Should College Students Be Able To File Bankruptcy and Wipe out Student Loans?

[rockerrockstar]

Just read this article on this kid that went crazy with school loans for a cooking school and now owes $142,000
and is homeless. He is living in a van down by the river... No really he is living in a mini van sleeping at truck stops. Anyways, this brings up the subject of people not being able to discharge their student loans. Maybe the law should be changed so that they can discharge their loans.

This kid was scammed like many kids are into thinking college is going to give them a great living while it really can put them into serious debt and may not pay off. Anyways, if you read the article the kid was not too bright about his decisions but the school did scam the students with false claims.

I think college costs would go down if we allowed students to file bankruptcy to eliminate their loans. Also, private loan companies would judge better the risk of loaning money and easy credit would dry up. But maybe both the companies and students would make wiser decisions on schools and careers. If the easy credit for school loans dried up it could be a good thing. The price of college educations is getting out of control.

Here is the tragic article on the kid

http://finance.yahoo.com/news/this-...-was-utterly-demolished-by-student-loans.html

 

[sparebulb]

No way.

These people need to feel the pain of just how worthless an "education" is. If you bail them out of this, where would the bailouts end in their lives?

 

[specsaregood]

I think college costs would go down if we allowed students to file bankruptcy to eliminate their loans. Also, private loan companies would judge better the risk of loaning money and easy credit would dry up. But maybe both the companies and students would make wiser decisions on schools and careers. If the easy credit for school loans dried up it could be a good thing. The price of college educations is getting out of control.

Nothing would change as long as taxpayers are forced to back up all the loans. So no, they shouldn't be able to discharge them as long as that is the case.

 

[oyarde]

Matters not what I think , but I will say this; if it worked the way it should , all these loans would be in the private sector with zero govt involvment and at that point , yes bankruptcy law would apply .

 

[rockerrockstar]

I agree oyarde the loans should be private and then allow them to file bankruptcy. Mean while we need to consider the mess the government and banks have done to students that have no means of bankruptcy to eliminate the debt.

The colleges that basically scam students to thinking a good job is guaranteed after getting a degree is one problem. The other is the government giving loans without judging if the student will make money after getting the loan to pay it off once they get their degree. The student needs to be better informed on the risks of spending the money before starting school. The question is do we expect banks and the government to take the risk or just the student. The easy credit is fueling sky high college costs. This system is making more debt slaves.

 

[brandon]

I think if it were allowed everyone would do it. Run up 100k in student loans, graduate at 22, and then just discharge them. It's not like a secured loan where the bank can collect some kind of collateral (house, car) when you go into BK. I think the 100k is definitely worth 7 years of bad credit. People in their 20's shouldn't even really need credit for anything anyway. Hell, even students whos parents would pay for their school would be better off taking a loan and then discharging it, and their parents can buy them a house or something with the money instead.

Edit: So thinking about the above, it probably means banks would pretty much stop giving any unsecured student loans, which wouldn't be a bad thing.

 

[rockerrockstar]

If everyone filed bankruptcy the loan companies would go out of business. Thus, if it was private the loan companies would have to be better at judging the risk. Anyways, less loans would be given and college prices would fall.

 

[ShaneEnochs]

No way.

These people need to feel the pain of just how worthless an "education" is. If you bail them out of this, where would the bailouts end in their lives?

I filed for bankruptcy a few years ago. Trust me, there is quite a bit of pain involved.

 

[dannno]

Yes

 

[jkr]

if i cant then why can EVERYONE else? (id rather have legit opportunity but i haven found it yet)
assholes with millions of $ in debt
banksters
athletes
mc hammer
house flippers
yep, they get a do over

but try and improve yourself so you can ACTUAL PRODUCE SOMETHING OF VALUE and you can "suffer"
i cant buy shit
i cant repair my car
i cant improve my home
i cant go off the grid
all in an economy that is 70% consumption

so, because i figured this out at 35 while retraining myself for the changing economy, i get the big fu? (and of course i am expected to sit here and take it.)
your gonna need a few million more fu's then,i have been looking at the numbers-we are ALL going to suffer from this bubble

the funny thing is, the law was changed because of DOCTORS completing med school and filing right away. And then they helped drive up health care costs. and now want to force us through guBBermint to worship them as the ONLY source of "health care".
they got rich
i get to suffer
fuckoff

 

[Xhin]

Maybe if the fedgov stopped offering educational aid and reform, the prices for tuition could return to sane payable levels.

 

[jkr]

http://www.zerohedge.com/news/student-debt-bubble-delinquencies-surge
By now, the bubble in student loans is becoming more widely understood. The absolute level continues to rise significantly and growth is accelerating with 8% YoY growth just reported, via the WSJ. Of course the reasons are anathema but attending college on the back of hope of a better-paying job when everyone else is also attending college in that hope (thanks to endless student-loan funding from your helpful government) seems to be self-defeating as the supply of supposedly better-qualified workers into a stagnant economy will do nothing but reduce higher-end wages further? Of course this is over-simplified but as the rest of the country delevers, pays down credit cards, or BKs, those that remain jobless heading to college for a way out are now struggling also - as is clear from WaPo this last weekend where dropout rates are increasingly dramatically. What is more worrisome is that while every other class of debt, according to the New York Fed's data, is seeing delinquency rates dropping, Student Loans 90+ days delinquent surged in Q1 to 8.7% - near its peak crisis highs and remains above peak mortgage delinquency rates.

Student Loan Debt is growing while the rest of the household sector is delevering...

 

[Endgame]

The kneejerk reaction of a lot of libertarians is to apologize for the banks because they're "private". This is a total misconception that will evaporate if you spend just a few minutes reading about how higher education is funded.

Sallie Mae, the other not-really-private corporations involved in the student loan business, and the universities, have colluded with the government to enslave and defraud an entire generation on an unprecedented scale. Student loans have only been bankruptcy-proof for less than a decade, and only because these banks lobbied congress to make them so. It is one of the reasons that college tuition has skyrocketed and student loan debt is larger than consumer credit card debt. They higher education system is the most decadent bubble industry going today, and the one more responsible for the misery of a generation than any other.

It needs to be popped ASAP. Letting students declare bankruptcy, which is a far from painless process, would be the simplest way to do that without bailing anyone out, though students do deserve compensation for how they have been defrauded.

 

[Xhin]

Of course the reasons are anathema but attending college on the back of hope of a better-paying job when everyone else is also attending college in that hope (thanks to endless student-loan funding from your helpful government) seems to be self-defeating as the supply of supposedly better-qualified workers into a stagnant economy will do nothing but reduce higher-end wages further?

This. A thousand times this.

 

[AGRP]

Lets put it this way: The private sector does not grant loans to people who go to school for pottery. That was before they were banned from granting loans within this last year. From what I remember, among the riskiest loans granted to consumers is to open up restaurants. Why would it make any sense to grant loans to a culinary student? Chalk this up to another example that everything the gov gets involved in tends to lead to chaos.

 

[specsaregood]

From what I remember, among the riskiest loans granted to consumers is to open up restaurants. Why would it make any sense to grant loans to a culinary student?

I think that is a poor example. most people that go to culinary school don't open their own restaurant immediately. I would think a loan for culinary school would be a rather safe investment. There are always lots of jobs in the field in lots of locations, so very employable.

 

[Endgame]

I think that is a poor example. most people that go to culinary school don't open their own restaurant immediately. I would think a loan for culinary school would be a rather safe investment. There are always lots of jobs in the field in lots of locations, so very employable.

There is a massive surplus of degrees which contain very little to no relevant job training, and a shortage of jobs that require actual skills. Loaning someone money to go to college is a horrid investment, one that the banks have successfully lobbied to insulate themselves from.

 

[AGRP]

I think that is a poor example. most people that go to culinary school don't open their own restaurant immediately. I would think a loan for culinary school would be a rather safe investment. There are always lots of jobs in the field in lots of locations, so very employable.

As prep cooks? Is that why schools like la cordon blue are getting sued by students because they could only find work as prep workers?

 

[specsaregood]

There is a massive surplus of degrees which contain very little to no relevant job training, and a shortage of jobs that require actual skills. Loaning someone money to go to college is a horrid investment, one that the banks have successfully lobbied to insulate themselves from.

Which is why I argued that a culinary degree is far from the worst as it would mean actual skills and handson training. I'd consider a loan for a russian lit degree to be far less safe as an investment.

 

[specsaregood]

As prep cooks? Is that why schools like la cordon blue are getting sued by students because they could only find work as prep workers?

At least those are jobs, yes? In higher availability than jobs for people with strange liberal arts degrees I would think. I can't speak to that school or what they promised their students and I'm not in that field; but I do know people that went to culinary school and they are all employeed in that field. Whereas you can go to starbucks and finds lots of people with generic bachelors degrees.