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Allow student loans to be wiped out via bankruptcy?
Posted on 3/21/25 at 12:06 pm
Posted on 3/21/25 at 12:06 pm
As I understand it, one of the issues with student loans is they can’t be wiped out with bankruptcy.
If we accept the fact that many/most will not be paid back, what would the appetite be for letting bankruptcy be an option? Maybe even a new version of it where the interest gets wiped, but not principal, but you still have the bankruptcy on your record and deal with the real world consequences of that.
If these things are perpetual, or they can’t see bankruptcy, there seems to be little downside to just riding them out in perpetuity. No idea how they affect credit scores, though. I was one of the dumb ones that paid Mrs. Zwin’s Baylor debt off in full.
If we accept the fact that many/most will not be paid back, what would the appetite be for letting bankruptcy be an option? Maybe even a new version of it where the interest gets wiped, but not principal, but you still have the bankruptcy on your record and deal with the real world consequences of that.
If these things are perpetual, or they can’t see bankruptcy, there seems to be little downside to just riding them out in perpetuity. No idea how they affect credit scores, though. I was one of the dumb ones that paid Mrs. Zwin’s Baylor debt off in full.
33
Posted on 3/21/25 at 12:07 pm to Ag Zwin
Have the universities pay them plus interest
Posted on 3/21/25 at 12:09 pm to Ag Zwin
Well, their credit got destroyed this past month as they are now reporting late payments.
Posted on 3/21/25 at 12:12 pm to Zgeo
quote:
Have the universities pay them plus interest
I also would like the universities that offer bullshite degrees and allow shitty students to matriculate to suffer consequences.
They should also be barred from accepting financing for any degrees outside of core areas like business, engineering, medicine, education, agriculture, etc, etc. Like, what do you plan to do with your 18th century art history degree, sir? Make a college pay for that. Make a musuem pay for it. Make some donor pay for it.
They actively recruit students into programs with zero chance they'll ever actually make enough money to survive and pay off debt.
Posted on 3/21/25 at 12:13 pm to Ag Zwin
Solving the money issue for higher education would solve a lot of the broader issues with higher education. As long there's unlimited funds available to 'loan' students, with basically none of the parties having skin in the game, costs will continue to rise, and people that shouldn't go to college will continue borrowing billions of dollars they'll never repay for worthless degrees that make them basically unemployable.
Posted on 3/21/25 at 12:14 pm to Ag Zwin
The reason for this law is that when these students graduate they have huge student loans, low income and no assets. It would be too easy for a large percentage of them to declare bankruptcy and the loans would never get paid back.
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Posted on 3/21/25 at 12:14 pm to Ag Zwin
It makes no sense to issue the loans without regard to ability to repay, or credit evaluation, then turn around and allow them to be dischargeable via bankruptcy.
Posted on 3/21/25 at 12:15 pm to ninthward
My wife’s best friend was one of those that just made the minimum payment based on income under Biden admin for all four years. Her payment was $28 a month and she was going to “ride it out” till the loans got fully forgiven. Almost $200k in student loans mind you.
Trump changed it to where it’s not based on income anymore so she finds out her monthly payment is now $1600 a month. She can’t afford it. Goes to a finance guy to discuss and he says she’s going to have to make big chunk payments if she wants to lessen that monthly amount.
She has a chunk in savings for a down payment on a new house and she said she couldn’t spend that on student loans. The advisor says “ma’am, no lender is going to let you even sniff a home loan with this amount of debt you have”
Real world shite.
Trump changed it to where it’s not based on income anymore so she finds out her monthly payment is now $1600 a month. She can’t afford it. Goes to a finance guy to discuss and he says she’s going to have to make big chunk payments if she wants to lessen that monthly amount.
She has a chunk in savings for a down payment on a new house and she said she couldn’t spend that on student loans. The advisor says “ma’am, no lender is going to let you even sniff a home loan with this amount of debt you have”
Real world shite.
This post was edited on 3/21/25 at 12:41 pm
Posted on 3/21/25 at 12:18 pm to Ag Zwin
Underwrite loans for student degrees like you do a business. bullshite, Riskier degrees with little prospect of sufficient cash flow after graduation receive much higher rates, thus deterring pointless borrowing.
Posted on 3/21/25 at 12:20 pm to Ag Zwin
Just get the government out of the funding business and let it work itself out. Government is 100% the problem with college tuition.
Posted on 3/21/25 at 12:20 pm to Zgeo
quote:
Have the universities pay them plus interest
This seems like an avenue to pursue. Any loans to a person attending a school should be paid back by the school's endowment if the person declares bankruptcy.
Posted on 3/21/25 at 12:21 pm to Ag Zwin
I don't give a shite if they pay until the day they die. They made choices, just like people that "didn't have access to contraception" and started punching out kids.
Where were the fricking parents, such as in the last post of a chick in 200k in debt? Oh, they were insisting little suzy absolutely could not take 1000 and 2000 level classes at a JUCO. Education is an investment in your future, they probably screamed.
Where were the fricking parents, such as in the last post of a chick in 200k in debt? Oh, they were insisting little suzy absolutely could not take 1000 and 2000 level classes at a JUCO. Education is an investment in your future, they probably screamed.
Posted on 3/21/25 at 12:22 pm to Ag Zwin
Anyone with student loans is just lazy. Stop getting bullshite degrees and you’ll be fine.
Posted on 3/21/25 at 12:23 pm to notsince98
I paid off my student loans Si, I have no sympthy for those who refuse to do so..I don't know if things have changed but in the past if you were behind your payments or were not paying the government would ketp any money that the IRS owed you.
Posted on 3/21/25 at 12:25 pm to Ag Zwin
The entire student loan system needs to be leveled and replaced. It incentivizes colleges to accept students who will have little chance of repaying it in the real world with their barista like salary.
Colleges need to have some of the liability for their side of the failure.
Colleges need to have some of the liability for their side of the failure.
Posted on 3/21/25 at 12:27 pm to Ag Zwin
How do you repossess an education you don't pay for like you do a car or a house you don't pay for?
Posted on 3/21/25 at 12:28 pm to Zgeo
quote:
Have the universities pay them plus interest
Idiocy.
Posted on 3/21/25 at 12:29 pm to Auburn1968
quote:
Colleges need to have some of the liability for their side of the failure.
Nope.
This is populist pablum.
Posted on 3/21/25 at 12:29 pm to concrete_tiger
quote:
what do you plan to do with your 18th century art history degree, sir?
I know a woman who got a degree in Art History and made quite a living working for an auction house.
People need to stop begging the government to control what degrees people can and cannot pursue. Let them pursue what they want, but also let them suffer the consequences if they make a bad choice.
But to the OP, why are student loans exempt from bankruptcy? That just doesn't make sense.
Posted on 3/21/25 at 12:29 pm to notsince98
quote:
This seems like a ridiculous, populist, low-IQ avenue to pursue.
FIFY.
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