A real option that included bankruptcy would include something like this:

Fed only underwrites loans for public schools, in conjunction with the current national need for that occupation.

Fed sets a lower loan rate: 5% instead of 8%. Your parents bought homes at 14% and they survived.

Loans can be discharged in bankruptcy BUT the federal government gets to keep your tax credits and refunds until its all paid off. Government is first in line of debts to be paid in the case of a death. Nobody gets to get a degree and walk away.

I think the reasonable compromise is playing around with the interest accumulation. Reducing rates, adding a max total accumulation, and applying payments straight to principal are a few ideas that hold borrowers accountable and don't go near outright forgiveness, but still create a path to freedom.

Plus, 7% rates on federally guaranteed, bankruptcy-proof loans (ie essentially riskless for the lender) are pure usery. 7% is a decent expectation for a risky investment, not a riskless one.

administrative errors said:

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Student loans are a symptom of a bigger problem.... the money is bad.

Fiat education, fiat Healthcare, fiat food... all rotten and festering at this point.

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Hey,

Let me know if you need an appendectomy. I watched a video on YouTube last night on how to do them on horses. I've been itching to try one out on my coffee table.

Quote:

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The easy button fix is to allow people to get rid of student loans through bankruptcy. That is a real penalty but it is something they can recover from, also will make them understand debt while getting a new start.

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When the main creditor is the federal government (FUNDED BY THOSE OF US WHO PAY TAXES) the bankruptcy and subsequent taxpayer bailout sucks donkey butt.

one MEEN Ag said:

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A real option that included bankruptcy would include something like this:

Fed only underwrites loans for public schools, in conjunction with the current national need for that occupation.

Fed sets a lower loan rate: 5% instead of 8%. Your parents bought homes at 14% and they survived.

Loans can be discharged in bankruptcy BUT the federal government gets to keep your tax credits and refunds until its all paid off. Government is first in line of debts to be paid in the case of a death. Nobody gets to get a degree and walk away.

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1) Provide each state a set amount of money to lend to students every year.
2) The state provides a set amount of money to public schools based on politics, uh, I mean some criteria that takes into account past repayment rates and total enrollment.
3) The school can re-lend that money when it gets paid back. They get to keep the interest they collect (statutory rates). If it doesn't get paid back, they have to wait for more money from the government.
4) Schools that have students that pay back their loans get massive war chests. Schools that don't lose.

Corinthian College
Quinn Street (see article details)
Career Education Corporation
UTI
Money Magazine LInk

[url=https://timeline.com/for-profit-colleges-have-been-taking-advantage-of-veterans-since-wwii-344ab3015543][/url]

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Article From 2016
Earlier this week, several veterans' organizations petitioned the Department of Veterans Affairs to halt its flow of federal funding to for-profit colleges institutions like DeVry University, Corinthian Colleges, ITT Tech and the University of Phoenix. Via the G.I. Bill, the V.A. diverts over $1 billion per year to such schools.

The problem is for-profit colleges are widely acknowledged to be predatory. They attract applicants with low barriers to entry, relatively low tuition costs, and online courses that can be taken around busy work schedules. Poor people, many of them, who don't realize the degrees they're pursuing are close to worthless. For instance, for-profit law schools promise to mint lawyers, but typically have no bar association accreditation, which students often only discover after completing the program, saddled with high-interest loans and unimproved career prospects.
--------------------------------------------
The recruitment of veterans has exploded since the turn of the century, with conflicts in the Middle East churning out more and more military personnel eligible for the G.I. Bill. In 2009, for instance, Kaplan University invested $29 million in the recruitment of veterans, including hiring 45 staffers whose main job it was to woo vets, often by visiting Wounded Warrior centers and veterans' hospitals.

In recent years, the problem has become too blatant to ignore. Seven of the eight companies that received the most G.I. Bill money in 2014 were under investigation for fraud. Earlier this year, the V.A.'s own educational advisory committee asked the department to do something about the for-profit college industry's targeting of veterans. Now, the National Military Family Association, the Military Officers Association of America have written letters to the V.A. urging them to stop the flow of federal funds into predatory corporations' pockets.

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Really easy to spend with OPM.

Ags4DaWin said:

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Young people get told they can live a resort like existence for 4 years with alcohol, sex, and good times and then get a job making 6 figs afterward by borrowing ridiculous amounts of money they have no business being lent.

And we are supposed to expect them to turn it down?

government guaranteed loans are the worst thing to happen to college education.

it has bloated liberal arts programs, led to higher costs and useless college fees, created a slew of useless degrees, turned 20 somethings into indentured servants, and helped to financially cripple a generation.

that being said, the students should still have to pay them back.

without accountability there will be no change. and accountability isn't saying "I shouldn't have to take responsibility for my mistake."

responsibility is learning from your mistake and fulfilling your obligations as best as you can.

We can hold students in debt accountable while changing the system.

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They shouldn't have to be fully paid back.

Bankruptcy should be an option.

The current state for borrows who can never pay it back, of having life long debt payments, is wrong.

Get the government out of the student loan business. This influx of free money is the primary driver for all these cost increases. Not advocating this, but if all colleges went 100% cash only, prices would drop like a stone overnight.

The predators here are the schools.....and it's not the "for profit" schools, it's the private liberal arts schools with their bloated administrations and over-paid professors. Make the schools pay based on default rates - many will go under (as they should). We need fewer colleges and many more trade schools.

TxTarpon said:

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Quote:

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The easy button fix is to allow people to get rid of student loans through bankruptcy. That is a real penalty but it is something they can recover from, also will make them understand debt while getting a new start.

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When the main creditor is the federal government (FUNDED BY THOSE OF US WHO PAY TAXES) the bankruptcy and subsequent taxpayer bailout sucks donkey butt.

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Don't disagree but it is a much more reasonable compromise that is actually possible and would start to equalize the system. If you think all that money is getting paid back you are naive. As it stands they are just leaving the spigot wide open.

The thing I find most bizarre is if your parents make too much money you don't qualify for federal loans. They literally don't even want to loan money who have the best chance of paying it back.

We fixed the keg said:

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MelvinUdall said:

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Holy crap, $1 million in student loan debt? Insanity!

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....and watch it be for something in liberal arts, like 9th century gender studies and the impact on planetary alignment.

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No. The guy featured is a dentist.

I teach a Dave Ramsey course at my church. Some of the worst borrowers are dentists, chiropractors and pharmacists. They take out hundreds of thousands of dollars in student loans, and their income maxes out pretty quickly with no way to repay it -- especially when they try to buy a nice home, couple of cars, and start sending their kids to private schools.

No one really sheds a tear for them, but they are operating on pretty thin margins trying to keep up with the Joneses.

Old McDonald said:

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is there any other area of finance where 17 year olds with no income to speak of (or at best a vague prospect of future income) are given access to tens or even hundreds of thousands of dollars of credit?

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Banks used to do it with CCs in the early to mid '90s but that stopped years ago. I received an unsolicited credit card with a $34K credit limit when I was a sophomore in college with no income to speak of.

I still have the card.

Simple solution for all of this is to get the government out of the student loan business. Was yet another issue that Trump was actually trying to make happen, but Biden won and recently fired the guy trying to make it happen. Biden then doubled down on the federal government staying in this business.

Quote:

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No. The guy featured is a dentist.

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For the $1MM in loans? WOW.

Still, even with a very solid medical degree and a private practice (which you aren't going to start right out of college with no experience), it would take some time to make $1MM over business and personal expenses.

I'd love to see a source on that, I think the for profit universities are the worst and are highlighted most often in the statistics and coverage I've seen.

WTF? Biden was gonna fix this. Aren't all the libs who voted for him holding his feet to the fire?

1 Mill for a dental practice is probably 10 years of payments with some belt tightening. Maybe 15. That person isn't defaulting on their loans unless they're living WAY out of their means.

Borrowing huge totals for a professional degree isn't crazy. Still, with state schools that could easily be 250k even if you paid every dime through undergrad.

I need to find the charts of how much is owed. The total number is massive. But the bulk of debt for thr vast majority is doable. It's the few that go deep for worthless degrees or they become doctors or lawyers.

Default on your house, thr asset remains.
Default on your car, it gets record.
There's no asset on school loans, thus no bankruptcy.

That or future loans need to be underwritten. No loans for garbage degrees.

Compromises are reducing interest to 2%, allow penalty free early payoff, and then gut schools for over charging and no fed loans to private or for-profit schools.

The problem is and remains that there's no way in this country for people of lower-medium competence to better themselves.

oldcrow91 said:

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WSJ ripped Baylor a new one yesterday:

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From that article:

"Her daughter, Shique Singleton, 26, said her Baylor degree from 2016 helped her get into an M.B.A. program, though the $38,000 she owes for Baylor on top of her mother's debt is daunting.

"Ms. Saverin said she earns about $75,000 a year directing a nursing assistant program at a technical school. She said that the loans are too much on top of her other bills and she hasn't paid on them in years because she has been able to suspend payments."

So she makes $75K but can't pay anything on her loans? Not even $100 a month?

These reporters always cite sources they think are sympathetic but in reality, they have the opposite effect.

And her mom is even worse off.

"She owes $231,000 in federal student loans of which at least $65,000 in Parent Plus loans came from sending her daughter to Baylor, at least $74,000 in Plus loans for her son's college costs, and loans for her own 2015 master's degree."

These people are smart enough not to get underwater like this. They just figure someone else will eventually bail them out. And we probably all will.

AlaskanAg99 said:

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I need to find the charts of how much is owed. The total number is massive. But the bulk of debt for thr vast majority is doable. It's the few that go deep for worthless degrees or they become doctors or lawyers.

Default on your house, thr asset remains.
Default on your car, it gets record.
There's no asset on school loans, thus no bankruptcy.

That or future loans need to be underwritten. No loans for garbage degrees.

Compromises are reducing interest to 2%, allow penalty free early payoff, and then gut schools for over charging and no fed loans to private or for-profit schools.

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Quote:

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For-profit colleges only enroll 10 percent of students but they account for half of all student-loan defaults. 71% of students in for-profit colleges borrow federal loans, as compared to only 49% of students in 4-year public schools. The average amount borrowed by students in for-profit colleges is nearly $2,000 higher than the amount borrowed in 4-year public schools. These differences in borrowing can't be explained by demographic differences among the student populations; instead, they are mainly caused by the fact that the average tuition at a for-profit college is over $10,000 higher than at a public community college.

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https://www.brookings.edu/blog/how-we-rise/2021/01/12/the-for-profit-college-system-is-broken-and-the-biden-administration-needs-to-fix-it/

BusterAg said:

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one MEEN Ag said:

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A real option that included bankruptcy would include something like this:

Fed only underwrites loans for public schools, in conjunction with the current national need for that occupation.

Fed sets a lower loan rate: 5% instead of 8%. Your parents bought homes at 14% and they survived.

Loans can be discharged in bankruptcy BUT the federal government gets to keep your tax credits and refunds until its all paid off. Government is first in line of debts to be paid in the case of a death. Nobody gets to get a degree and walk away.

---

1) Provide each state a set amount of money to lend to students every year.
2) The state provides a set amount of money to public schools based on politics, uh, I mean some criteria that takes into account past repayment rates and total enrollment.
3) The school can re-lend that money when it gets paid back. They get to keep the interest they collect (statutory rates). If it doesn't get paid back, they have to wait for more money from the government.
4) Schools that have students that pay back their loans get massive war chests. Schools that don't lose.

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Good idea,

The only issue is that its a good idea, and thus the government can't implement it. If they do, they'd find a way to break it and reward the cronies they want.

The only problem is this will expose just how useless most degrees are, and government can't have that. This will correctly align incentives from lending though.