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

[angelatc]

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

Oh, absolutely. Because there's certainly no real reason to believe that everybody won't file the day they graduate. /snark

Apparently you and I define "tragic" a little differently, btw.

If they want to file bankruptcy for student loans, they they shouldn't be taking out loans they're guaranteed to get, regardless of income, financed by the taxpayer.

And by the way, Obama has eliminated the private student loan market. It was part of the Obamacare bill. It's all tax-funded, all the time. This is intentional - the next step is for the government to provide free college educations.

But in the meantime, Obama has fixed it so that the next generation can be even less responsible than this one:

Eventually, students with federal loans will qualify for better repayment terms. Part of the legislation signed today also improves repayment terms first enacted last summer. Loan payments will be capped at 10 percent of a student’s disposable income (it’s currently 15 percent) and any debt remaining after 20 years will be forgiven (the current threshold is 25). For public servants – including teachers, nurses, or members of the armed forces – that cap is 10 years.But, those repayment terms are only applicable for loans signed after July 1, 2014, and will not be retroactive​

 

[heavenlyboy34]

Either students should be allowed to discharge loans in bankruptcy or lenders must demand collateral (I prefer the latter). I have difficulty sympathizing with lenders who made stupid decisions to make risky loans during a bubble. Although there is a lot of degree inflation going on, college in general is not a bubble.

Gary North makes the case for my assertion well:
[h=1]College: Why It Is Not a Bubble[/h]

 

[AGRP]

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.

There is no "at least." This is business. It's about return on investment. No one in their right mind would lend a kid 150k so they could become a prep cook.

 

[heavenlyboy34]

There is no "at least." This is business. It's about return on investment. No one in their right mind would lend a kid 150k so they could become a prep cook.

Yes, but they do it because the incentives are fucked up in the prevailing system.

 

[specsaregood]

There is no "at least." This is business. It's about return on investment. No one in their right mind would lend a kid 150k so they could become a prep cook.

150k sounds like an extreme to me. Maybe Im uninformed but I thought they were generally 2-3 year degrees, that were under 20k/year.

My cousin got his bachelors in 3 years and spent well under 20k/year for it.

edit: but yeah, if culinary degrees are costin 150k I wouldn't make that loan either, I'd urge them to consider an associates degree in the field first.

 

[AGRP]

Yes, but they do it because the incentives are fucked up in the prevailing system.

Hopefully, we all can agree on that. The cost of school is outrageously inflated which is where this mess begins. Peter Schiff is right.

 

[rockerrockstar]

150k sounds like an extreme to me. Maybe Im uninformed but I thought they were generally 2-3 year degrees, that were under 20k/year.

My cousin got his bachelors in 3 years and spent well under 20k/year for it.

edit: but yeah, if culinary degrees are costin 150k I wouldn't make that loan either, I'd urge them to consider an associates degree in the field first.

The kid was getting a degree in engineering for the first two years but dropped out then went into culinary school. He had I believe 60K in loans or so and then quit paying after only getting a job paying $10 an hour out of school. Ten years later he now owes 142K. The extra is from fees and interests. One of his loans is 19 percent.

The kid did not listen to the dad when he said not to go to the cooking school. Anyways, this kid made some big mistakes. The father said originally the only way he would co-sign the loans if the kid would do engineering as a degree but the kid dropped out and later did the cooking school on his own by getting loans on his own.

"Feeling confident, Keith took out $46,000 in private loans

He then took out another $14,000 in federal loans to cover his rent, since the school's fees didn't include room and board. "

He wasn't the first one to be duped

In September, the California Culinary Academy agreed to pay $40 million back to thousands of students in a class action suit claiming they were misled about the program.

The school allegedly boasted a "48 percent to 100 percent" success rate for graduates looking for work, but students claimed the calculation included jobs that didn't require a culinary education at all.

 

[DEGuy]

The only thing the government should be doing is enforcing a contract from an impartial perspective between two private parties. And when it becomes clear that one side of the contract can no longer be fulfilled, then the government should make a decision on what is a reasonable compromise so that the issue can be settled quickly and everyone can move on.

The first problem is that the government is on one side of the contract (Sallie Mae). The second problem is that he can't declare bankrupcy when it's clear he has no way of ever reasonably paying back his loans. The third (and probably the most significant) is that he can't find any kind of job and is homeless. I blame that one on bad economic policies. Although, I'm not exactly sure how disabled he is if can still drive a van and get around. Can't even work a little bit of delivery?

 

[specsaregood]

There is no "at least." This is business. It's about return on investment. No one in their right mind would lend a kid 150k so they could become a prep cook.

I don't know how accurate this site is; but I'm gonna assume it is in the right ballpark:
http://www.usastudyguide.com/schools-for-cooking-classes.htm

Culinary school and cooking school program length

Each culinary school offers different kinds of culinary programs, and the culinary arts program lengths vary. Top culinary arts school programs can range anywhere from a few months to 4 or 5 years. The most common culinary arts degrees awarded are the associate degree in culinary arts and the bachelor degree in culinary arts. The culinary arts associate degree can take anywhere from 9 months to 2 years to complete. The Bachelor degree in culinary arts generally takes 3 - years to complete. Obviously, the shorter the culinary arts course length, the more likely it will prepare you for an entry-level culinary position. Bachelor degrees in culinary arts offered by cooking schools prepare you for eventual management positions.

Affordability of cooking school or culinary school tuition
Cooking schools, culinary schools and culinary arts institutes and schools charge different tuition rates, and the cost can vary very widely. Some culinary school tuition and expenses can exceed $15,000 per year. It is important that you carefully consider the cost to attend a cooking school or culinary school and factor that into your decision-making process. While many of the best cooking schools and culinary schools charge a higher tuition, just because a culinary arts school charges higher tuition does not mean the culinary arts program is necessarily better than other culinary arts schools that are cheaper. Many cooking schools and culinary arts schools offer financial aid, which is addressed below

Yeah, so even the very high range of what they listed: 4years x 15k = 60k. Not 150k.

 

[angelatc]

The kid was getting a degree in engineering for the first two years but dropped out then went into culinary school. He had I believe 60K in loans or so and then quit paying after only getting a job paying $10 an hour out of school. Ten years later he now owes 142K. The extra is from fees and interests. One of his loans is 19 percent.

After 25 years the debt is forgiven. Tell him I said to man up.

Or even better - you're feeling sorry for his irresponsible ass. Why don't you give him some of your money?

 

[seraphson]

Oh, absolutely. Because there's certainly no real reason to believe that everybody won't file the day they graduate. /snark

Apparently you and I define "tragic" a little differently, btw.

If they want to file bankruptcy for student loans, they they shouldn't be taking out loans they're guaranteed to get, regardless of income, financed by the taxpayer.

And by the way, Obama has eliminated the private student loan market. It was part of the Obamacare bill. It's all tax-funded, all the time. This is intentional - the next step is for the government to provide free college educations.

But in the meantime, Obama has fixed it so that the next generation can be even less responsible than this one:

lol what a riot! Let's quit dicking around and cut to the chase... (in regards to the "caps" and all tax funded loans)

*taps cellphone then cradles cellphone between neck and shoulder with arms out and palms facing up*

Hey Benny boy how's it goin? Yep. You got it! Fire up the heli we'll drop the money in Cali, Miami, and then to NY.

To answer the OP. No. Maybe this will be a nice reality check on what happens when big bro gets involved and really shows what crony-capitalism is all about. I was watching a skit on some Wolff guy on YT earlier today talking about how terrible Capitalism is and how Socialism is so great. Yet here we are, 1 $(T)rillion dollars of student loans right in his face brought on by the very people/policies he advocates for. What a joke.

The five golden rules every voter should now before voting comes to mind:
1. You cannot legislate the poor into prosperity, by legislating the wealth out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it.

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them; and when the other half gets the idea that it does no good to work, because somebody else is going to get what they work for, that is the beginning of the end of any nation.

 

[frodus24]

I work in financial aid. I am working with an adult student who has has been taking classes for 11 years. She has received $29,247 in Federal Pell Grant funds and has accumulated $50,000 in Federal student loan debt. And her main concern is where is her refund living expense check. This is what boils my arteries.

 

[jbauer]

I say we should just rest the whole system. Everyone gets everything for "free". We're all winners, 1st prize to everyone!!

No you shouldn't be able to file for bankruptcy and get rid of college debt. In fact I don't think you should be able to file for bankruptcy no matter what. The students made their bed, they get to sleep in it. Your personal decisions are NOT our problems you should pay the consequences.

 

[jbauer]

Oh and while I went to college I paid my way without student loans (no help from my folks either, they were just as broke as I was)...Ironically working in kitchens with some of the dopes that went to Le Cordon Bleu. They were the most worthless POS's I ever worked with.

If this kid is as talented as those $10/hr is way to much. I'd much rather have worked with someone who wanted to work then one of these guys who thought because they spent a bunch of money they knew what they were doing. Most could burn water.

 

[Brooklyn Red Leg]

Am I missing something? They got hosed with debt that is FUNNY MONEY! It won't MATTER since the goddamn fiat currency is going into the toilet to begin with. Let them discharge the debt. The Federal Reserve is monetizing our debt and the countdown to doomsday is accelerating. Saying 'no they cannot discharge it' is the same inane reasoning as propping up the housing market. The pain is going to be ALOT worse in the long run if we don't let them discharge it.

 

[ghengis86]

Yes, all debts should be dischargable in bankruptcy. Those who extend credit will learn real quick if they're making wise decisions with regard to making loans. Even if the government is subsidizing student loans, let them be dischargable; it will hasten the empire's collapse

 

[ShaneEnochs]

All I can say is I am so glad that debtor prison isn't a thing anymore.

 

[awake]

Student borrows money to jump the gatekeeper education cartel, declares bankruptcy and goes to work. If you want to cut to the chase, simply have socialized education all the way. No need to pretend that one is borrowing or repaying any thing real.

People are being coned and indoctrinated to take out massive debt collars to jump the wall built by the "higher education" racket. All to get a "good job".

 

[Galileo Galilei]

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

.
I agree 100%. Private and public lenders should be treated .

 

[economics102]

The ability to file bankruptcy is a basic and fundamental tenet of a free society.

The ability of the legal system to confiscate an individual's accumulated property in response to valid claims, that's appropriate.

The ability to confiscate an individual's future property is, quite simply, the ability to take away that individual's future and make them an indentured servant.

Once you have taken EVERYTHING from a person, they must then be free.

I don't argue that student loans should be dischargeable in bankruptcy because I want to help out the young people. It is in fact unfair to credit companies to now change the bankruptcy laws to allow liquidation of student loans. But the far greater and unacceptable injustice is to allow something that is beyond-the-pale wrong, to continue.

If you believe that a person should be legally allowed to "sell" their freedom -- to agree to become the slave of another person, that is -- then you might agree with the bankruptcy law. If you believe that should not be legal, then you should be against the bankruptcy law.

It gets interesting though. I agree with those who argue an individual should be allowed to sell their body parts. You own your body, therefore you can sell it.

However, the difference in my view is this: a basic principle in contract law is that an individual ought ALWAYS have the de facto right to break a contract. It is the responsibility of the stakeholders in a contract to work out any legal contingencies resulting from breach of contract, beyond the default legal consequences for that. So, how can you sign a contract selling your free will to another person? Such an agreement must be unenforceable simply because you can break it. Aside from penalties involving relinquishing of property, etc, what contractual consequence could one possibly write in as penalty for breaching a contract requiring you to be a slave?

In other words, the legal system ought go no further in its power than its ability to confiscate CURRENT property of an individual. Confiscation of free will, or of future property (which is indentured servitude, a form of slavery), should have no place in a free society.

To return to the selling of body organs example -- if you were to make a contract agreeing to sell your kidney one year in the future, and then, when that time arrives, you decide not to sell it, the court may impose whatever monetary penalties are dictated by the contract, but the court may not empower anyone to force you to remove and relinquish your kidney against your will.

It should not be possible to lose your future freedom merely by making a bad trade in present time.