Just want to point out the fact that US government-backed student loans are non-dischargeable through bankruptcy. You will have that albatross around your neck until you pay it off or die. This is the ultimate predatory loan and it's provided by the government.
A better solution is to allow discharge of private debt so that lenders put more effort into validating debtors. If a creditor want to get money back from a debtor, they need to put the effort in to validate that the debtor has sufficient assets to pay it back and isn't paycheck-to-paycheck buying highly depreciating products.
If you need to buy a house or a car on credit, you can. For almost anything else, you don't need credit unless you have an (usually illiquid) asset to back it -- a slowly-depreciating asset like a house or car, or a steady job. If you want a loan for a business, the creditor is on the hook for your default. Perhaps they'll insist on keeping your funds under trustee in escrow so you don't waste your loan on a luxury car and WeWork.
And while we're at it, term-limits on secured loans that cannot extend much beyond the depreciation of the loan-enabled purchased.
There's no reason that non-dischargable debt has to be arbitrarily easy to obtain.
That this has not received more attention is troubling -- debtors prisons are illegal, and this is de facto creating a debtors prison. And that is often the only legal test required. That no one who can change the situation cares is indicative of societal rot.
Student loans are forever.
You can make a (somewhat legitimate) argument that we shouldn't require young kids to major in subjects that result in good paying jobs, but on the other hand you wind up with the mess that we are in if you don't.
The status quo cannot go on. I'm in favor of either fully privatizing the system again, OR fully socializing it. In either case, the government would absolutely not be backing loans anymore.
People get private loans for bullshit degrees all of the time. Lenders don't care, because private student loans are non-dischargeable.
Do you mean buying out all of the universities?
PS: I come from Europe, studied in the UK when the tuition was capped at £3K/year.
Maybe we could try to actually tackle things like medical costs so people aren't getting so deeply into debt to begin with.
That's a strange assertion, considering there are dischargeable government loans, and private student loans cannot be discharged.
I fail to see how this is worse than current predatory loan scenarios.
But I don't have statistics on default rate or anything of that sort.
The problem is the default rate.
Example: An investor issues loans for $100k at $1k each. He charges the legal 30% interest to make $30k profit / return on his money. However, 30-40% of the borrowers default and these are unsecured loans. He makes 0% return. He stops offering these loans and now these people don’t have the access to these credit facilities.