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This is why we need to make college loans dischargeable in bankruptcy

Posted by on Apr. 8, 2016 at 3:50 PM
  • 114 Replies
1 mom liked this

Then we don't have people in upper 5 or 6 figures in loan in worthless degrees. Banks will only give to people with the ability to pay it back.


Only 12.5 of about 22 million borrowers are fully up-to-date.

A huge amount of Americans with student debt are finding it hard to keep up with their loans.

More than 40% of Americans with federal student loans are behind in their payments or aren’t making them at all. The data comes from a quarterly snapshot of the government’s $1.2 trillion student-loan portfolio put out by the Department of Education. That means only 12.5 million Americans are current on their federal loan repayments of the 22 million who are out of school and took out loans.

It’s a slight improvement from last year, when the Education Department reported a non-payment rate of 46%, but much of the difference is due to more borrowers entering programs that lower their monthly obligations by tying them to borrowers’ incomes. The number of borrowers in these programs jumped nearly 50% over the past year.

Of the group that is behind on their student debt, 3.6 million haven’t made payments in over a year, placing them in default. Another 3 million are at least a month behind.

In a recent blog post published earlier this week, the Education Department wrote that those who don’t pay back their federal student loans won’t be arrested—but “it’s bad for your credit and your financial future, for starters.” The department has trumpeted income-driven repayment plans as a way of responsibly addressing large student loans.






I simply cannot understand the giant selfishness of this generation of users that major in something and then can never pay back what they borrow, so they steal from the taxpayers.


I so hope the next President ends this government backing of college loans. It is ridiculous that people can just take 100K plus and never have to pay it back.

by on Apr. 8, 2016 at 3:50 PM
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Replies (1-10):
Kriskash25
by Member on Apr. 9, 2016 at 12:32 PM
5 moms liked this
I think all should get a college degree as free public school. I hope our next president makes the next steps toward making that happen. People shouldn't need to take out loans out to get a better a life the school work is payment enough.
Billiejeens
by Emerald Member on Apr. 9, 2016 at 12:54 PM
5 moms liked this
There is nothing free
The only time something is free is if someone stole it.

Quoting Kriskash25: I think all should get a college degree as free public school. I hope our next president makes the next steps toward making that happen. People shouldn't need to take out loans out to get a better a life the school work is payment enough.
talia-mom
by Bronze Member on Apr. 9, 2016 at 12:59 PM
2 moms liked this

Then move to another country. It will not happen here. A president does not have that power.

Quoting Kriskash25: I think all should get a college degree as free public school. I hope our next president makes the next steps toward making that happen. People shouldn't need to take out loans out to get a better a life the school work is payment enough.


idunno1234
by Silver Member on Apr. 9, 2016 at 2:06 PM

Oh sure, those selfish college students.

Because the fact that student loan debt is over a trillion dollars has nothing to do with the obscene rise in college tuition.



Donna6503
by Gold Member on Apr. 9, 2016 at 2:20 PM
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These loans are used to pay professors, researches, assistances, etc., all back by taxpayers, if such loans that have already been discounted by government backings, become dischargeable by bankruptcy would hurt everyone but the person who actually took the loan in the 1st place. Everyone knows if you take out these loans you'll need to pay it back. It's fair.
Donna6503
by Gold Member on Apr. 9, 2016 at 2:25 PM
1 mom liked this
In purely an economic solution to quickly lower college tuition would be to have the government withdraw all funding and money from college. (I'm against such actions)

Point being; solution needs to be aware of side effects of their actions, the side effect of allowing bankruptcy to discharge students loans would be higher tuition cost

Quoting idunno1234:

Oh sure, those selfish college students.

Because the fact that student loan debt is over a trillion dollars has nothing to do with the obscene rise in college tuition.

idunno1234
by Silver Member on Apr. 9, 2016 at 2:39 PM

I am not saying there is a simple quick fix for this at all.  This problem has been, like so many others we are dealing with, decades in the making and it is multi faceted.

However, in the last 35 years, college tuition has quadrupled.  The easy availability of loans allowed access to a college education for people who otherwise could never have afforded it....which contributed to a further rise in tuition costs (hey, "free market "shit going on there) and now we have kids and their parents (raises my hand....ugh) who are saddled with more debt than they can reasonably pay off.

It seems to me that the only other solution is to cut off the loan spigot and make college once more the domain of the wealthy.

Regarding the current trillion dollar mess, I would say it is just one more thing that will screw all of us, including future generations, down the line.  I have no answers.


Quoting Donna6503: In purely an economic solution to quickly lower college tuition would be to have the government withdraw all funding and money from college. (I'm against such actions) Point being; solution needs to be aware of side effects of their actions, the side effect of allowing bankruptcy to discharge students loans would be higher tuition cost
Quoting idunno1234:

Oh sure, those selfish college students.

Because the fact that student loan debt is over a trillion dollars has nothing to do with the obscene rise in college tuition.


romalove
by SenseandSensibility on Apr. 9, 2016 at 2:57 PM
2 moms liked this

$10,000 is five figures.  If someone took that much debt to go through four years of college that wouldn't seem excessive, would it?

No one is taking six figure government backed loans to get a bachelor's degree.  Max if you're an independent student or a dependent student with parents who can't take PLUS loans is $57,000 for all four years combined. 

I have a child in college and one who's been out of college for about five years.  The amount of government backed loans permitted over that time has not gone up very much.  My older daughter took max loans permitted over each year of school and ended up about $27,000 in debt.  My child in college now will end up with less than that, because she has been given scholarships and grants my older daughter didn't get.

I don't know what you consider a "worthless" degree.  My older daughter's degree is in English.  She had a great deal of trouble getting a good job after graduation, and has had her loans deferred several times.  In deferrment status she wasn't considered delinquent, but it took her time to get a job where she could actually pay anything back.  She's recently gotten a good job at an IT company and is paying again, and has some optimism about her career.

My younger daughter is going for a degree I'm sure you would likely find worthless.  She is finding it very worthwhile.  

talia-mom
by Bronze Member on Apr. 9, 2016 at 3:28 PM
1 mom liked this

You are capable of understanding that the ease of taking out the loans is a huge chunk of the reason why the costs have risen so much?

Make them dischargeable, do not allow the government to back them, and people aren't taking out incredibly high amounts of loans so they can live a nice life off them in college because the banks aren't going to give 60K for art history.

Quoting idunno1234:

Oh sure, those selfish college students.

Because the fact that student loan debt is over a trillion dollars has nothing to do with the obscene rise in college tuition.


romalove
by SenseandSensibility on Apr. 9, 2016 at 3:33 PM
1 mom liked this


Quoting talia-mom:

You are capable of understanding that the ease of taking out the loans is a huge chunk of the reason why the costs have risen so much?

Make them dischargeable, do not allow the government to back them, and people aren't taking out incredibly high amounts of loans so they can live a nice life off them in college because the banks aren't going to give 60K for art history.

Quoting idunno1234:

Oh sure, those selfish college students.

Because the fact that student loan debt is over a trillion dollars has nothing to do with the obscene rise in college tuition.


I have a question for you.

Most college students don't have good jobs and credit ratings (most haven't started getting credit so they don't have a rating yet).  On what basis do you propose loans be doled out?  Should the banks have a predetermined list of approved majors?  What about kids who change majors while in school?  Most colleges don't require a declared major, unless you're in a specialized field, until the end of sophomore year.  How would the bank know they were funding an art major if there is no declared major?  

How would this play out in real life?  Would only people of means be able to take liberal arts type degrees such as art history or philosophy because no one would give them a loan?  Would only people who have parents with good credit ratings get loans?

How would this impact universities as they stand right now, since they depend so much on loans for their funding?

I guess that was more than one question lol.

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