Student loan debt should be able to be discharged in bankruptcy. If an institution gives someone a $200k education and that person can’t pay the debt back with their career, it was overpriced and should have never been give a loan.
I’ve seen people flee the country and live in Australia or Germany so as just to escape their student loans. Bad on them for making the poor financial choice but good for them sticking it to the industry that gives out these loans.
For example, how do you prevent people from finishing college, immediately declaring bankruptcy, and then getting a high-paying job with their degree? Unlike a house or car, the education can't be repossessed so the holder retains all of the upside.
It would be the ultimate financial hack to get a medical degree, declare bankruptcy, and then immediately start practicing once the bankruptcy went through.
So obviously there would need to be a lot of protections against abuse. Perhaps a provision that the student loan could only be discharged after a protracted period (many years) of too-low income.
Ironically, there's a huge resistance to this idea from within humanities departments. They fear (rightly so) that such provisions would make it harder to get loans for humanities degrees because they pay significantly less. I don't think that's really a bad thing, but you'll find some outspoken arguments against this from people in the academic world.
If you're suggesting that some things are only possible to fund through slavery, may I humbly submit that slavery is still wrong, and things which cannot be funded except through slavery have no right to existence?
It is entirely possible to have fair deals where you get an education in exchange for X percent of the income you have over Y minimum, for Z years.
Specifically, you're selling future labor in exchange for an asset that you can't immediately liquidate to pay off the debt. This is not acceptable, if the counterparty makes a profit from it. (If you could immediately liquidate it, at that point there would be no need to make recourse to your earning power)
And I personally wouldn't call a 10 year 0-10% cut of income "indentured servitude" so that's not a very useful way to figure things out.
> Specifically, you're selling future labor in exchange for an asset that you can't immediately liquidate to pay off the debt. This is not acceptable, if the counterparty makes a profit from it. (If you could immediately liquidate it, at that point there would be no need to make recourse to your earning power)
Doesn't the same thing happen if I use a loan to buy almost any product? As soon as it becomes mine, it becomes used, and liquidating it wouldn't be enough to pay off the loan. I don't think all those loans are immoral.
Is there a difference? Or do you think both are unacceptable?
And look, I'm fine with saying you could discharge this college revenue-repayment loan in bankruptcy if you were actually in need of doing so, but I'm trying to describe the kind of repayment terms where that would basically never be needed. If your income isn't above the threshold then you owe $0 and the loan goes away by itself after a few years.
Loans by themselves are acceptable; loans with interest are not, because you're making a profit from what could potentially be slavery.
A licit way to do it would be to have a purchase-repurchase agreement. I pay $5000 to "buy" a car, and I'm guaranteed to be able to sell it back for let's say $4000 a week later. That way, if I default on it, I can never end up in debt.
Loans backed by people's ability to earn income are a form of slavery, and earning interest off this is not licit.
If you want it to be easy to get the loan payments reduced or even cancelled when you're having money problems, then you need to make a profit off the people that do have plenty of money. And isn't that even better than returning what you got?
> Loans backed by people's ability to earn income are a form of slavery, and earning interest off this is not licit.
To my mind, the whole point of the minimum threshold for the type of loan I'm describing is so it can't be slavery. If you don't have lots of money, the debt just disappears. If you're wealthy... then you're wealthy, not a debt slave.
Teenagers applying for college usually don't have personal credit histories to be evaluated. Either we give out lots of student loans, or we don't.
State schools and schools with high admission percentages might get cheaper in tuition, but it’s still going to be expensive to live and eat for 4 years with no income coming in for most of the year.
1 in 20 applicants is only the top 5%. Being in the top 5% income earners in the country is not a high enough bar to shell out $50k a year extra post tax to pay a child’s tuition.
Harvard draws from all over the world and many US upper-middle class parents/grandparents are willing to save for 20 years or use HELOCs; they don’t have to pay out of current income. Upper class can just pay for it (there are well over 1M households in the US alone with a net worth over $10M; those people would barely notice putting little Chris through Harvard).
If student loans were entirely outlawed, Harvard wouldn’t need to lower its prices; it would just end up not having poor people attending.
Why would a student not want to work part time to have a little income? I found it beneficial.
That's... kinda ridiculous. My twitter feed[1] is absolutely filled with flush 20-somethings who clearly aren't seven years into their careers showing off their NFTs and cars and condos and whatnot.
People right out of college with zero assets are getting loans. People right out of bankruptcy can't. So it's not the same.
[1] Seeded, it seems, from my following of a few Tesla-related accounts. There's... a somewhat distressing level of overlap.
People declaring bankruptcy aren't in a position to have good credit scores or acquire more assets anyway. If you can't service your debts, you're not going to be securing more loans and buying more assets.
Bankruptcy is a chance to reset the debt to $0 and start over. The bankruptcy even drops off your credit score entirely after several years, making it a complete reset.
Bankruptcy is better in every way than forcing people to service those debts forever.