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(Salon)   Why is it a city like Detroit can hide behind Chapter 9 Bankruptcy protection, but not the 37 million Americans drowning in student loan debt?   (salon.com) divider line 225
    More: Interesting, Americans, Detroit, collective investment scheme, sticker price  
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5393 clicks; posted to Main » on 24 Jul 2013 at 9:46 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-07-24 09:46:55 AM  
Because fark you, that's why.
 
2013-07-24 09:47:39 AM  
because indentured servitude is the new hotness
 
2013-07-24 09:47:41 AM  

tommyl66: Because fark you, that's why.

 
2013-07-24 09:48:00 AM  
Because Detroit had assets when it established its line of credit?
 
2013-07-24 09:49:16 AM  
Let me sum it up: Because Bush Obama Benghazi Snowden Wikileaks Fox News.

That's why.

Oh, and also Obamacare Welfare and Bootstraps.
 
2013-07-24 09:49:28 AM  
Is the answer Socialism?
 
2013-07-24 09:50:28 AM  
Because bankruptcy is an extreme last resort and most people would rather do everything they possibly could before declaring bankruptcy over student debt?
 
2013-07-24 09:50:32 AM  
I know it sucks, but who would make a student loan that was dischargeable in bankruptcy? You'd have ten million students every year graduating with $160,000 in student loans, no assets, no income, and immediately declaring bankruptcy to get out of it. In a sense, no bank would ever loan that much money unsecured at a reasonable interest rate, unless the collateral is your future earnings.

//That's my understand of why that's how it has to be. Am I wrong?
 
2013-07-24 09:50:42 AM  
Its who you owe it to. The guy with the gun government always gets theirs.
 
2013-07-24 09:50:45 AM  

LaurenAguilera: Let me sum it up: Because Bush Obama Benghazi Snowden Wikileaks Fox News.

That's why.

Oh, and also Obamacare Welfare and Bootstraps.


Also Zimmerman
 
2013-07-24 09:50:48 AM  
It would be a moot point if secondary education was affordable.
 
2013-07-24 09:51:10 AM  
Because Detroit knows how to change the brakes on a 15 year old Ford Escort?

/nothing
 
2013-07-24 09:52:16 AM  

bopis: Its who you owe it to. The guy with the gun government always gets theirs.


I thought about striking out "government" and putting in "bank" but I'm in a cynical mood this morning and figure that would just be replacing synonyms.
 
2013-07-24 09:52:19 AM  

dukeblue219: That's my understand of why that's how it has to be. Am I wrong?


I guess I should have RTFA first because it covers what I just said. Oh well.
 
2013-07-24 09:53:31 AM  
Sure.   If you want to pay 8% interest on your loan.

Better be careful what you ask for....
 
2013-07-24 09:53:52 AM  
Because students and other people saddled with student load debt do not have the balls in this country to stand up for what they farking believe in.  Take to the farking streets.  Make them hear you.  You won't get change from a ballot box and you want get change from either major party.
 
2013-07-24 09:55:45 AM  
Student loans are a giant scam.  Some of them have 10% origination fees, then charge you interest on top of this so you are paying interest on 110% of what you took out immediately.  Compounding this over four years, you'll accrue over 43% of the value of the original 5k in interest.  This part is usually left off of the financial aid paperwork or put in super small print.  Also, given the state of mathematics education in this country, compounding interest is probably above the skill set of the average college student.
 
2013-07-24 09:56:03 AM  
You owe it to the government. The government always gets its money.
 
2013-07-24 09:56:07 AM  

dukeblue219: I know it sucks, but who would make a student loan that was dischargeable in bankruptcy? You'd have ten million students every year graduating with $160,000 in student loans, no assets, no income, and immediately declaring bankruptcy to get out of it. In a sense, no bank would ever loan that much money unsecured at a reasonable interest rate, unless the collateral is your future earnings.

//That's my understand of why that's how it has to be. Am I wrong?


That was the logic when they started introducing the five and seven year waiting periods before you could file for dischargement of your student loans under bankruptcy protection, yes.

I really don't see where banks would have any incentive at all to make loans to people who have no income and no assets if those same people could immediately just walk away from the loan the day they get the degree with the only penalty being seven years of bad credit. They'd be completely out from under it before they turned 30.

/Borrowed money for college.
//Paid back every cent.
 
2013-07-24 09:57:42 AM  

dukeblue219: I know it sucks, but who would make a student loan that was dischargeable in bankruptcy? You'd have ten million students every year graduating with $160,000 in student loans, no assets, no income, and immediately declaring bankruptcy to get out of it. In a sense, no bank would ever loan that much money unsecured at a reasonable interest rate, unless the collateral is your future earnings.

//That's my understand of why that's how it has to be. Am I wrong?


Yes. That is the point. The federal government sets annual and aggregate limits on the amount of money you can borrow from them. Sallie Mae does not.

So, if you could discharge your Sallie Mae loan in bankruptcy, they would think twice before offering a $40,000 loan each year to a kid studying "undecided".
 
2013-07-24 09:57:47 AM  
www.bvvp.com
 
2013-07-24 09:57:54 AM  

dukeblue219: dukeblue219: That's my understand of why that's how it has to be. Am I wrong?

I guess I should have RTFA first because it covers what I just said. Oh well.


Reality check:  This is *Fark*.  You're posting a response to the headline for an article without reading it.

Would you post internet reviews of cars based on the font used to write the text surrounding one picture of the car in an article online if the picture was photoshopped to look like it was in a funny location?

Seriously, re-evaluate your logic process here.  RTFABR (before reply/response).
 
2013-07-24 09:58:19 AM  
Earn it before you burn it.
Try that out for a while.
 
2013-07-24 09:58:29 AM  

dukeblue219: I know it sucks, but who would make a student loan that was dischargeable in bankruptcy? You'd have ten million students every year graduating with $160,000 in student loans, no assets, no income, and immediately declaring bankruptcy to get out of it. In a sense, no bank would ever loan that much money unsecured at a reasonable interest rate, unless the collateral is your future earnings.

//That's my understand of why that's how it has to be. Am I wrong?


Okay, so what you're saying is that we'd go back to responsible loan practices instead of just writing blank checks for ever-escalating higher education and maybe actual capitalist market forces might start to exert a bit of control over this part of our society infrastructure?

You make it sound like such a bad thing.
 
2013-07-24 09:58:47 AM  
I filed bankruptcy a few years ago specifically so I could handle my student loans. Sucks but I had to do it.   I knew in my last year of grad school that I was sinking in debt and would not be able to handle all of it once my deferment ended.  If I had a choice I would have discharged my loans but kept the credit cards.
 
2013-07-24 09:59:13 AM  
The answer is simple:

- subsidize tuition in order to reduce the frequency/need for student loans
- allow student loans to be absolved through bankruptcy
- provide other means/ways/mechanisms to promote an educated population

However, in order to qualify for this program, as a student, you need to:

- present what essentially amounts to a "business plan" in order to qualify for a loan:
  - show how you intend to pay it back
  - justify your degree in terms of return on investment
  - research the "employability" of your degree
  - present a year-by-year plan including such things as expected income, loan repayment schedule, etc.
- require that you maintain a certain GPA, or you revert back to the "old" system

What this will do is:
- ease the way for people who actually plan for their future, and are serious about college
- dissuade people from going to college for the sake of going to college
- dissuade people from racking up massive amounts of debt in order to obtain an obviously useless (in terms of ROI) degree

e.g. If you really, really want that Gender Studies degree, you can pay for it on your own dime
 
2013-07-24 09:59:45 AM  

buckets_of_fun: LaurenAguilera: Let me sum it up: Because Bush Obama Benghazi Snowden Wikileaks Fox News.

That's why.

Oh, and also Obamacare Welfare and Bootstraps.

Also Zimmerman


I knew I forgot one.
 
2013-07-24 09:59:51 AM  

Kome: bopis: Its who you owe it to. The guy with the gun government always gets theirs.

I thought about striking out "government" and putting in "bank" but I'm in a cynical mood this morning and figure that would just be replacing synonyms.


Synonymous

You should have expected us

I was going to change all the words with synonyms but I then stopped caring.
 
2013-07-24 10:00:36 AM  
Because Congress, that's why.

Based on zero reliable evidence and a whole lot of hearsay about Doctors declaring bankruptcy during their residency to get rid of med school debt and then walking into 6-figure jobs, Congress decided to monkey with bankruptcy laws.

Maybe - just maybe - the proper solution to this isn't to force (and permit) huge loans to students with little ability to repay them, but to actually have government fund higher education appropriately, and exercise some control on the stupidly high cost of college.
 
2013-07-24 10:00:55 AM  

outdoorsman_jph: Student loans are a giant scam.  Some of them have 10% origination fees, then charge you interest on top of this so you are paying interest on 110% of what you took out immediately.  Compounding this over four years, you'll accrue over 43% of the value of the original 5k in interest.  This part is usually left off of the financial aid paperwork or put in super small print.  Also, given the state of mathematics education in this country, compounding interest is probably above the skill set of the average college student.


That's no longer the case. I don't know of any REPUTABLE student loans that have a 10% origination fee. If any such loans existed, they haven't since 2009.

The highest origination fee that I know of is the Federal PLUS loan, with it's brand new 4.024% origination fee. It went up from 4% even the last time  Congress made good on it's promise to hold it's breath until the president stopped being so black.
 
2013-07-24 10:01:52 AM  

dukeblue219: I know it sucks, but who would make a student loan that was dischargeable in bankruptcy? You'd have ten million students every year graduating with $160,000 in student loans, no assets, no income, and immediately declaring bankruptcy to get out of it. In a sense, no bank would ever loan that much money unsecured at a reasonable interest rate, unless the collateral is your future earnings.

//That's my understand of why that's how it has to be. Am I wrong?


Yes, but the solution isn't simply to make loans non-dischargeable, or else there would be no such thing as bankruptcy for any type of loan (which may or may not be the wet dream of every bank CEO, I don't know). Part of the solution is to cap the interest of the loans to a reasonable level, so that people might actually be able to pay it off in a reasonable amount of time without their debt spiraling out of control. Part of the solution is to stem the tide of rising tuition costs requiring more students to take out more and higher loans in order to afford to be able to get a degree, eventually leading to the cost of continuing education going down, not up. Part of the solution is for the vaunted and sacred job-creators to actually create some f*cking jobs so people graduating can find employment commensurate to their academic and technical knowledge/skills that pays a living wage. Student loan debt is a problem that needs to be tackled from multiple angles, most of which would require an immediate short-term cost but a huge long-term benefit to society. As such, it probably won't ever be solved.
 
2013-07-24 10:02:59 AM  

tommyl66: Because fark you, that's why.


Done in potato.
 
2013-07-24 10:03:19 AM  

raerae1980: I filed bankruptcy a few years ago specifically so I could handle my student loans. Sucks but I had to do it.   I knew in my last year of grad school that I was sinking in debt and would not be able to handle all of it once my deferment ended.  If I had a choice I would have discharged my loans but kept the credit cards.


Did you pay to go to graduate school cause it sounds like you did? Which is doing it wrong.
 
2013-07-24 10:03:24 AM  

Limp_Bisquick: It would be a moot point if secondary education was affordable.


Nonsense, you would expect administrator to take a pay cut?

U.S. Department of Homeland Security Secretary Janet Napolitano has been approved by the UC Board of Regents as the first woman president in the 145-year history of the University of California at a salary of $570,000 per year http://www.californiality.com/2013/07/janet-napolitano-new-uc-presiden t.html

How else would they pay for courses in gender or ethnic studies or puppetry? They offer too many college majors in areas of study that should not really exist.
 
2013-07-24 10:03:28 AM  

what_now: dukeblue219: I know it sucks, but who would make a student loan that was dischargeable in bankruptcy? You'd have ten million students every year graduating with $160,000 in student loans, no assets, no income, and immediately declaring bankruptcy to get out of it. In a sense, no bank would ever loan that much money unsecured at a reasonable interest rate, unless the collateral is your future earnings.

//That's my understand of why that's how it has to be. Am I wrong?

Yes. That is the point. The federal government sets annual and aggregate limits on the amount of money you can borrow from them. Sallie Mae does not.

So, if you could discharge your Sallie Mae loan in bankruptcy, they would think twice before offering a $40,000 loan each year to a kid studying "undecided".


As they *should*.  Everyone has a right to pursue a college education.  Not everyone should go, even those who can afford it.  If you don't know you want to go to college enough to pick something to study, then wait to go until you do know what you want.  Or go somewhere else like a technical school for post secondary study.  Really, we need more trade schools that are cheaper/easier to get into in the US, and less 4 year colleges designed for only recent high school graduates to attend.

In business there is risk.  If students being able to discharge a loan in bankruptcy puts the current lenders out of business because there's too much risk, then other lenders will step up.  That's business for ya.  There's always someone willing to accept the risk for the reward.
 
2013-07-24 10:03:28 AM  
i.imgur.com
 
2013-07-24 10:03:37 AM  

WhippingBoy: e.g. If you really, really want that Gender Studies degree, you can pay for it on your own dime


Except that liberal arts students are getting better jobs out of college because they are the only discipline that teaches critical thinking.

Every time someone says "You should get X degree" I cringe because I recognize that we will hit market saturation of those degrees.

E.g: Law Degrees.
 
2013-07-24 10:04:09 AM  

dukeblue219: I know it sucks, but who would make a student loan that was dischargeable in bankruptcy? You'd have ten million students every year graduating with $160,000 in student loans, no assets, no income, and immediately declaring bankruptcy to get out of it. In a sense, no bank would ever loan that much money unsecured at a reasonable interest rate, unless the collateral is your future earnings.


I fail to see the problem with this.
 
2013-07-24 10:04:14 AM  

vernonFL: Because bankruptcy is an extreme last resort and most people would rather do everything they possibly could before declaring bankruptcy over student debt?


Hardly.   There is nothing like racking up 100k of debt and just declaring bankruptcy, discharging the debt, and getting a job.   Its no problem being able to rent a room when you are 23.   Then, the new job starts paying you the big bucks and you are on easy street.

At minimum, if you discharge your govt student loan, you should not be eligible for a home to be backed by freddie.  It would probably still be worth it to skip town on your 100k, but at least you would have to think about it.   People would probably get around this one by having their parents buy the house and the kid makes the payments.  Once the house is paid off.  Parents simply quit claim.  Now, none of the kids had to pay for college.
 
2013-07-24 10:04:38 AM  
I remember reading an interview with Donald Trump a number of years ago in which he was explaining some of his financial situation which went something like this;  "If you are some guy that defaults on a $200k mortgage, the bank is gonna come after you for the money you owe them.  Basically, if you owe a bank $200k you're farked, but if you owe them $200 million, you're partners."
 
2013-07-24 10:04:41 AM  

WhippingBoy: The answer is simple:

- subsidize tuition in order to reduce the frequency/need for student loans
- allow student loans to be absolved through bankruptcy
- provide other means/ways/mechanisms to promote an educated population

However, in order to qualify for this program, as a student, you need to:

- present what essentially amounts to a "business plan" in order to qualify for a loan:
  - show how you intend to pay it back
  - justify your degree in terms of return on investment
  - research the "employability" of your degree
  - present a year-by-year plan including such things as expected income, loan repayment schedule, etc.
- require that you maintain a certain GPA, or you revert back to the "old" system

What this will do is:
- ease the way for people who actually plan for their future, and are serious about college
- dissuade people from going to college for the sake of going to college
- dissuade people from racking up massive amounts of debt in order to obtain an obviously useless (in terms of ROI) degree

e.g. If you really, really want that Gender Studies degree, you can pay for it on your own dime


PSHHHHH your rational approach has no place in a student loan debt thread!  Leave at once!
 
2013-07-24 10:05:11 AM  

Intrepid00: raerae1980: I filed bankruptcy a few years ago specifically so I could handle my student loans. Sucks but I had to do it.   I knew in my last year of grad school that I was sinking in debt and would not be able to handle all of it once my deferment ended.  If I had a choice I would have discharged my loans but kept the credit cards.

Did you pay to go to graduate school cause it sounds like you did? Which is doing it wrong.


Um, there's no funding at the MA level so yes, out of pocket I did.  Now, had I gone on to a PhD then no, I would not have.
 
2013-07-24 10:06:21 AM  

AccuJack: As they *should*. Everyone has a right to pursue a college education. Not everyone should go, even those who can afford it. If you don't know you want to go to college enough to pick something to study, then wait to go until you do know what you want. Or go somewhere else like a technical school for post secondary study. Really, we need more trade schools that are cheaper/easier to get into in the US, and less 4 year colleges designed for only recent high school graduates to attend.


This. This right here.

When I'm made Queen of Everything it will be very very difficult to get into college and very very difficult to stay in college.

Paying for college, however, will not be challenging.
 
2013-07-24 10:07:14 AM  
Why did we bail out the auto makers but not the city that spawned them?
 
2013-07-24 10:08:01 AM  
College is a scam.
 
2013-07-24 10:08:31 AM  
ON the one hand, you have a city that helped grow and prop up the US economy for a century.  And on the other hand, you have an economy recently built on the false premise that a degree is only good if you spend $40,000 per year on it.  Go to a state school.  Let the overpriced shiathole schools die.
 
2013-07-24 10:08:34 AM  

Limp_Bisquick: It would be a moot point if secondary education was affordable.


This is bullshiat.  Get out and see the world for a few years, get off the parental tit so you can apply for financial aid based on your own income.  You'd be surprised how much grant money is available when your income is under $20k per year.  There ARE opportunities but you're already defeated by the impression it's too expensive.  You can't always have it HOW you want it.  If you want it bad enough you will find a way without saddling yourself with crippling debt.  You will learn the meaning of SACRIFICE.

Or get into an apprenticeship program

This country has been conditioned to believe that the only way to achieve prosperity is through a bachelor's degree and now we have a shortage of skilled blue collar workers and a surplus of lawyers and unemployable "educated" youths.

High paying jobs as electricians, plumbers, millwrights and other fields go unfilled because they require hard work instead of expertise in Art History or whatever humanities program you completed at "Cal State Barstow", and entitled sh*tbags think the jobs are beneath them.

Also you start at the bottom and work your way up it's not "plumbers idol" where you're plucked from obscurity and showered with false praise.

I know mommy always told you you were special, but you're not.  You need to get in line with everybody else.
 
2013-07-24 10:08:42 AM  

dukeblue219: I know it sucks, but who would make a student loan that was dischargeable in bankruptcy? You'd have ten million students every year graduating with $160,000 in student loans, no assets, no income, and immediately declaring bankruptcy to get out of it. In a sense, no bank would ever loan that much money unsecured at a reasonable interest rate, unless the collateral is your future earnings.

//That's my understand of why that's how it has to be. Am I wrong?


you're right.  i would not have lend me the money for my student loans if I were a bank.

let's see, no job, no assets, no income... and you're guaranteed not to be working for several years.  yeah, here's $150k.
 
2013-07-24 10:09:19 AM  

raerae1980: Intrepid00: raerae1980: I filed bankruptcy a few years ago specifically so I could handle my student loans. Sucks but I had to do it.   I knew in my last year of grad school that I was sinking in debt and would not be able to handle all of it once my deferment ended.  If I had a choice I would have discharged my loans but kept the credit cards.

Did you pay to go to graduate school cause it sounds like you did? Which is doing it wrong.

Um, there's no funding at the MA level so yes, out of pocket I did.  Now, had I gone on to a PhD then no, I would not have.


His point was inelegantly stated but correct: It's almost never a good idea to pay for a terminal Master's degree, because they rarely pay for themselves.

There are some exceptions of course, but if you got a Masters in History and took out a loan for it, that's not really a smart fiscal decision.

Nothing you can do about it now, unfortunately, but serve as a warning to others.
 
2013-07-24 10:09:29 AM  
People often claim their bankruptcy is due to an unexpected medical cost or something similar, but nothing can unexpectedly force you into college.  And while you can argue that people being screwed by payday advanced loans and the like are not smart or knowledgeable enough to know they are going to get screwed, college students are assumed to be at least semi-educated.

So, it is assumed you were smart and knowledgeable enough to know exactly what you were getting into, and the debt was completely voluntary.  As such you are unlikely to get a lot of sympathy.


/paid every cent of my student loans
 
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