Re:Some U.S. Colleges Cut Tuition
by LMYahooTFY on Monday December 21, 2020 @02:44PM
(#25498629)
>Nope, students could enter debt before (and still can outside of) federally subsidized student loans.
Yeah I'd also like a source for further reading on this. As far as I understood the number of lenders willing to underwrite a loan to an 18 year old with no collateral is virtually none compared to the ubiquitous availability of federally subsidized student loans, and the reason for this is empirically supported by how many student loans are non-performing.
Re:Some U.S. Colleges Cut Tuition
by lotsofpulp on Monday December 21, 2020 @01:10PM
(#25497582)
> Nope, students could enter debt before (and still can outside of) federally subsidized student loans.
Source? I’m not aware of any non government lender that would or has underwritten an 18 year old with no collateral and no co-signer. At least not at any single digit interest rate, and definitely not for tens of thousands and maybe hundreds of thousands of dollars.
There's a good argument that its the wrong method to acheive democratization/affordability (I personally prefer a very different approach), but…
> They’ve allowed students to enter into debt,
Nope, students could enter debt before (and still can outside of) federally subsidized student loans.
> the only long term contracts kids under 18 can legally sign,
Again, no. Its true that federally subsidized student loans are not voidable under federal law even where due to the age of the borrower contracts generally might be under state law, but similar exclusions from the “defense of infancy” apply to student loan contracts, whether public or private, generally under many state laws, as well as sometimes for other contracts. So its not the only kind of contract which minors can enter into and not subsequently avoid. (And even without the exclusions minors can legally enter into the contracts and they are valid until and unless the defense is asserted, but counterparties will be unlikely to enter into the contracts because they know the defense is available to the minor.)
And even if this were a particular problem, it would be easily fixed without abandoning federally subsidized student loans, either by shifting eligibility for minor students from student loans to parent loans, or by simply limiting them to students 18+, which might force some younger students to delay college entry.
> for something they can never declare bankruptcy on.
That’s also not true; there is a fairly high threshold for discharge of student loans, but it is not impossible. Again, the problem suggested with this is easily curable (and arguably doesn’t even require removing the limitations on discharge) within the context of federal student loans. If the income contingent repayment plan with discharge of the balance after a set period were the only one available, discharge in bankruptcy would be largely a non-issue.
Now, since the discharge restrictions also apply to private student loans, you might still want to remove them to address that problem.