If lenders stop lending so much due to bankruptcy filings it might bring down the cost of tuition or get rid if useless degrees. Or it might not.
Tuition rates are high because they are propped up by debt. Make the debt bankrupt-able, and people will lend less. The colleges will have to lower rates because there is less money available to them or they can go out of business.
We are seeing price inflation due to the availability of financing. My goal is to end the financing of education, or at the very least make the lender analyze the degrees they are financing.
Just curious. This money is owed, right? If it gets wiped out who pays the bill? Or do they get screwed? What are the repercussions if that happens? Or is the government going to pay it?
In my opinion it’s because the government was moving to be the primary lender in student loans. Of course it’s going to protect itself by law.
But larger than that, bankruptcy guidelines almost ensure that if student loans were subject to bankruptcy, just about any college graduate with a portfolio full of loans (and no assets yet, and entry-level salary – if they even have a job) will qualify for immediate bankruptcy upon graduation.
The problem isn’t new. They recognized it decades ago. It has only become more extreme.
If law allows bankruptcy upon graduation, watch how quickly the student loan business disappears. (And maybe that’s a good thing.)
I’m not a fan of allowing bankruptcy for this. But if it goes through, it should only be allowed on loans written after the law passes. Old loans were written with the understanding that they could not be discharged. Those lenders will get screwed if they can suddenly be wiped out by bankruptcy.
These specification would be spelled out in the law, but I would prefer just letting the bankruptcy judge decide who gets screwed.
Like all other debt.
If lenders (moving forward) know that their loans are going to get bankrupted, at least they can take that into account when writing new loans.
This has been a long time coming if it passes. The ways they can come after you over student loan debt are insane.
Sounds like a good idea.
That’s way too high.
This I would fully support.
They would be following the well-trodden path of Trump in not paying bills and using bankruptcy to avoid paying bills.
I would assume that there would be at least a five or ten year moratorium on when they could do this. I’ve said this before if these colleges think they are putting out such an amazing product let them stand behind it.
If every student declares bankruptcy upon graduation, there will not be any loans available to the students. No one is going to loan money that won’t be paid back.
It’s free market economics.
No rational legislation for this would allow a student to declare bankruptcy after graduation. The whole idea of going to college is to get an education that is going to result in a good paying job. But if a person doesn’t get a good paying job after say 5 years I have no problem letting the colleges be on the hook for that. Colleges should have to stand behind their ■■■■■■■ product just like any other business.
Don’t allow it to be wiped off within a certain period of time (you have to TRY after all), but after that, allow the debt to be discharged. Tired of Wall Street having priority over Main Street.
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Yes, although the 1978 legislation that first trimmed the ability to bankrupt student loans after college was set at five years, there were reports that the bankruptcy rate of college debt was 1 - 2% back in the 1970s.
I’m sure it would be much higher after this, but that would be due to the amount of debt that was not dis-chargeable via bankruptcy the last 21 years.
I’d like to see the colleges take responsibility for the degrees they bestow too. Many are worthless as usable degrees. Many are granted to students who will not be able to exercise them. And a vast many today are not worth the loans students took out to obtain them.
However the question here is bankruptcy, and in most cases the college is not the lender. Assigning responsibility of the government- or bank-loan to the college is not a function of bankruptcy courts. A whole new legislative pile would be needed for that.
What if we made the loans bankrupt-able only going forward? The people of the last twenty year would be the sacrificial lamb.
Oh you know who the lender will be, the Government.