Forum Post: HELP: Let's Make Student Loans Dischargeable in Bankruptcy
Posted 12 years ago on Jan. 3, 2012, 7:45 p.m. EST by dandypirate
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Right now there are two bills in Congress and two bills in the Senate regarding Student Loans. H.R. 2028: Private Student Loan Bankruptcy Fairness Act of 2011 and S. 1102: Fairness for Struggling Students Act of 2011, the House and Senate versions of the same bill, amend the Bankruptcy Code to make student loans dischargeable in bankruptcy. Also H. Res. 365: "Expressing the sense of the House of Representatives that Congress should cut the United States' true debt burden by reducing home mortgage balances, forgiving student loans, and bringing down overall personal debt" has been proposed to forgive student loans. Please help me and all the other people struggling with student loan debt to get these laws passed. Right now they are still in committee and they won't get out of committee unless someone pushes Congress to pass them. The OccupyWallStreet movement can push these issues. I think these bills should be passed into law.
Too many people are struggling with extreme student loan debt and can't afford to pay it back. Yet there is no relief for student loans. If you default, all the programs for student loan forgiveness automatically go away. And default means a 15% wage garnishment for the rest of your life, even of your Social Security. Student loans are non-dischargeable and never go away. You can get eliminate credit card debt, mortgage debt, income tax debt, etc. in bankruptcy. You should have the ability to get relief from your student loan debt in bankruptcy as well.
Please help me to get these bills passed into law. I think it will be beneficial to millions of people. Plus that extra money in people's pockets will boost the economy.
Who in their right mind would loan out the kind of money needed for a private university with no collateral if you can just declare bankruptcy and walk away? You'll kill the program, in the unlikely event, that you get support to get this bill passed.
No one forced you to take out the loan in the first place and the conditions are no secret. Time to grow up and accept the responsibility you took on.
rather than eliminate it, the lenders will charge 30% interest... those who pay it back get royally screwed by paying 3-4 times the original (already outrageous) debt. and those who discharge it will have gotten away with it--and will likely not be able to buy a home for 10 years. that's always the way it's been.
Private schools have increased tuition at a greater rate then just about anything else, it may be time to take a close look at that.
10 -15 years ago I could see your point but today, NO WAY! Its 3, 4, 5 x more expensive to attend a university today along with the high cost of living. Plus once you're out its very tough to find a job. If you're lucky you may find a low paying job & in this struggling economy it can be a choice between paying your rent & eating or your student loan payment. Something has to give!
They estimate a state university in New York will cost you about $16K a year (this year's catalog), soup to nuts, everything. You can probably earn half that as you go in part time or summer work. So you end up owing $32K, unless your parents did some planning for you. Not an impossible loan to pay back, even burger flipping.
There are no statistics on how many students pick useless majors and think just attending a private school will magically make their dream job appear vs those that started out in a good field and now can't find work. The anecdotes go both ways.
It's your first adult decision, how much to borrow and where to go to school. I don't see why the government should be on the hook for a kid insisting on attending a private school and borrowing $100K. Something does have to give, maybe the focus should be on why the private schools are so out of reach. Maybe the students themselves should do a reality check before signing the loan agreement. It shouldn't be government picking up the pieces for your poor decision.
100k? where'd you get off that cheap?? many privates are solidly at 50k--and in my experience and that of my friends, there's not much financial aid. one needs to do the GI Bill--which just foists the over-priced bill onto the taxpayer.
When I say $100K I'm thinking of the articles I've read about kids that are complaining about their loans, some had grant money, scholarships, or savings to help get things started. The point is no one has to go to a private school.
agreed; it is notable, however, that i get regular begging donation letters from my major in-state school because my state has cut their budgetary support of the school by 30% (wow!). i never got these before. school tuition is doubling and the students need relief from tuition shock. when i went, not long ago, it was reasonable, now it's not even worth the extremely high tuition, and i'd advise those students to go work for 100k in the bakken oil fields. and no, i am not in one of those profligate states like CA, NY, IL, etc... this really hit home for me, and basically it says to me the whole system is broke. completely broke, and my generation and future ones are getting screwed by the past decisions of profligate asshole older generations--well, i say we cut back on what they're stealing from us (medicare/aid, SS--which the legislature has been radically underfunding for decades) screw them... we inherited a complete disaster that developed when i was a kid in a field chasing butterflies.
The tax structure needs to be reworked, eliminate deductions, tax corporations, the rich, and even the middle class more. We need to work out a method of acquiring more money for government before we start spending it on new programs. Good luck on trimming programs to the older generation. As a group, unlike the young, they vote and there are curently more of them. You'd have more luck cutting social programs but there really isn't as much spending there to cut.
no kidding--taxation is out of whack; i am quite attune to the IRC, and it's this giant monster of abuse from when the country was doing well through credit expansion. also, eliminate special interest tax favors for sectors such as farming, mining, green energy, most interests have their little loopholes. the older generation has the AARP too, and formidable factors go against cutting the things that need to be cut, but i like a challenge (unlike congress)--there's certainly room to stop paying those with more than $5 million in assets, for example. warren buffett says he accepts his SS checks with confusion... why are they paying him, and many others similarly situated, about 18k per year at mine and your expense?
The rules for Social Security were set up and Buffett paid in, according to those rules, he has a right to claim the money. Besides it's not like you're going to save Social Security if you change the rules and stop paying the rich, there aren't enough of them to make a difference. A better more complete solution needs to be found.
FALSE. Many student borrowers are now approaching 50 or 60 years of age. Many of them were laid off several times-thus, many defaulted on their loans. They urgently need help. I personally know people that are having their Social Security /or disability garnished. There has to be some kind of consumer protection.
Besides that, I also know young new grads that can't find a decent job to pay back their loans.
I'm one of them, and its tough. In the late 80's I only borrowed $7000 (I was a single mother) and consolidated a $5000 loan to earn my Masters in 2000. With rising interest, deferments for health reasons & lack of employment for older adults I now owe over $40,000.
I really have a hard time believing that. Tuition 30 or 40 years ago was basically nothing. Most people did not even need loans in the first place and if those that did could not manage to get them paid off in 40 years then they deserve the trouble they are in now.
So, where's the problem - the problem is that everything has gone up in price.
Why, because our society wants everything and as a result they are getting it.
What was false? You think someone forced student's to take out loans against their will? The conditions on those forms were secret? Or was it my use of the phrase "time to grow up" that is in error? If you are 50 or 60 and still owe money from decades ago then you may have gotten older but you certainly haven't matured.
If the government wants to just hand out money for college that's fine write a bill, debate it, and vote on it. If you're going to loan money, the borrower should accept the fact that he or she has to pay it back. You should not be allowed to weasel out of your responsibility.
The average student debt on graduation in 2010 was $25000, that can be covered by a part time job over the next couple of years. Those that borrowed much more then they could ever pay back were foolish. Ironic that OWS is so against greed, but so many think taking large sums of money for their own use and not paying it back isn't selfish at all. I don't see why they should be allowed to simply walk away form a responsibility they took on. Welcome to the adult world.
The gov't (read TAXPAYERS) guarantee student loans. If you could default then the taxpaying portion of the 99% gets stuck with the bill. It's no skin off the banks' backs.
I should get reimbursed for my student loans that were paid off 30 years ago. I never got a job in my field of study. I was sold a phony bill of goods by the school that forced me to go there, forced an education upon me, forced me to take out loans, forced me to not work, forced me to drink and party. Forced me to think like a dimocrat
I got an ENGINEERING degree, bought a house, bought a car (not some POS mind you) and will have my student debt payed off in 7 months. I'm 25. All of the above gives me the motivation to kick ass at work, so quit your fucking bitching.
seriously. what the US need most badly is a clear demand for Free Education up to Master as a right you can claim. it's simply sad to see a country like this still being not able to afford the most basic value for their citizens.
I thInk I agree with this. If student loans are defaultable then banks will raise the interest rates to compensate for default losses. What this does is to impose the true cost of further studies on prospective students. What we really need is to get people to think really hard about whether studying is a worthwhile endeavor. Maybe 7-9% interest rates aren't deep enough, maybe 15-20% loans will make people reconsider studying.
Studying is not meant for everyone - most importantly, studying mostly prepares people for academia and not professional work
what? the notion that every person should goto college should be rethought? outrageous:):) ask peter thiel, with whom i agree, one of the most powerful people in the world--founder of pay pal, first $ in facebook, attorney, multi-billionaire--he hates the above assumption. he wrote an op-ed in NYT that college is wasting time and talent and called it a four year party devoid of learning for most--well he now pays people NOT to goto college and to pursue start ups in many different industries. isn't that funny--someone actually doing something good with their money.
I support these ideas on student loans! To the negative commenters: either you are a troll , or you are poorly informed about the corrupt student loan industry. The current student loan system invites profiteering on behalf of the banks. And, most student debtors have loans that are DOUBLE what they originally borrowed. And, a lot of student debtors HAVE GREY HAIR- they are not young. Not only are the student lending institutions corrupt, but they are also making high returns on these loans via derivatives.
Consumer protections must be reinstated. And, we need new laws that prevent the banks from making high interest student loans.
If you make them go away in a bankruptcy then the interest rates will go even higher because there will be more losses.
There should be no relief. You have a choice to get a loan, no one holds a gun to your head and forces you to get one.
In life there are choices and with bad choices come consequnces. They put themselves in debt, they can get themselves out.
To all the trolls, you can go to college without a loan. It is very easy to get a scholarship to pay a good portion of your tuition and there is always financial aid (which is really easy to get unlike other government support).
scholarships are hard to come by and are down since many of the assets were lost due to poor investment; the financial aid is a myth if your parents make a decent living.
The student lending industry is corrupt. There is NO reason why any student should have to pay back 3 times the amount they originally borrowed. I know people with student loans, that had a severe illness or accident- and their loans defaulted due to their disability. A 60 year old woman should not have to live in the street due to her student loans.
You're right, if you paid for 4 years of college and then Wall Street collapsed the global economy with a massive derivatives ponzi scheme (built on selling debt as an asset btw) causing massive layoffs in the field you have a degree in, you're simply a lazy parasite who made your own choices and has to live with the results.
Im sorry im going to have to grab my tin foil hat to understand your conspiracy.
Thats life kid. Not everything goes your way. Yea you may have got screwed because of the economy , but that does not mean your debt should disapear while those who didn't get screwed payed for theirs.
sounds like you have a general problem with people being able to declare bankruptcy or something. no tin foil hat needed to understand the correlation between wall street collapsing, record high unemployment, and the inability to pay back student loans caused by prolonged unemployment... just intellectual honesty
There are tons of reasons the economy collapsed. You can't blame one entity for it. I do not have a problem with bankrupcy. I have a problem with people making others pay for their mistake. If they did pass this law the debt would not disapear.
college students graduating into a depressed economy are paying for Wall St's mistake, but you clearly don't have a problem with that
There are tons of reasons why the economy collapsed. They are paying for alot of peoples mistakes.
and most of those people made quite a bit of money off of student loan debt via derivatives
Why did the economy collapse?
Also by your name, I'm assuming you have to be a child.
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I support this, but don't think it will go anywhere because as members of Congress openly admit "the banks run the place."
If the movement to get corporate money out of government and elections makes any headway in 2012, it will be the first step towards fixing student loan debt and many other problems.
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So, who's going to pay for these "forgiven" loans and anything else the government thinks should be for free after it was purchased?
You see, there is only so much money to go around in our society - even if you take it all away from the evil rich it's only a matter of time before it's gone and then what?
As the old saying goes " if you have a room full of people and take away the money from the people on one side of the room and give it to the other side of the room you haven't increased the amount of money in the room" all you did was "re-distribute it".
education is not a product. education is not sold in schools and universities, at least this was not what it was supposed to be. take a look at the military budget and you will see what the US can afford instead of assuring the most basic (and most needed, actually) value for their citizen.
Education is a "tool" to be used to improve ones "ownself" to empower them.
if being a tool is all what education is about, then why the heck are so many people interested in such useless stuff like american literature history, arts, social sciences...
Nothing wrong with American Literature, history, arts and social sciences. They all improve ones "ownself" to empower them when they have a conversation with someone who wants to talk about those topics.
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I think I should be able to get a $60K loan so I can get a Master's in Womens Studies. Then I can cry and whine about the fact there is no job in the real world that my degree can be applied to
I agree.
A previous generation already pulled that stunt, slugger. That's why it's different now.
College students are supposed to be our best and brightest. Guess not in your case. See, you're supposed to be able to figure out that borrowed money needs to be paid back. You're supposed to be about the figure out that you evaluate debt against potential future earnings. You're supposed to be able to know better than to rack up huge debts against some soft major that no one employer gives a fuck about. You failed and now you want people that didn't go to college to pay for it. Fuck you, junior. Grow up and pay your bills.
This is the dumbest generation in 100 years.
I think it is a great idea to have those that take on loans to have the right to declare bankruptcy. There are a number of businesses that have declared bankruptcy because they found that they would lose less by declaring it - money was not paid back and those who lent to them took a hit (along with the company declaring bankruptcy). So, I would guess that lenders who know they might lose money if one were to default, would have a greater tendency to make a prudent loan. But, the bill will never be passed because the political system as a whole is willingly bought by the highest bidder, which in this case includes the TBTF banks.
It would do that, dry up money available for student loans. But that isn't what people wanted. As a policy matter, people wanted more access to loans, not less.
This is the dumbest generation ever produced. Gosh, borrowed money has to be paid back. Gosh, the more you borrow, the tougher it gets. The dopey your major, the tougher it gets too. Holy fuck, is it really that complicated? And these are college students, geeessch.
Regular people declare banckrupcy all the time and don't pay back the money lent to them.