increasing.

In the land of predatory bubbles it looks like higher education is now fully caught up in the credit market implosion. In the same debt produced vein as housing, college used to be a relatively cheap bet with decent results in the long-term. Even if you went to public universities and picked up a degree in a field with low job prospects, at least you didn’t have the cloud of student loans hanging over your head when you graduated. Today it is a very different ballgame and the mythology behind college is being used to lure people into institutions that are little more than paper mill factories. Even quality institutions are having a harder time justifying tuition and fees that cost upwards of $50,000 per year (or the median household income of an American family). Can the next major crisis come from the student loan market? There is currently close to $1 trillion in student loan debt outstanding. During this crisis most debt sectors contracted except for student loans. Let us examine 10 charts to see why a bubble in student loan debt is about to implode.

http://www.mybudget360.com/student-...r-edudation-bubble-bust-crash-credit-markets/

 

[bobbyw24]

Recession Has Lit the Fuse on Explosive Student Debt

Troubling long-term trends have gotten even worse as schools, government, and families cut back and student loans skyrocket.

This week’s credit check: Average student debt can spiral up to $100,000 with interest and late payments. Room and board charges at colleges have doubled in actual dollars since 1982.

It’s no great secret that student loan debt is exploding. The total amount is set to top $1 trillion, more than total credit card debt. But accompanying that post-recession surge in student debt (as all other consumer debt is being paid down) is a surge in delinquencies. As The Wall Street Journal reports, “In the second quarter, 11.2% of student loans were more than 90 days past due and the rate was steadily rising, according to data from the Federal Reserve Bank of New York. Only credit cards had a higher rate of delinquency — 12.2% — but those numbers have been on a steady decline for the past four quarters.”

The rise in student borrowing is a longtime trend, but things have clearly gotten worse in the recession. A lot of it is because of decisions schools are making. In a recent Atlantic Monthly article, Andrew Hacker and Claudia Dreifus explain that higher tuition — paid for by student loans — “keeps most colleges going.” Private colleges Loyola University and Franklin Pierce see 77 and 85 percent of students enroll with loans, respectively. Historically black colleges, which tend to have lower endowments and a poorer population, are closer to 90 percent. Part of this, they report, is not because the actual education is more costly, but because “room and board charges have doubled in actual dollars since 1982 to enhance campus life.” That’s a long-term trend. But part of it is unique to the recession: As endowments tanked, priorities changed. They note:

http://www.newdeal20.org/2011/08/24/recession-has-lit-the-fuse-on-explosive-student-debt-56271/