"Them that has the gold makes the rules"

Translation: walk away from an obligation to pay back money you've borrowed?

I'm all for educational financial reform...capping the amount of interest charged on student loans to make it possible for someone to pay the loan back in a reasonable amount of time without it being a major strain on personal and family finances. I'm also all for finding ways to lower the cost of a higher education that have gotten out of hand in recent years (stop paying coaches 7 figure salaries would be a nice start) and also to look for new forms of grants...goverment and private that have helped many get educations without the heavy debt load.

There's a serious need for debt reform in this country...especially to the millions who are stuck underwater in high interest loans they've paid back many times over...but I'm definitely not in favor of walking away from a debt. When you sign on the dotted line there should be some responsibility behind it.

But then, they are special persons.

...they need to keep profit while socializing their risks and prefer to pay no taxes.
Very special indeed.

or is it morally unacceptable for corporations to walk away from their debts; they should be held to the same standards as normal citizens?

Bryant

Artificial social constructs can be moral or immoral depending on how they are used. And depending on whether or not you believe in any morality beyond species survival. But if you believe that individual people are capable of doing wrong, than you believe that groups of people are capable of doing wrong. Nobody exonerates a lynch mob because they are an artificial social construct (they might exonerate it for other reasons, of course). By the same token if it is wrong for an individual to default on her debts, it should be wrong for a group of people (a corporation) to default on their debts.

Bryant

society that only further enhances their pockets...


http://thinkprogress.org/economy/2011/11/18/372044/exploiting-purpose-banking/

And you won't get many loans, if any, as a result, for a long period.

That can be very challenging, particularly in a debt-based economy like ours.

There is no reason at all--NONE--why student loans should be granted this special inescapable status.

Do you assert that ALL loan debt should be inescapable? If not, then why is student loan debt singled out?

Lenders would likely require cosigners with strong credit ratings to approve a loan. Bottom line is that if bankers have to factor in the risk of bankruptcy, then loans will be much more expensive and harder to get.

Can't have it both ways. If they're inescapable, and they are, then they shouldn't accrue interest, since interest is a mechanism for offsetting the risk of default. Victims of student loan debt ultimately can't default, so what is the justification for interest?

If they're permitted to accrue interest like any other loan, then they shoild be dischargeable like any other loan. They could even carry a greater penalty for default in order to offset the need for a higher interest rate.

There are many possible solutions beyond "student loans must be permanent and inescapble burdens."

If I didn't know any better I'd say bankers have some sort of influence over law makers to actually get what they want to have, AND have it both ways.

LOL

The base rate is the cost of capital or the potential return if the money were deployed elsewhere. On top of that you add a risk premium which varies with the type of loan (e.g. a secured vs an unsecured loan, high credit risk vs low credit risk, floating rate vs fixed rate, etc.). US Tresuries, LIBOR or some other very low risk investment would represent a reasonable base rate. Even though student loans are not dischargeable under bankruptcy, that does not mean they are riskless for the bank, so there will and should be a risk premium included in the loan rate. Lots of people are way behind in the loan repayment and some have walked away from the loan entirely. They will have crappy credit and have a tough time getting any kind of a loan or credit card, but the bank has still lost real money. Banks consider that in assigning a risk premium to student loans.

Reread the OP - the poster is advocating reneging on student loans. Given that, would you loan your own money at a zero interest rate? I didn't think so. Why would you expect anyone else to do it?

ETA: I should add that if there were zero interest rates, there would be zero student loans. Who would lend with no interest when they could lend at some interest rate elsewhere. That is so obvious, I forgot to mention it.

Last edited Wed Jun 27, 2012, 09:03 AM - Edit history (1)

I would guess that the inescapability of the loans is what makes them even remotely attractive to lenders. They're a source of guaranteed return far more secure than any bond or t-bill you can hope to buy.

Eliminate the inescapability and you'll eliminate a great many loan approvals, which will mean far fewer college enrollments and, ultimately, a significant drop in tuition, unless schools are content to see their rosters cut by 75% or more.

Sadly student loans aren't in a status all to themselves...there are many loans where rates soared. Much of it was thanks to the "bankruptcy" bill of 2005 that opened the flood gates for a lot of the debt mess we have now. It allowed banks and other lenders to raise interest rates to obscene levels and do so arbitrarily. If you messed up on one debt it could be used to increase rates on another. No wonder so many people fell underwater and continue to drown in large debt. Unfortunately there's been little done to address this problem by this administration and even if the President proposed some form of debt amnesty tomorrow it'd never pass the legislative.

I do think those who have seen their loans go through rate increases should have the ability to either renegotiate the loan or have their rates returned to a lower level that will reduce the interest payments (that most are paying only interest) and help them eliminate the principal. This applies to all loans, not just student loans.

and financially unrealistic... The student debt crisis needs to be studied to understand, and I would suggest looking at the on line Universities like Phoenix to get an idea... I'm thinking taking people and indebted them without feeling any responsibility to graduate them is fraud.... and this is where it grows... I believe that without transparency, opinions like yours take on some misplaced righteousness no longer even part of the discussion...


Education in this country has been a perk of the rich and being sold to the rest as a commodity... Solutions for this are to bring 0 percent interest rates and then payed back only after full time employment.....In that case I can see the full employment act becoming a tool to be used by those in office... Other wise this debt train is too lucrative to stop...

If I could live in my perfect world, the value of education wouldn't have a price tag on it. We'd go back to where college educations were mostly paid through tax dollars and as long as you passed the proper boards and/or exams (based on merit) you paid nothing or little for one's degree. Loans should be to assist someone not to make them a debtor. The dirty secret is how the banks make their money off the interest and the longer they can keep you paying the better. There are few protections from predatory lending today. But that's a different issue and topic...

I've had to put two of my own through 6 years of college (bachelor's & masters) over the past year and have seen the costs rise every year. It amazes me when I look at the high enrollment and how are these students paying for it?

I also concur on the college mills like U of Phoenix or certain "trade schools" that leave their students with massive debts and little job prospects. I think this reflects in all I can say is a "cheapening" of degrees and education. Today one needs a masters to get the good jobs that a bachelors was sufficient enough. Even Community Colleges that were the last refuge for those who didn't have the financial resources to get some kind of higher education have become cost prohibitive. As you say transparency and a closer look at not just "for profit" but also state and private institutions as to the job they do in helping graduates find jobs as opposed to the debt these students have to take on.

they should pay back every person who has ever taken out a student loan and paid it back...every fucking penny.

sP

And we can throw public welfare on the scrap heap as well, unless everyone who has ever eaten is given a foodstamp allotment.


Accusation of "apples and oranges" in three... two...

nice logic...

sP

Last edited Wed Jun 27, 2012, 08:59 AM - Edit history (1)

By your assertion, no person should receive any benefit as long as someone else will not receive that benefit. Nice world you're proposing there.

I got fucked, why shouldn't you?!!!

We should join every other civilized nation on earth and provide free education through the doctorate level.

"Student" and "Loan" are two words should never be used in the same sentence. Education is too important to our national interest to be left to profiteers.

Who knew?!

If the burden is not made clear to the borrower--and it isn't--and if the benefits of that burden are greatly exaggerated--and they are, then being forced to honor that commitment with no hope of escape other than death or total disability means getting fucked.

Next question?

The concept is very simple: If you borrow money, you're expected to pay it back. It's not rocket science and if you can't understand that, you should be digging ditches or flipping burgers, not going to college.

The concept that's sold is "you need a college education to succeed, and with a degree you'll make a million dollars more than the person who didn't go to college." That's the aggressively sold line of bullshit so shameless that it borders on fraud.

It's a predatory lending scheme feeding off of victims ill equipped to defend against it, and if you disagree then you simply don't know what you're talking about.

Page one of the application should include a warning in big red letters stating "This loan is a unique burden in that you will never escape it except by repaying it." It should also include a detailed amortization schedule so that victims can see how a $10K loan can turn into a $40K horror.

If the costs of the loan and the actual value of the degree were made clear to the borrower, the this would be a very different discussion. However, neither of those takes place, so the victim is held accountable for the entire transaction, while the lender and the college have no responsibility beyond "rake in as much money as possible from the duped borrower."

No matter how you dress it up, you're simply arguing in favor of the predatory banking class. Since you've already insulted the victims by calling them too stupid to be worthy of degrees, you'll likely now make some claim about personal responsibility, which is a lovely sentiment but ultimately tangential to the actual issue at hand, which is that lenders have purchased the power to saddle victims with inescapable debt with no accountability and minimal transparency.

In any case, there is no way to accurately predict how a person or a class of persons would do looking forward over a long period of time. College gradutaes over the last few years have had it rough, but could you have predicted four years before they started that it would be this bad? If you had done a study and assembled data in 2008 or earlier, what conclusions would you have drawn from it? Don't go to college, but become an electrician or a plumber instead? Do landscaping, work retail or wait tables? What would you have advised a high school senior in the 2006 - 2008 timeframe based on what you knew at the time?

I got an engineering degree, but I never assumed I would graduate and walk out onto Easy Street. The job market wasn't good when I graduated (1972) - it took me 6 months to get a real job, but after that, things have been OK. I've done way better than my friends that did not go to college. Nobody explained to me that a college degree is not a guarantee of success - that is just common sense. There aren't any guarantees in life - do we really need to explicitly say that?

Loan terms should certainly be clear and I have no problem providing an amortization schedule. I have no problem explaining the costs of the loan, what happens if you delay repayment, and pointing out the fact that it is not dischargeable in bankruptcy. I haven't seen an application for a student loan since high school, so I can't comment on how deceptive the loan documents really are. I do favor transparency.

BTW, I think your bit about the big red letters is insulting in its own way. Your assumption is that the borrower, i.e. the student, would look at walking away from the loan as an option. The obligation to repay a loan flows from personal integrity and if I read such a warning in big red letters, it would suggest to me that lenders thinks I may not have it.

If it were like any other loan and could be discharged through bankruptcy, then the extra warning wouldn't be necessary. However, insulting or not, it would be greatly helpful to the average borrower if it were made clear from the outset that student loan debt is an inescapable burden.

Student loan providers make no effort to check credit or determine reliability. Is that the behavior of a responsible lending institution in your view? Would you expect to be approved for an $80K mortgage with no credit check, no income verification, and no way to escape that loan once incurred?


I am, however, gratified to see that we agree re: transparency and the amortization schedule. These would be big steps in the right direction all by themselves.


While we're at it, I'm not even greedy enough to ask for full loan forgiveness. I would be satisfied if the usurious penalties could be rolled back. I took out about $21K in loans and paid back about $7K before longterm financial hardship eliminated my ability to repay them. I have recently begun chipping away at the balance again, which is now $32K thanks to interest and penalties. As a result, my $21K loan grew to nearly $40K, most of which is the result of penalties. Rein those in, and borrowers nationwide would be in a much better position to repay.

i have no problem with that...but you take out a loan you are responsible for it...or aren't you?

sP

Congress makes the rules. If you wonder why there seems to be one set of rules for the rich and a different set for us. I have just one question for you….how many congress critters have YOU bought this year? I bet BoA will have a different answer.



Macoy

but the monthly payments were still too high.

or what form society takes, the poor always pay.

Really. When we say bankers, banksters etc, is it the very few, and I mean, handful of super wealthy that own much of the worlds wealth, including such darlings as Warren Buffet (sarcasm), because they are essentially bankers. Movers of money. Or do we mean the institutions, that employ millions of average everyday folk. Same can be said of corporations, there are more common folk that make up a corporation than there are super rich stockholders and investors.

Former JPMorgan Banker: Exploiting Consumers Is ‘The Purpose Of The Banking Organization’
By Travis Waldron on Nov 18, 2011 at 12:45 pm
Wall Street banks, largely spared from the economic ruin felt by millions of Americans since the financial crisis of 2008, have returned to profitability, generating higher profits in the two-and-a-half years since the crisis than they did in nearly eight years preceding it. But that hasn’t stopped them from seeking new ways to generate revenue — like Bank of America’s proposed $5-a-month debit card fee or the millions banks have made from charging consumers to receive unemployment benefits or food stamps.
If all this makes Americans feel like Wall Street banks only view them as money-making tools, well, that’s because the banks apparently do. According to David Mooney, a former JPMorgan Chase employee, Wall Street banks see consumers as an “income stream” to exploit for profit-making purposes, Reuters reports:
David Mooney, chief executive officer of Alliant Credit Union in Chicago, one of the nation’s larger credit unions, used to work at a one of Wall Street’s top banks, JPMorgan Chase. There’s a vast cultural gap between Wall Street and his new world, he says: Old friends from the Street, he says, now jokingly refer to him as a “socialist.” A credit union is supposed to be run in the interests of all members, he says, while commercial bankers tend to see consumers as customers who can be “exploited” by layering on more fees.
Says Mooney: “I don’t say this lightly, but the consumer is simply an income stream and exploiting that is the purpose of the banking organization.”
Mooney’s bluntness may seem shocking, but his assessment shouldn’t. Wall Street banks made millions profiting off shoddy mortgage lending practices, setting the stage for the housing collapse that plunged millions of Americans into foreclosure. They made a mess of the foreclosure process, using robo-signers to speed foreclosures and foreclosing on homes they either didn’t own or that weren’t even in foreclosure. They sold deals to investors that they knew would fail, and took advantage of customers with outrageous overdraft, credit card, and other fees.http://thinkprogress.org/economy/2011/11/18/372044/exploiting-purpose-banking/

of the line at a popular restaurant, and gets the best table in the place.

The private banks, not the government, create fake money at the computer.

They lend us this fake money at interest, so we have to pay back more than they created.

When we don't have enough money to pay it back, they come for our real stuff.

That is how the system is designed.

too young to know better, often by sleazy private institutions charging outrageous fees to train "chefs" (i.e. mcdonalds) or "sylists" (i.e. haircutters).

and never dischargeable. you pay for life.