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Friday, June 28, 2019

Mailvox: another reason for cancelling student loan debt

A bankruptcy lawyer explains how student loan debt is often just the first domino:
Here's what practical experience has taught me in the thousands of bankruptcy cases I've filed for clients: student loan debt perpetuates bankruptcy filings.

A pattern is emerging. Clients making $25,000-$40,000/year with student loans see us every decade to file a new Chapter 7 bankruptcy case. Why? They take out predatory loans and use credit cards to stay afloat. Why? Because the ~$50,000 in student loans wasn't discharged in the last bankruptcy. There are limited programs to get around the debt temporarily, but most are stuck in the cycle.

In a sense, the predatory loans and credit cards they are taking out again and not paying are paying the student loans they're stuck with (i.e. the money being paid on the student loans is offset by dischargeable debt they later take bankruptcy for to stay afloat). It's a vicious cycle.
There are a number of bad reasons to not discharge student loan debt, but there are no good reasons. Literally nothing good is going to come of trying to squeeze even more blood from those particular stones.

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142 Comments:

Blogger Daniele Grech Pereira June 28, 2019 4:11 PM  

Nothing good can come of it, but dagnabit we are going to try our best anyhow.

Blogger SciVo June 28, 2019 4:18 PM  

It's funny how our ruling class could find the time to make student loan debt unable to be discharged, but couldn't find the time to break up banks that are demonstrably "too big to [be allowed to] fail" and a looming existential threat to America.

Reeeal funny. I can't stop laughing. Ha. Ha.

Blogger Cloudswrest June 28, 2019 4:24 PM  

I understand that student loan debt is not dischargeable thru bankruptcy. Strategically, what's to stop you from using some other form of dept to pay off the student loan, and THEN declaring bankruptcy?

Blogger Whitecloak June 28, 2019 4:25 PM  

Thankful that my situation isn't -that- bad. Jeez.

Position remains unchanged from the last thread, all for the dual program of eliminating the sloan debts and using the opportunity to gut the educrat racket.

Let's see if this Boomer bait works as intended (it will, a certain kind of Boomer seems to despise anything that might help his own children succeed and breed).

Blogger The Philosopher June 28, 2019 4:28 PM  

Woooooo

Blogger tublecane June 28, 2019 4:29 PM  

The only possible consequence I don't want is to encourage anyone to go to college. My wis

Blogger Haus frau June 28, 2019 4:30 PM  

Still paying on my husband's student loans. He got laid off from management in 2009 following the 2008 crash. We had to move 1700 miles away to take up a union position with the same company. Our income was cut by about %40 and our house foreclosed. We deferred payments on the student loans while trying to keep our heads above water on other debts. Of course, when you defer a loan you are still charged the interest qhich is then added to the principal of the debt. When we started making payments again all of the headway he had made paying on it for years was erased. We are in a good financial position now but we considered bankruptcy at one point. Student loans are debt slavery. The government and banking elites can crash the economy and demand a bail out but everyone else has to eat the consequences of their decisions and the bad actors decisions in perpetuity.

Blogger sammibandit June 28, 2019 4:31 PM  

Sounds like this gentleman has a birdseye view of real earning potential for some uni grads.

A pattern is emerging. Clients making $25,000-$40,000/year with student loans see us every decade to file a new Chapter 7 bankruptcy case.

Blogger David Ray Milton June 28, 2019 4:34 PM  

In addition to canceling the student loan debt, it would also be prudent to cancel the predatory student loan system. Will this make unnecessary universities fail? Yes. Think of all the labor that would instantly come into the work force after high school graduations each year if mediocre minds weren’t being coerced into getting worthless degrees. Not to mention that the bloated and unnecessary universities that closed would send a lot of their professors looking for jobs at the local fast food joints. Hell, it might even be an immigration deterrent if the low-skill jobs were already occupied by the natives.

Blogger Whitecloak June 28, 2019 4:34 PM  

@8 Yep. Some are worth even less than that on the open market.

Reasons to discharge the damn things. Usurious loans made to unqualified borrowers under false pretenses.

Even some people who did things far more right and meet than I did got screwed- there are STEM grads stuck in the 25-40 bracket because H-1Bindis have the entry level work that should've gone to them on lock.

Blogger Franz Lyonheart June 28, 2019 4:38 PM  

Spot on.

The solution is dead easy : the universities are declared guarantors of the debt (even retrospectively, because predatory), and the DEGREE acts as collateral. The colleges pay off the defaulted assets, and the delinquent obligor loses his (worthless) college degree. It's all fair.

Blogger tublecane June 28, 2019 4:38 PM  

@6- ...my wish is to take down the university system, which I consider necessary for proper reorganization of society. Debt relief could help, or could possibly further the anathematic goal of free college for all.

Blogger sammibandit June 28, 2019 4:44 PM  

@Whitcloak,

I was reading about what IBM did to it's American labor force circa 2011 through 2015 in a shocking ProPublica article. It sounded exactly like what happened to Haus Frau's husband down to the pay cut and having to move.

Blogger Barbarossa June 28, 2019 4:44 PM  

@3 Because the folks under this burden suffer from two simultaneous and not always unrelated conditions. First, during any loan underwriting process that debt is going to be front and center. Second, the person with that debt usually has a crap job, so the underwriting will also pick up the fact that Xania with her degree in gender studies makes $22K at Starbucks. No one's going to write an uncollateralized loan for these folks.

Blogger Zorlig June 28, 2019 4:45 PM  

So make student debt bankruptable again.

Blogger Stilicho June 28, 2019 4:48 PM  

@3 the only practical limitation is access to credit to use to pay off the debt. Legally, it could be viewed as an attempt to defraud creditors. If these folks are using credit cards and other debt to pay living expenses, then every available dime should be used to pay student loans so that if they are faced with bankruptcy down the line, most of their debt is dischargeable

Blogger gunner451 June 28, 2019 4:50 PM  

Well one way to get out of your debt is to be eaten by a recent African immigrant.
https://www.foxnews.com/us/arrest-made-in-disappearance-of-university-of-utah-student-mackenzie-lueck

Blogger David Ray Milton June 28, 2019 4:50 PM  

Loans must have collateral before they are given out. You could possibly do this tactic if your loan was sub-$10k, but for $50k-200k loan you’d have to put up a house as collateral. Annnddd, if you have said collateral you probably aren’t having trouble making student loans payments.

About your only option would be a loan shark, where you offer your head as collateral.

Blogger Chuck Finley June 28, 2019 4:50 PM  

Franz Lyonheart wrote:Spot on.

The solution is dead easy : the universities are declared guarantors of the debt (even retrospectively, because predatory), and the DEGREE acts as collateral. The colleges pay off the defaulted assets, and the delinquent obligor loses his (worthless) college degree. It's all fair.


Quit being a boomer. As Vox has said multiple times, this isn't about punishing the debt slaves. To borrow Vox's analogy of firefighters putting out a neighbor's fire - you are suggesting to take the neighbor's land because they had a house on fire there. If the degree is worthless (to you) then why do you care if the debtor retains it? Because of some sense of fairness to the Boomers? Are we going to keep punishing the victim for being a victim?

Blogger Whitecloak June 28, 2019 4:54 PM  

@19 Millennials should have been born decades earlier in a high trust, intact America that wasn't ruled by post-Christian and tribal Boomers.

Our mistake was trusting our elders. Turns out that you shouldn't do that.

Blogger LZ June 28, 2019 5:01 PM  

Let them declare bankruptcy. Then there's a slap on the wrist, they'll be borrowing again within 2 years.

Blogger Haus frau June 28, 2019 5:01 PM  

@11 how exactly do you take a degree away? If the debtor can prove they earned but the university says they arent allowed to use it then what? Does he lose his job he was hired into based on that degree? Taking back the degree sounds like a symbolic non starter.

Blogger David Ray Milton June 28, 2019 5:02 PM  

If only someone had thought of that.

Blogger sammibandit June 28, 2019 5:02 PM  

As much as Boomers would like to they cannot reposess the brains of younger people. These zombies just need die already.

Blogger Nation-Deprived June 28, 2019 5:09 PM  

I’ve made this analogy to several boomers since Vox talked on this. Totally useless to appeal to morality with them. You will never convince them that 17-18 yr olds aren’t responsible for their debt, and they will proudly die on this hill of fairness. “THEY signed it, THEY can pay for it!”

I think the best way to convince them, assuming you even think it’s worth the trouble, is to explain how the debt’s negative effects on the economy will be measurably worse than forgiving it. Which I currently don’t know how to do.

Blogger Halvar Andersen June 28, 2019 5:10 PM  

@22 It makes no sense, especially if they have a degree that actually provided them with a skill. "Yeah, I used to have a computer science degree, but my uni repossessed it when I defaulted on my student loans due to economic reasons. So now I know longer know how to code. Sorry."

Blogger SirHamster June 28, 2019 5:16 PM  

Nation-Deprived wrote:I think the best way to convince them

Taking to heart that some people cannot be taught ...

Ignore their protests, do what needs to be done, and piss on their graves.

Blogger Haus frau June 28, 2019 5:26 PM  

@25 and @27
As always you have to convince them that they will benefit from it by avoiding the debt reckoning that is coming.

Blogger Rick June 28, 2019 5:27 PM  

I’m for discharge in bankruptcy. Or at a minimum, remove the interest and return the balance to its original charge minus payments already made. Or 50% off the balance. Does it have to be one of the other? And why is the govt charging interest?

Blogger Unknown June 28, 2019 5:28 PM  

By "re-possessing" a degree, you might signal to employers that this person can't handle their finances. Now, granted, that's most people. But most people know how to keep it quiet.

Employers have to be getting wise to the possibility that Millennial hiring prospects with the worst student loan problems are also the ones demanding ridiculous raises 3 months after getting hired.

Blogger Clint June 28, 2019 5:30 PM  

The only real thing a university can do about a student who owes them money is to withold the transcxript. For most jobs that require a degree, the transcript is required. In the scenario where the school was the debt-holder, they could refuse to send the transcript.

(Yes, the diploma on the wall is for looks. You can get those for a few bucks on line. Most places want to see the transcript with all classes and grades and the words "Degree Awarded").

Sure, some places may not require that, but everywhere I have worked, that needed a degree, had me get a transcript sent from the institution. You cannot provide it yourself.

Blogger Rick June 28, 2019 5:31 PM  

If anyone can persuade the boomers, it’s Trump.
I think he could see the economic sense in it.

Blogger swiftfoxmark2 June 28, 2019 5:35 PM  

I keep telling boomers that they are eating the young to feed the dead and dying. Student loans are ghoulish.

Blogger Mike Wallens June 28, 2019 5:36 PM  

Joe the Plumber pays off the student debt for Megan getting her degree in Womyn's Studies at Dartmouth. NFW. Never, ever, never. If boomers are opposed to debt forgiveness then just call me an honorary boomer..

Blogger nidus of inflection June 28, 2019 5:38 PM  

RUBBLE BOUNCED

Blogger Lance E June 28, 2019 5:49 PM  

Student loans should all be cancelled and then banned, but it needs to be done the right way, by actually cancelling them and making the banks and universities financially responsible, not by providing some "government loan assistance" and taxing the middle class to pay them off, like the various Democratic candidates are proposing.

Paying with taxes will perpetuate the cycle even further, by forcing average taxpayers to subsidize transgender intersectional autoethnographic critical theory studies and cause those programs to grow larger, when instead the cost of those programs needs to change to reflect their value: zero or negative. Cancel the loans by legally voiding them, which leaves bankers holding the bag, and then force universities to cosign all future loans. With their trillion-dollar endowments, they can handle it.

(p.s. who is this wad who keeps replying to every post with "rubble bounced"?)

Blogger Balam June 28, 2019 5:50 PM  

Nation-Deprived wrote:I’ve made this analogy to several boomers since Vox talked on this. Totally useless to appeal to morality with them. You will never convince them that 17-18 yr olds aren’t responsible for their debt, and they will proudly die on this hill of fairness. “THEY signed it, THEY can pay for it!”

It's not about anything rational with the boomers, as seen in the various compulsions and delusions they consistently have. Take your example, how many boomers enthusiastically cheered on 'murican freedom bombing the middle east? "Freedom a'int free" deposing entire governments (such as Saddam Hussein) using impressive shows of murderous force in the name of freedom? A lot of them, perhaps most of them.
62% of them according to this link
https://www.sfgate.com/news/article/Baby-Boomers-top-supporters-of-war-in-Iraq-2600135.php


Now how many boomers are for freeing their own children and the people of their own nation, simply by forgiving debt? No nation wrecking, no murder, no show trials with a hanging at the end. 33% support forgiving the debt vs 47% against forgiveness. Kill brown people for Israel and freedom! Freedom for our own kin, why my word how undignified!
Data on the bottom of page 18 of this survey.
https://d25d2506sfb94s.cloudfront.net/cumulus_uploads/document/1vtffk3bpp/Student%20Debt%20Forgiveness%20Survey.pdf

You can't appeal to reason/logic/premise-conclusion because they are not operating on that level.

Blogger Ken Prescott June 28, 2019 5:54 PM  

I've been discussing this in a conservative group on Farcebook.

I'm on the side of turn it off, cannibalize the banks and the schools, and use the funds extracted to write off the loans.

Holy Jeebus, the REEEEEEEEEEEEE! from the Boomers is a PITA.

Blogger SciVo June 28, 2019 5:56 PM  

Haus frau wrote:Taking back the degree sounds like a symbolic non starter.

Yeah, that's the point. That's why it would work. (For society, not the unis.)

"Oh noes, I can no longer get a transcript proving my M.A. in Underwater Feminist Interpretive Dance! How will I ever move up from barista?!"

Blogger Balam June 28, 2019 6:16 PM  

SciVo wrote:How will I ever move up from barista?!

I'm told that the 'degree as credential' started only because they outlawed employment tests/iq tests, and so they outsourced the duty to colleges. Revoking degrees would make that even more removed and convoluted, and sounds strange. Wouldn't it be simpler and easier to get support for allowing discrimination again? You could even frame it, for the leftists, as letting them finally officially discriminate against Trump voters.

Blogger W. P. Harrison June 28, 2019 6:21 PM  

It’s ridiculous that college debt can’t be discharged through bankruptcy, but I have trouble with the idea of absolving it across the board. It might be an unfair analogy, but it seems relevant to compare this to amnesty. Blanket amnesty only invited more illegal aliens to breach the border. In a similar vein, won’t absolving college debt lead to higher tuitions and therefore more debt?

Ideologically I don’t care about maintaining the integrity of the credit system, but it seems prudent to create new bankruptcy courts first, wait a decade for individual cases to cement a fair precedent, and only then consider whether and how to pay it off for all at the same time. Otherwise, universities will keep increasing their tuitions and funding more Vice Chancellors for Diversity and Inclusion (a real position at my school).

Blogger Robert What? June 28, 2019 6:33 PM  

To forgive student loans and let the perps (colleges, universities and banks) walk free would be a crime on top of a crime.

Blogger nbfdmd June 28, 2019 6:38 PM  

@42: It's not the same thing as amnesty because it's OUR people who will benefit, idiot.

God, some of the people on here really don't grasp the concept of nationalism. Hint: it's OK to do nice things for your own people.

Blogger Ominous Cowherd June 28, 2019 6:39 PM  

Lance E wrote:Student loans should all be cancelled and then banned, but it needs to be done the right way, by actually cancelling them and making the banks and universities financially responsible ...

I like the cut of your jib. Let's take the hook out of the cheeks of the debt slaves, hook the slavers on it, and let them struggle a while.

Blogger Stilicho June 28, 2019 6:39 PM  

@ Mike Wallens: you actually think Megan is going to pay it off?

Blogger Ominous Cowherd June 28, 2019 6:40 PM  

Lance E wrote:(p.s. who is this wad who keeps replying to every post with "rubble bounced"?)

The fact that they aren't giving details suggests that we don't need to know details. We can hope that Vox will do a post some day telling us all about a great victory. In the mean time, loose lips sink ships.

Blogger David The Good June 28, 2019 6:41 PM  

Forgive all debts, then ban usury.

Blogger Rattlesnake_Kid June 28, 2019 6:42 PM  

Forgiving student debt would require the Boomers to transcend their generation's god, Self Interest. We will see them transcend their mortal coil before they are willing to do that.

Blogger Ominous Cowherd June 28, 2019 6:46 PM  

W. P. Harrison wrote:... won’t absolving college debt lead to higher tuitions and therefore more debt?

Don't be silly.

Think this through: if the victims/debtors can go bankrupt, that limits the capacity of the predatory lenders to enslave them. Without government guarantees and with bankruptcy protection, the availability and size of tuition loans plummets. So do college tuitions.

Restoring bankruptcy protection for borrowers and removing government guarantees for the loans burns the predatory lenders and their university co-conspirators. It pretty well ends the scam.

Blogger Rex Leroy King June 28, 2019 6:47 PM  

David The Good wrote:Forgive all debts, then ban usury.

Also ban Jesuits and libertarians.

Blogger Rick June 28, 2019 6:48 PM  

1 Trillion dollar war in the ME

Boomers: Yay!

10 Billion dollars in school loan interest discharge to America citizens (1 Billion per year for 10 years). No more federal student loans.

Boomers: Over my dead body!

Blogger Whitecloak June 28, 2019 6:49 PM  

@50 Seems to me it should be a special kind of BK that doesn't mean you lose your house or necessarily have to nix -all- your liabilities. Plenty of sloan debt slaves do fine on things that aren't their useless burden.

Blogger VFM Bear June 28, 2019 7:00 PM  

David The Good wrote:Forgive all debts, then ban usury.

And that's why he's known as The Good.

Blogger liberranter June 28, 2019 7:02 PM  

I think the best way to convince them, assuming you even think it’s worth the trouble, is to explain how the debt’s negative effects on the economy will be measurably worse than forgiving it. Which I currently don’t know how to do.

Easiest way to appeal to a Boomer/Silent Generation's sense of self-preservation: tell them that the more Millennials and Gen Yers remain unemployed/underemployed, the sooner Social Security will implode, leaving them (the Boomers/Silents) out in the cold.

Blogger Snidely Whiplash June 28, 2019 7:12 PM  

The only real thing a university can do about a student who owes them money is to withold the transcript. For most jobs that require a degree, the transcript is required. In the scenario where the school was the debt-holder, they could refuse to send the transcript.
Which would make the colleges untrustable 3rd party information brokers. Which would create a demand for a trusted 3rd party info rmation broker. You pay an up front fee to have them obtain your transcript, and a per-inquiry fee when the send it to employers, other schools, licencing authorities, etc. Taking the college entirely out of that part of the transaction. Also, btw, making a convenient clearinghouse for this information, and making it substantially easier for businesses to vet potential employees. Instead of waiting 3 weeks for the university to send you informaion, you do a simple web app lookup.

Blogger Ominous Cowherd June 28, 2019 7:15 PM  

Whitecloak wrote:@50 Seems to me it should be a special kind of BK that doesn't mean you lose your house or necessarily have to nix -all- your liabilities.

Making student loan contracts not legally enforceable and removing the government guarantees would burn the lenders and leave the universities unable to collect the big bucks they have become accustomed to.

Merely restoring bankruptcy protection and ending the guarantees is probably an easier sale, and accomplishes nearly as much. I really don't care if some baristas with degrees in grievance studies lose their used cars and big screen TVs in their bankruptcies. Sure, they're victims, but they're stupid victims, and stupid should hurt at least a little.

My point is not to punish the victims, my point is that this is worth doing, and if we can't do it well, it's worth doing poorly.

Blogger JaimeInTexas June 28, 2019 7:20 PM  

So the debt is forgiven. Now what? What does the bill to be enacted into law looks like?

Blogger Damelon Brinn June 28, 2019 7:24 PM  

Clients making $25,000-$40,000/year with student loans

Damn. When I went off to college in 1987, the expected salary for a new engineering graduate was in the $25-28K range. But minimum wage was $3.35 and one semester of out-of-state tuition and room-and-board was around $3K, so that seemed like a good deal. With the deal they're getting now, they'd be better off delivering pizza full-time.

Blogger maniacprovost June 28, 2019 7:25 PM  

Student loan debt is disproportionately held by college educated morons with no useful skills or ability to plan ahead: in other words, liberals. They can just go to their graves in debt.

Blogger dienw June 28, 2019 7:31 PM  

I support student loan forgiveness and placing the cost onto the backs of the banks and universities.

A way around the "no transcript for you" gambit would be to obtain a notarized transcript shortly after graduating and maybe three years before defaulting on the student loan; hell, there are people out there -- I've met such an SOB -- planning bankruptcies five or more years in advance.

Several years ago Karl Denninger wrote on his Market Ticker blog to the affect that it is foolish to behave morally in regards to a system that is corrupt and immoral(my phrasing may be i9ncorrect but that is the gist of his statement that I came away with. That advise is for the nine out of ten who can get away with bad behavior; it is not for the one in ten who can't get away with even not paying automatic highway tolls.

Blogger Uncle John's Band June 28, 2019 7:38 PM  

"I’ve made this analogy to several boomers since Vox talked on this. Totally useless to appeal to morality with them. You will never convince them that 17-18 yr olds aren’t responsible for their debt, and they will proudly die on this hill of fairness. “THEY signed it, THEY can pay for it!”"

A lot of them are coward secret kings who watched everything fall apart in silence while chortling to themselves that some day those leftists will get theirs. Rob them of this and their fake justification for complicity goes poof with the rest of their integrity.

Blogger Azimus June 28, 2019 7:42 PM  

Eliminating the student loan exception of the bankruptcy law combined with a special fast-track jubilee that can be applied for w/on an attorney is the right way to handle this.

Blogger Clint June 28, 2019 7:42 PM  

Snidely Whiplash wrote: Instead of waiting 3 weeks for the university to send you informaion, you do a simple web app lookup.

Overall, your post is on point. I could see the value there. On the time issue, most schools now send electronic transcripts, at least to other educational institutions. So they are actually pretty quick. Not sure about a regular company/corporation, though.

Blogger SciVo June 28, 2019 7:47 PM  

Ominous Cowherd wrote:My point is not to punish the victims, my point is that this is worth doing, and if we can't do it well, it's worth doing poorly.

I concur, up to a point. That point is where they start taxing me to pay off the debt of TWANLOC that hate me. Any plan that has us picking up the tab is a no-go.

Blogger VD June 28, 2019 7:49 PM  

Student loan debt is disproportionately held by college educated morons with no useful skills or ability to plan ahead: in other words, liberals. They can just go to their graves in debt.

Speaking of morons, you're taking tens of millions of Americans out of the housing market. Guess what is going to happen to your home values. But at least you can feel good about playing a part in scamming 17-year-olds, so you've got that going for you.

The Boomers with mortgages won't be quite so pleased with the situation when they find themselves underwater on their mortgages on homes they can't sell.

Blogger Cluebat June 28, 2019 7:50 PM  

Educrats must also pay for this failure.
And not all of these loans were a bad investment. The industry is run by leftists, building a program that is intended to spark a new SJW economy. Those failed programs should be thrown back in the laps of these administrators and made painful enough to deter future shenanigans.
Any gift without reform is only encouraging future bad behavior.

Blogger Ingot9455 June 28, 2019 7:53 PM  

If you feel the need to punish someone, punish the colleges and universities. They're the ones who bloated up their administrations and regularly raised rates whenever loan limits were raised so as to capture the new funds.

While I liked a good portion of my teachers and classes and certainly the lifelong friends I made in college, the administration of the place treated me very poorly. They can beg and send me their quarterly magazine but they don't get a penny. Nor do I need their helpful brochure as to how to make them a donation in my will.

Blogger Sargent.matrim June 28, 2019 7:55 PM  

It's evil that this one type of loan is not able to be done away with in bankruptcy. It's the best evidence that the whole thing is a con.

I hope Trump does do something. Because to tie such a lead weight around a young persons soldiers is wrong on every level.

At the very least it should be treated as a normal loan under chapter 11. But the record should be set straight first by wiping the slate.

I really liked your idea to make the Colleges pay the debts through their endowments.

Blogger Capital6 June 28, 2019 8:18 PM  

From 1958 to 1976 student loans were able to be discharged through bankruptcy. In 1978 the laws were tightened to prevent student loan discharge through bankruptcy so that it took 5 years of repayment before bankruptcy could be filed. This is a year or two before Generation X started going into the university system (assuming 1961 - 1980/1 as Generation X).

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act is the law which prevents student loans from being discharged through bankruptcy. It took effect right as Millennials (1980/1 - 1996) were really getting into the university system. Those born after 1987 had no chance at all. Those born between 1983 and 1986 were graduating or still attending as this law took effect. Those born between 1980 and 1982 had 1-3 years after graduating to declare bankruptcy. This is impossible because the 1990 bankruptcy law required a 7 year period before bankruptcy could be attempted for student loans.

This means that Generation X was hit with the beginnings of these laws and the Millennials were completely trapped by them. Millennials never had a chance. While the bankruptcy laws became tighter and tighter the Boomers did absolutely nothing and, in 2005 when bankruptcy was removed as an option altogether, the Boomers still did absolutely nothing.

Blogger JK June 28, 2019 8:18 PM  

I get the forgiveness of the student debt but without system wide changes (e.g. tightening up the mortgage/lending market) doesn't the newly freed up money just find another bubble to inflate? Thus kicking the can down the road?

It seems to me a system wide failure is the only way that system wide changes occur, sadly.

I thought I had asked this in a previous post but can't find it now, sorry if this a repeated question.

Blogger Rick June 28, 2019 8:19 PM  

Here’s the future solution. Daddy has to put his house up for collateral or the student has to have sufficient collateral in order to secure the loan. That will eliminate the gender studies programs and ridiculously high tuitions. I can’t think of any other loan where this is not the case.

Blogger maniacprovost June 28, 2019 8:23 PM  

Of course there is something to be said for ending usury. Absent the government enforcement mechanisms, I don't think people would sign away their lives as collateral.

Blogger Sargent.matrim June 28, 2019 8:25 PM  

*Shoulders

Blogger Brett baker June 28, 2019 8:27 PM  

Deep down inside, the leftists know it would hurt their side worse.

Blogger Brett baker June 28, 2019 8:28 PM  

Define "own people", please.

Blogger State Estimation June 28, 2019 8:29 PM  

Guess what is going to happen to your home values.

Why not cancel the underwater portion of the mortgage?

I don't understand why never-ending increase of housing prices is a good thing.

Blogger Werekoala June 28, 2019 8:40 PM  

Coming soon - corporatization of debt. If you want to go to college, Company A will front you the funds in exchange for a 25 year non-negotiable contract for work performed. If you can't apply your "skills" to the job Corporation A wants done, that's fine, you still have to work it off in a lower-level job for longer terms and lowered wages. Simple.

Blogger Sheila4g June 28, 2019 8:48 PM  

Limit the debt forgiveness to White men, and I'm on board.

Blogger Glaivester June 28, 2019 8:58 PM  

@49:

[In response to the idea that college loan forgiveness will encourage higher tuitions and more debt]:

Don't be silly.

Think this through: if the victims/debtors can go bankrupt, that limits the capacity of the predatory lenders to enslave them.


This only works as long as private institutions are the ones holding the debt. If the loans were given out by the government, the government can just forgive the debt and then let new students pile on more more debt, because the government does not necessarily need to be paid back.

Without government guarantees and with bankruptcy protection, the availability and size of tuition loans plummets. So do college tuitions.

Yes, if we get rid of the government guarantees. I'm not willing to simply cancel student loan debt unless I am certain that the government guarantees will be taken away - but again, that assumes that the loans are guaranteed by the government through a private institution rather than given directly from the government.

Restoring bankruptcy protection for borrowers and removing government guarantees for the loans burns the predatory lenders and their university co-conspirators. It pretty well ends the scam.

Except how much of the debt is currently held by predatory lenders?

We can't cancel student loan debt unless we make certain that the people who are getting rich off of it are going to be the ones held accountable, or else we are just subsidizing the universities even more.

Blogger James Dixon June 28, 2019 9:02 PM  

> Reasons to discharge the damn things. Usurious loans made to unqualified borrowers under false pretenses.

Exactly. Let the banks and the Universities split the losses.

> there are STEM grads stuck in the 25-40 bracket because H-1Bindis have the entry level work that should've gone to them on lock.

Don't get me started. Snidely can add his own tales too.

> I’m for discharge in bankruptcy.

Most of us are. It's a simple change that would be easy to implement and should have bipartisan support.

> Joe the Plumber pays off the student debt for Megan getting her degree in Womyn's Studies at Dartmouth.

What part of forgiveness are you not understanding. Vox isn't saying the government is going to pay the loan for them. He's saying the loan has to be written off by the bank. If anyone has to pay it, it's the university that granted the worthless degree.

> I'm told that the 'degree as credential' started only because they outlawed employment tests/iq tests, and so they outsourced the duty to colleges.

Correct, but beside the point.

> Damn. When I went off to college in 1987, the expected salary for a new engineering graduate was in the $25-28K range

The people he's talking about don't have engineering degrees.

> Any gift without reform is only encouraging future bad behavior.

Agreed, but that doesn't change the initial prescription. Forgive the debt, then fix the programs. Mainly by cancelling all federal student loans and loan guaranties.

> Coming soon - corporatization of debt. If you want to go to college,

You do realize that corporations used to train their employees, don't you?

Blogger Nobody of Consequence June 28, 2019 9:02 PM  

Honor is the reason you pay off your debts. Anything that allows you to escape your debt is dishonorable. No one forced you to take out debt and if you took out debt to get an education you proved you should never have gotten that so-called education CAUSE U2S2PID!!!

Blogger Jeff Weimer June 28, 2019 9:09 PM  

1) Make student loans dischargeable in bankruptcy. If one must take that road, they should pay some price, even temporary. It also discourages

2) Make the college at least partially (50% at least) for all future student loans. Might make them think twice about that up-front money if they have to pay it back.

Blogger Aeroschmidt June 28, 2019 9:10 PM  

I was talking with a boomer coworker about how his generation is starting to die off and how the home prices should be coming down. He said, "that's why it's important to import migrants to make up the slack in the market."

A zero wealth migrant would be more or less able to buy a house than a negative former student?

Blogger Doktor Jeep June 28, 2019 9:10 PM  

The issue will pit boomers and millennials against each other. Therefore, while I don't know where it will go, it's going to be fun to watch.

Blogger mgh June 28, 2019 9:19 PM  

Since the money is owed to the government, the inability to discharge appears to me to violate the 8th amendment. Any lawyers out there who can tell me why this debt slavery is constitutional?

Blogger Glaivester June 28, 2019 9:31 PM  

@80

> Joe the Plumber pays off the student debt for Megan getting her degree in Womyn's Studies at Dartmouth.

What part of forgiveness are you not understanding. Vox isn't saying the government is going to pay the loan for them. He's saying the loan has to be written off by the bank.


What bank? New student loans are owned by the government. So it's the government writing them off, so in effect it is the same as taxpayers paying the loan.

https://www.investopedia.com/articles/personal-finance/081216/who-actually-owns-student-loan-debt.asp

If anyone has to pay it, it's the university that granted the worthless degree.

Even before the government monopolized student loans, the Universities mostly did not, I believe, finance their own loans, so how would they be on the hook?

Blogger CostelloM June 28, 2019 9:33 PM  

There's a lot of debt out there now that can't be discharged. Medical debt, child support debt, student loan debt to name the big three. Taxes are a gray area where its pretty much up to the government agency and so are many court imposed fines/fees. The solution - taking out huge loans on credit cards at usurist rates of interest then declaring bankruptcy is an innovative solution so I imagine our government masters will label it as a "loophole" to be plugged. Must keep the 'deadbeats' from getting away with their evil after all. Still and especially to tackle debt that gets you imprisoned immediately (child support and taxes) this is an elegant solution for as long as it lasts. Just be sure to leave the country after you pay enough to get your passport back.

Blogger Paul M June 28, 2019 10:01 PM  

Franz Lyonheart wrote:and the DEGREE acts as collateral.

A degree isn't a thing that you buy, and viewing degrees in this way is maybe the central thing that's wrong with the whole system.

The main purpose of tertiary education is to give you a badge that you belong to a certain stratum of society. The moderately moneyed class. To restore education to its historic role of educating people and conducting research, we need an alternate way of doing that.

How about going back to selling commissions in the army? Or a peace corps? Why not just give people jobs on the basis of social media likes?

Blogger Noah B. June 28, 2019 10:15 PM  

@87 Medical debts can be discharged and IIRC they are now the leading cause of bankruptcy.

https://www.nolo.com/legal-encyclopedia/medical-debt-chapter-7-bankruptcy.html

Blogger Roman Daoist June 28, 2019 10:48 PM  

Yes I suppose discharging uni debt is appropriate but then what? Start issuing debts again tomorrow for the kids now signing up for fem-mother-gaia-love class? What's the plan Stan?

It seems that 'university' has become an institution unto itself (and for those who have co-opted its prestige) instead of a service for the community... The model needs to be revisited from first principles.

Uni is for professional training. Not for political advocacy, not for revolutionary indoctrination, not for undermining the status quo just becuase, etc, etc. Doctors, chemists, engineers, historians, linguists - and the like, and that's it. Revisit the model, and restructure from there.

Blogger justaguy June 28, 2019 11:05 PM  

Predatory? how

The kids were lied to? how/when. career is also a crap shoot where one takes a chance. College grads still make more than non-degreed etc.

Okay I got that VD and others want as a policy matter to forgive the loans. Lots of pluses for society, not that different than previous US land giveaways etc. I am not seeing how colleges lie and the government loaning you however much you want for years and years of school is predatory? Problematic, yes, ...

Blogger Chief_Tuscaloosa June 28, 2019 11:06 PM  

So enraging that none of this bailout would be necessary if 8 assholes in black robes had been frightened of backlash for saying that a company trying to hire the best candidate is violating muh constitution (Griggs v. Duke Power=no IQ tests allowed in hiring).
Not enough pitchforks in 1971, not enough today. Having said that Vox is right--relieve the debt or the only children in the USA's next generation will be Somali. And piracy won't cover my social security. Our nation's young people need student loan debt relief ASAP. WON'T SOMEONE THINK OF THE CHILDREN!?

Blogger justaguy June 28, 2019 11:11 PM  

#89: long term sickness leads to bankruptcies because the family breadwinner can't work and living expenses still pile up. That isn't medical bills. Warren's study was debunked as shoddy/fraudulent long ago.

That said, when someone gets a long-term illness and can't work, there aren't many programs that can keep the family going except other family members and neighbors (church). The government social programs don't give much $.-- enough to feed the kids but a large lifestyle change normally happens. SS disability isn't enough to even live off of without help. Uncle government doesn't replace caring family members.

Blogger JGP June 28, 2019 11:38 PM  

@36 With you man but the horrible fact is that those degrees pay BETTER than being a mechanical engineer or computer scientist. If you're hooked in with the right people.
The problem needs to be dealt with but no taxpayer dollars - not because I'm Gen Jones but because it's not fair.

Blogger The Pitchfork Rebel June 28, 2019 11:43 PM  

@2

"It's funny how our ruling class could find the time to make student loan debt unable to be discharged,"

Actually you can, but you have to file an additional action to prove "undue hardship"-which is exactly what you need when you are broke, right?. It's almost like the government knew it would be the sole originator after 2010.

Just as accounting and law firms and quant shops benefited when student loans were assembled into CDOs, there's unseen benefits to various constituencies (in this case lawyers) from the way the program is structured.

If there was some kind of forgiveness program, if it doesn't do things to stop the excessive growth in college costs and force the disgorgement of money from people who benefited from these loans, it will recur and be worse next time.

Blogger Primus Pilus June 29, 2019 12:04 AM  

The BoomerCon opposition to student loan forgiveness makes me not only support forgiveness /more/, but I now also support stripping all Boomers of home ownership, and holding an Under-50-Only lottery for all their deeds.

The Boomers get to keep the mortgage debt, though.

Blogger Jack Amok June 29, 2019 12:07 AM  

In addition to canceling the student loan debt, it would also be prudent to cancel the predatory student loan system.

Yes, if all we did was cancel the debt but leave the same system in place, it would just restart the cycle. It would still be worth doing, but would be less than ideal.

There are lots of ways to plus the debt cancellation package to make it even better, and I'd love to include as many as possible, but ultimately the debt itself needs to be cancelled and even if nothing else happens, that by itself will exert some positive influence on the predatory system. Someone will take a bath, and that should provide some discouragement to loaning the money out again.

Requiring students to surrender their degree as a part of it would be hilarious and beneficial, since obviously we'd want to publish stats on which degrees from which institutions were repossessed. And it would highlight the absurdity of demanding a college credential for routine jobs.

Blogger Jack Amok June 29, 2019 12:15 AM  

Student loans should all be cancelled and then banned, but it needs to be done the right way,

There really is no wrong way to do it. There are better ways and worse ways, but all of them that cancel the debt are at least "right."

Blogger James Dixon June 29, 2019 12:36 AM  

> What bank? New student loans are owned by the government.

Which would be shut down.

> So it's the government writing them off, so in effect it is the same as taxpayers paying the loan.

No, it's the government not getting the money, which they're not going to get anyway.

> so how would they be on the hook?

They lied to the student about how much the degree they were offering was worth.

> The issue will pit boomers and millennials against each other. Therefore, while I don't know where it will go, it's going to be fun to watch.

The majority of the boomers will be dead within 25 years. The oldest ones are 73 now.

> The kids were lied to? how/when

Everyone. Their parents, teachers, student counselors, the banks, the university reps, the government, the press. You name it, and they lied to them about how much the degree would cost and what it would be worth.

Blogger Colonel Blimp June 29, 2019 12:50 AM  

Ive often wondered why student loan holders dont simply spend a few years getting absurd credit cards and credit lines then maxing them out to pay off student loans before simply defaulting on the cards a few months later and filing bankruptcy.

Once the banks realize paul is borrowing from the bank to pay off the previously borrowed but inescapable debt, one of three things happen

1) colleges will have to guarantee large portions of any loan or loans will simply not be offered.
2) new credit lines to anyone with student loans will be near impossible to get overnight
3) frugalists lobby the gov to once again make their usury profitable again by further screwing over the young while endowments grow into the billions at even shit schools like tulane or berkeley.

Blogger Jack Amok June 29, 2019 1:03 AM  

The kids were lied to? how/when

If you don't know the answer to this question, you're simply not paying attention.

Blogger Kristophr June 29, 2019 1:30 AM  

The kids were lied to by the educational establishment and their boomer parents.

"Get your degree. Any degree. Then you will be successful!"

Forgive the loans. Let the banks eat the cost. Repeal the guaranteed student loan legislation. Allow privately underwrited and bankruptable student loans. Allow employers to use IQ and aptitude tests to select new hires.

The GSL program has been an abject failure, and has resulted in a bunch of people getting into permanent debt slavery, leaving them with the options of credit fraud or fleeing the country as the only way out.

Just end it.

Blogger NO GOOGLES June 29, 2019 1:40 AM  

@91
The biggest and most specific type of fraud is when Colleges report what percentage of their students found paying jobs within their field in a year or less. This is a huge part of the US News college ranking system and basically every single college out there is lying their ass off about it.

On top of that - most colleges are admitting students that they KNOW will not get a degree and then helping them take out loans (thru the finance office) to get paid. This is the same type of fraud that happened in the housing industry - loan originators getting people who they know can't afford the loan (once the adjustable rate spikes after the introductory period) and purposefully write loans without income verification and with no money down required. Then the loan originators sell these loans to banks/investment outfits who package them with a bunch more of the same, then the frauds at the rating agency says "it's diversified! AAA rating!". And suddenly you have a massive financial crisis because a huge chunk of the mortgages were fraudulent to begin with. But the loan originator? He got the money and sold the responsibility a LONG time ago.

It's the same system - just substitute the college finance office for the loan originator and the Federal government for investment banks. At least the people who got fucked with fraudulent mortgages they couldn't possibly pay just lost their house and had their credit dinged for a while - the majority of college students end up with debt they can't get rid of and no college degree either.

In reality, if you were disgusted at the level of fraud in the housing bubble/financial crash - it's basically the same level of fraud except the average Joe college student remains a debt slave for the rest of their life instead of just losing their house.

Blogger cyrus83 June 29, 2019 1:54 AM  

Student loans should be subject to forgiveness in bankruptcy, but just forgiving the debts without fixing the broken system that led to this problem means the problem will be back and probably worse a decade or two from now unless the next generation wises up on the scam that is college.

Federal student loans need to go. They are too easy to obtain, drive up the tuition costs to soak up every possible loan dollar, and none of the players in the current system has any incentive to look out for the student's best interests because they have no skin in the game if the student either flunks or takes out too much debt.

Blogger Chad Hedgcock June 29, 2019 2:01 AM  

The main argument against loan forgiveness is that it will fall on the taxpayer.

To help make up for that, companies should have to list all filled job positions that require a degree and be taxed on it. That lowers the incentive to require a degree for say, barista, just because you can.

That list also gets ranked so that we know what degrees are in demand. Banks are not allowed to lend to students majoring in things low on the list. Philosophy? Sorry kid, you’ll have to pay out-of-pocket.

The tax becomes a subsidy for majors very high on the list. Computer science? The government will pay $15K of your annual tuition.

Blogger Glaivester June 29, 2019 2:36 AM  

> What bank? New student loans are owned by the government.

Which would be shut down.


The point is that shutting down the government program is a separate step. Forgiving the debt and then shuttering the student loan program won't work, because they'll either find some workaround to keep the loan gravy train going, or else someone will just re-start the program later.

However we wipe out student loan debt, we need to do so in a way that punishes those who profited off of student loans, so that they have less incentive to try to restore the system. There need to be consequences this time, or no one will have any reason to believe their will be any consequences if they start this scam over again.

> So it's the government writing them off, so in effect it is the same as taxpayers paying the loan.

No, it's the government not getting the money, which they're not going to get anyway.


The net effect of the government not getting the money is the same as the government paying off the loan. So your initial statement "What part of forgiveness are you not understanding. Vox isn't saying the government is going to pay the loan for them. He's saying the loan has to be written off by the bank" is a distinction without a difference.

> so how would they be on the hook?

They lied to the student about how much the degree they were offering was worth.


I'm not asking how they are responsible. I am asking what skin they have in the game. I agree that the colleges ought to pay for the forgiven student loans. I'm just saying that canceling the debts by itself does not actually cost the colleges anything, because they do not hold any of the debts. The college has already received the money and it is the lender's problem if the student defaults, not the college.

If you are arguing that we should force the schools to pay, I agree. But you seemed to me to be suggesting that if we canceled the debt, the schools would lose money.

Blogger James Jameson June 29, 2019 2:39 AM  

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Blogger James Jameson June 29, 2019 2:40 AM  

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Blogger James Jameson June 29, 2019 2:40 AM  

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Blogger James Jameson June 29, 2019 2:44 AM  

Remember the Greek debt crisis?
The solution offered by the EU bankermen was another loan to pay off the original loan.
I.e, even more debt.
Tsipras duly accepted, after having campaigned on returning the drachma.

When we win, do not forget that these people want you broke, dead, your kids raped and brainwashed, and they think it's funny. ~ Sam Hyde

Blogger Daniel Heneghan June 29, 2019 2:49 AM  

@15
>>So make student debt bankruptable again.

Just try and get that past the Cucks in the Senate. Destroy all Cucks.

Blogger Jack Amok June 29, 2019 3:07 AM  

Honor is the reason you pay off your debts. Anything that allows you to escape your debt is dishonorable.

The Fedora of Honor has spoken! All take heed and adjust your bow ties accordingly. Far better to continue to lose with honor than to strike out and risk making some sackless CivNat feel bad about himself for being too chickenschick to make his own decisions about screwed up situations.

Blogger MJ Meyers June 29, 2019 5:39 AM  

I suggest you all read the book through Castalia Direct: Michael Hudson - ... And Forgive Them Their Debts: https://aerbook.com/maker/productcard-4188188-1875.html

I find it particularly amusing that people are arguing student loans should not be forgiven because: the government took the debt, and, thus, the people are ultimately going to have to pay for that taking.

Debt forgiveness has been around for over 20,000 years. The most common debt amnesty was forgiveness on tax debts. Governments have been wiping their balance sheets for taxes owed to them for millennia. And to the degree you want to argue student loans being paid back is really for debt the government took on is the degree student loan payers are akin to tax payers. The modern federal government uses the money it takes in as an excuse to borrow and spend more money anyway. To the extent the U.S. government is being "paid back" for student loans is the extent the taxes it charges to U.S. citizens in the here and now are really just paying back the 20+ trillion in dollars it borrowed to finance things it bought decades ago (albeit I know on the balance sheets with interest payments it's not counted exactly that way; you get the heuristic here).

The real "problem" with any government debt amnesty is the notion that some lenders will (a) charge more interest or (b) not loan as much to the federal government. To the extent the U.S. government wipes out this debt and lenders refuse to lend it more is the degree to which the U.S. government may spend less in the future and, thus, have less power over us and/or ability to use its resources to sustain its corroding global empire of 800+ military bases that have no practical use for its actual people.

Money is the weapon the government uses to push forward with new laws and programs most of us don't want. The argument here is akin to: the alcoholic shouldn't stop paying the bar tender (and the alcoholic gets some of his bar money offset from "student loans"), because the bar tender may stop giving him more drinks. But the bar tender will keep pouring the drinks anyway. Why? Due to the nature of the Federal Reserve and the notion that government always has the power to pay its debts by future taxation, a few debt amnesties will do little to impact the above scenario of the bar tender cutting the alcoholic off that some may be concerned with.

What I found most striking is how modern governments tend not to cancel any debts at all. When looking at millennia timespan, this is a fascinating anomaly. Bankruptcy law has usurped the role governments historically had in blanketly canceling debt and put all the onus on individuals in the court system. The big-time lenders get their money financed not through the people but through the government. And they're guaranteed to be paid. To that extent, the financial sector has achieved oligarchical control over modern governments to a degree far beyond that of the Greek city states Aristotle called "oligarchies."

There's been this libertarian notion that once the U.S. is incapable of paying its debts, there will be a "collapse" and that, therefore, we should cut spending and pay that debt down. But why not cancel it? It's not the banks not getting paid and the bankers losing their jobs that people fear what happens after the government is unable to write checks to the low-IQ-with-a-propensity-to-violence-when-not-satiated (i.e. the fear of a "collapse" is ironically a mirror of the system libertarians prefer anyway).

Perhaps the only "collapse" we need to fear is bankers not lending to the government anymore. The U.S. government will get by just fine with $3.5T a year in tax revenue it currently has to work with. I'm sure it'll find a way to function!

Blogger Ceasar June 29, 2019 6:44 AM  

I see this as an opportunity.

If under 35, forgive student loan but individual will not have access to federal food/housing assistance for X years.

If over 35, forgive student loan but individual will not be able to collect social security before full retirement age.

Both of these would help offset entitlements to pay for student loans.

Blogger xavier June 29, 2019 9:49 AM  

Nicholas Nassim Taleb adds real estate developers should also be responsible for paying off student loans. His reasoning is that by building all those fancy campus facilities, they helped to push up tuition.

In any case, in the future, students should receive any funding from university endowments. The universities should also be strictly prohibited from lending (and banks too) and be compelled by law to grant scholarship or interest free grants.
I'm sure the admissions will become much more selective and merit based than now as well as eliminate totally frivolous programs from the catalogues

Blogger James Dixon June 29, 2019 10:14 AM  

> The point is that shutting down the government program is a separate step. Forgiving the debt and then shuttering the student loan program won't work, because they'll either find some workaround to keep the loan gravy train going, or else someone will just re-start the program later.

And? The fact that people will be evil in the future is no excuse for not undoing evil today.


> However we wipe out student loan debt, we need to do so in a way that punishes those who profited off of student loans, so that they have less incentive to try to restore the system. There need to be consequences this time, or no one will have any reason to believe their will be any consequences if they start this scam over again.

That would be, in order: The universities, the banks, and the government. Each is a separate process.

> So it's the government writing them off, so in effect it is the same as taxpayers paying the loan.

There is a big difference between making a large payment now and not receiving a set of smaller payments in the future.

> The net effect of the government not getting the money is the same as the government paying off the loan.

There is a big difference between making a large payment now and not receiving a set of smaller payments in the future.

> I'm not asking how they are responsible. I am asking what skin they have in the game.

Ah, I misunderstood. At the moment the only skin they have in the game is that they've become dependent on ever increasing tuition fees to pay their ever increasing salaries. Shutting down the student loan program would put an end to that game.

Now, a class action suit for fraud against several major universities by those currently in debt might help that a bit.

> But you seemed to me to be suggesting that if we canceled the debt, the schools would lose money.

See above. Cancelling the current debt wouldn't affect them. But cancelling the program would. Payments it's become obvious they're not going to receive in any case.

Blogger James Dixon June 29, 2019 10:14 AM  

Rats, I thought I'd removed the repeated paragraph above.

Blogger Joel Oafsteen June 29, 2019 10:28 AM  

Don't get your Panties in a wad in worry over this. Nothing will be done unless the Saturday People can figure out how to monetize a solution that benefits them only. Everyone else can just bugger off.

Blogger Brick Hardslab June 29, 2019 10:32 AM  

For goodness sakes, nobody needs to be 'punished'. Bring in the jubilee then worry about punishing your opponents. That's not happening anyway. It's going to crash no matter what. Do you want to make an emergency landing or wait until you plow into a mountainside?

Blogger Primus Pilus June 29, 2019 10:52 AM  

Nobody of Consequence wrote:Honor is the reason you pay off your debts. Anything that allows you to escape your debt is dishonorable. No one forced you to take out debt and if you took out debt to get an education you proved you should never have gotten that so-called education CAUSE U2S2PID!!!

Shut up, nerd.

Blogger Grid Killer June 29, 2019 11:13 AM  

Two-thirds of the debt is held by women. Conquer and humiliate the university system by tying debt forgiveness to childbirth in normal heterosexual marriages. During the families’ formative years, the debt is suspended, yet the interest grows. Once the third child reaches adulthood, the debt less 95% of interest is charged to the public, but if the woman commits infidelity or attempts divorce, the full balance of debt is divided in half and charged to both the woman and the university. If the woman abandons her family, she has instead chosen slavery.
I will gladly pay taxes to domesticate our female brutes.
This plan makes the university financially interested in responsible fertility, restores male leadership in the home by shifting female ownership from creditors to husbands, increases wages, and provides incentives for women to abandon work, find their natural calling while remaining faithful.

Blogger Whitecloak June 29, 2019 11:24 AM  

@121 No need to be that heavy handed. Just remove the burden and half the work is done in itself.

Blogger Franz Lyonheart June 29, 2019 12:05 PM  

Quit being a boomer. As Vox has said multiple times, this isn't about punishing the debt slaves. To borrow Vox's analogy of firefighters putting out a neighbor's fire - you are suggesting to take the neighbor's land because they had a house on fire there.

No boomer here, and what you're saying here is plain stupid. You obviously didn't understand Vox's metaphor, and your "borrowed" extension thereof is just incomprehensible nonsense.

Maybe you want to read that again : the main point being that the colleges / universities have to be made the guarantors of the debt they created - effectively landing the cost of re-establshed possibility of bankruptcy back with the originators of the debt. Adding the degree (or the transcript, as others have suggested) as collateral may be an extra detail that may (or may not) be discussed at a later stage; but it's not essential. Making the loan originators - the universities - take back defaulted debts is the key point.

I fully support Vox idea of two steps : first step - cancelling the debt, and then as second step, allocating the loss in a fair manner. The first step is more important.

Before reading it here, I had no idea that US Congress had even created a class of debt without bankruptcy. That's a crazy move, you cannot legislate away the associated credit risk by fiat, that's illogical. US Congress is not unique in that regard of "wishing away" credit risk - the EU government treaties creating the Euro currency had that same daft basic flaw at its heart, abolishing the potential for government bankruptcy by fiat - a logical impossibility, as Greece has proven.

What that means for student loans, is that someone will have to pay for the debt forgiveness. The taxpayer are the second best solution, albeit better than none. The college debt originators are a better alternative, and Vox has run the numbers - they have enough money.

Blogger Up from the pond June 29, 2019 12:13 PM  

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Blogger Thomas Howard June 29, 2019 12:16 PM  

Speaking as a guy only a couple of years away from an MD with close to 90k in med school loan debt already, this is hitting at just the right time. Why add to the stress of a residency by writing out those monthly loan repayment checks? The universities would only use their endowments on funding present/future scholarships, research, and facilities improvements, while the average American worker needs to do his fair share as well. I heartily endorse this call to action! /s

Blogger Up from the pond June 29, 2019 12:21 PM  

VD wrote:The Boomers with mortgages won't be quite so pleased with the situation when they find themselves underwater on their mortgages on homes they can't sell.

It doesn't matter to them. Altruistic punishment is insatiable. "Let justice be done though the heavens fall." The Boomer version is: "Let Somalis replace the next generation if the next generation doesn't pay back a loan in full."

Shylock only wanted a pound of flesh. The Eternal Boomer with his notion of "honor" demands nothing more or less than national death.

Blogger Up from the pond June 29, 2019 12:35 PM  

Franz Lyonheart wrote:someone will have to pay for the debt forgiveness

If the debt is forgiven, it no longer exists. The notion of paying a forgiven debt is a stubborn assertion that it still exists. The creditors are not going to get the money anyway. Not even one cent on the dollar. The point is for the creditors to remove their fangs from the pound of flesh and let life go on. The lesson will be to be more careful about whom one lends to.

Someone here already referred to Michael Hudson's great new book, "…and forgive them their debts," but it's explained in there.

Blogger Wraithburn June 29, 2019 12:42 PM  

I just realized something I should have earlier about the student debt. "...the Fed economists noted that, at any given time, “about half” of all student loans are in deferment, forbearance or a grace period..."[1]

That half doesn't stop accumulating interest, that's not how the loans work. It's either accumulated into the loan if it is unsubsidized, or the government pays it. Since you usually get about half your loans subzidized, that means the US Tax payer is already paying the interest on a quarter of the student debt every year.

Current interest rates are about 5% on the $1.2 trillion student loan amount. Some simple math gives us (25 * 1.2 * .05) or $15 Billion in interest per year paid by the taxpayer. For all those people complaining they should pay their debts, you are costing us a chunk.

[1] https://www.valuepenguin.com/news/student-loan-delinquency

Blogger DonReynolds June 29, 2019 12:48 PM  

I knew Lamar Alexander back in 1974, when he was a young shirt-tail lawyer in Nashville, running for governor for the first time. In fact, I spent way too much time helping him campaign, at the expense of my other obligations. WE lost and the state elected probably the most corrupt individual since Andrew Johnson. My Democrat professors sent a joint letter to the state attorney general demanding that MY activities on behalf of Lamar be investigated for violation of election campaign laws, but nothing came of it.

So when Lamar became the US Secretary of Education, we exchanged correspondence on the subject of student loans. I told him it was particularly stupid to hold a person's official transcript hostage anytime they were in arrears on their student loans. Without the transcript, they have more difficulty getting a job that paid enough to pay the student loans. I told him it was also stupid for the state to confiscate all of the wages of part-time professors teaching at state schools for student loan debt. Lamar agreed but said there was nothing he could do.....the standard Republican response.

The LAST thing the Student Loan Gods need to do is keep anyone from working and getting paid in the occupations they trained to do with the student loans. At common law, I could argue that they are deliberately interfering with my ability to repay the student loans, acting in restraint of trade, and conspiring to double my outstanding balance by forcing me into arrears.

I have been unable to get my transcripts since 1979. It was more difficult to get hired without them but I can be creative. The entire student loan collection system is based on the idea that everyone has a wealthy family member somewhere....a rich uncle....or parent....who will come to the rescue and make sure they can get their transcripts. Of course, that is not always true, nor was it true in my case.

When I was able to work and get paid, I would make payments on my student loans. Several times, I was terminated after a few months because I could not provide official copies of my transcripts. So I was thrown out of work several times because I owed money, even when I was trying to get caught up. The payments all seen to be gobbled up by the collections process and my loan balances never seemed to do anything but double, each time I went into arrears.

There were too many lies that students are told about student loans. "You do not have to start repaying the loan until you graduate." "If you are out of work for a prolonged period of time, they will suspend re-payment until you get back to work." "If you get caught up on the amount in arrears, they will release your official transcript." "As long as you are making an effort to pay, they will not put a hold on your transcript." All of these are lies repeated many times.

Blogger Up from the pond June 29, 2019 12:58 PM  

Just as the big banks should have been allowed to fail instead of getting a bailout in 2008/9, so the government student lending program should be allowed to fail. But instead, people are trying to bail it out by sweating the deadbeats, who have no money. When informed that this won't work, these people shriek "Honor!"

"Those whom the gods would destroy, they first make mad." Adios, America.

Blogger R Devere June 29, 2019 1:20 PM  

Let's see if this Boomer bait works as intended (it will, a certain kind of Boomer seems to despise anything that might help his own children succeed and breed).

Oh, you mean like King Lear and all of that??? And simplify to ALL Boomers who allowed their children to become indebted to go to college for some worthless degree(most of such dgrees!)

Blogger Franz Lyonheart June 29, 2019 1:20 PM  

If the debt is forgiven, it no longer exists. The notion of paying a forgiven debt is a stubborn assertion that it still exists. The creditors are not going to get the money anyway. Not even one cent on the dollar.

You guys keep missing the point. The semantics around "forgiven" versus "lost debt" is just a spergy detail. So, will calling the debt "written off" satisfy you more? Putting different words to the same process makes no practical difference - it amounts to the Same thing.

Erroneously or not, it's a fact that the creditors currently account for the debt as an asset on their balance sheet. A naive "forgiveness" will mean they're writing it down. And that makes the USA taxpayer paying for the written off debt - trusting the knowledgeable people on this blog, majority of student loans are now in some form or other underwritten by the federal US government.

And I have no problem with that. However I prefer Vox's idea of using university endowments instead - kick the losses back to the originators of the scam.

Blogger Franz Lyonheart June 29, 2019 1:34 PM  

on the subject of student loans. I told him it was particularly stupid to hold a person's official transcript hostage anytime they were in arrears on their student loans. Without the transcript, they have more difficulty getting a job that paid enough to pay the student loans. I told him it was also stupid for the state to confiscate all of the wages of part-time professors teaching at state schools for student loan debt. Lamar agreed but said there was nothing he could do.....the standard Republican response.

I feel bad for you. This legal situation is getting crazier by the minute. So effectively they are already repossessing the collateral against mere arrears rather than against a default?

This is analogous to repossessing your house if you're merely behind on your mortgage - but the repossession won't discharge the mortgage loan either, which will remain valid until..., death I suppose? This student debt situation is absolute madness, how could anybody ever have drafted something stupid like this into law? Politicians I know....

Blogger DonReynolds June 29, 2019 2:37 PM  

This comment has been removed by the author.

Blogger Glaivester June 29, 2019 2:41 PM  

If the debt is forgiven, it no longer exists. The notion of paying a forgiven debt is a stubborn assertion that it still exists. The creditors are not going to get the money anyway. Not even one cent on the dollar.

If a debt is forgiven, the creditor, in effect, pays the debt. Or are you saying that Jesus did not need to die on the cross?

Blogger DonReynolds June 29, 2019 2:44 PM  

Franz Lyonheart

I am actually more disturbed by the idea that the terms of the loan can be unilaterally changed by the lender after making the loan.

In the bad old days, the government only insured or guaranteed the loan, kind of like credit life insurance. If you failed to pay the loan, the government would pay it instead, and that led to a minor effort by the government to be more prudent.....requiring co-signers and to stop making loans to students at schools where only a few actually graduate or they subsequently were unable to find work after graduation. These are completely reasonable precautions. But once the loan is made and the agreement is signed, there should be no unilateral modifications of the terms and conditions. The practice of doubling the outstanding balance once anyone is in arrears for "attorney and collection fees" is arbitrary and abusive.....especially when it is doubled four times! That is ridiculous.

Of course, one of the real good arguments for making investments in education is that it can never be taken away, which is not entirely true. If your transcript is held hostage for payment that cannot be made, because you cannot obtain work without a transcript, then you have no education. There was a time when student loan debt could be discharged through bankruptcy, but that was changed after many of the loans were made.

I certainly would not object to the university endowments being used to pay off the student loans, but I suspect the Feds will probably work out a swap of Treasury bills for student loan debt, rather than payment in cash....or the Feds may allow commercial banks to hold student loan debt as the required reserve of the bank, after factoring the debts by age and writing off what is uncollectible.

Blogger Silent Draco June 29, 2019 5:25 PM  

Ny creating a debt which cannot be discharged in bankruptcy, they created two things:

Lifetime involuntary servitude, unless the debt is not discharged at death, in which case they re-created chattel slavery.

Bill of Attainder

Either one is grounds for the people involved to be impaled at 50ft intervals on the Mall, to encourage the others.

/Rant on

A lot of later Boomers fell into the same trap but were able to bankrupt. Theirs were 4-5 figures, thanks to a decade of stagflation '73-'82. The difference was that college costs didn't decouple from reality until the late '80s and early '80s; then the numbers shot to 5-6 figures. Yes, I was in the group that graduated into inflation and recessions without too much debt. Yes, I lived and ate poor, and kept that habit in the better times. Yes, I want that %$#@ing debt forgiven or dischargeable, and the colleges to offer scholarships and not sit on the $@@&ing endowments. Nevwr could place a finger on the names and reasons for that nonsense. Some of us have friends whose credit was bad for 7 years, and then got better slowly; many of us ate cheap so we could save for a better car or a small home we could afford. Heart and wallet are out for my children and nieces and nephews for that reason. The leading edge Boomers clear-cut all their younger siblings, Ain't happening to those I can help.

/Rant off

We now return to our regular comment mode.

Blogger Up from the pond June 29, 2019 11:00 PM  

Franz Lyonheart wrote:Erroneously or not, it's a fact that the creditors currently account for the debt as an asset on their balance sheet.

The fact that government accountants and other Shylocks create "assets" out of thin air by entering a figure on a balance sheet does not mean that there is an actual asset.

In the case of any one student, there is nothing to "pay back" except the cost of a sheepskin, 1/10000th of a few lecturers' salaries, and some paperwork fees and finders fees (assuming that the student loan is just for tuition and not for housing, parties, fancy pants, and lollipops).

All that is lost in fact if the "asset" is deleted from the balance sheet is two things: the cost of the items mentioned above, which are eaten by the university, and the fantasy which the government told itself about collecting $100,000 or whatever for being the middle man in this transaction. (Also, the university may be disappointed in an expectation of getting a kickback from the scam.) You seem to be saying the government ought to- or maybe just *will*- demand that someone respect that fantasy and make it come true.

Let's be clear about what's going on here. Two entities, the government and the university, are looking for a sheep to shear. They think they have found one in John Q. Student. They think they are going to get $100,000 or whatever out of John for providing him with the comparative trinkets listed above. So confident of this dream of avarice is the government that it enters "$100,000" on a balance sheet as an "asset" already. But then John, who was not other than a 17 year old ignoramus who agreed to a liar's loan, doesn't come through. He never had any money, he can't get any money, and he won't get any money unless he has a rich doting aunt who goes tits up. The scam failed: there isn't going to be any $100,000. It might have been entered on a balance sheet, but it never went through the formality of coming into being. There is no loss, there is only the disappointment of a failed hustle. What to do? The government, and every Ayn Randy mouthing platitudes about the moral necessity of making unethical opportunists whole, roar that that the fantasy be made good- that the $100,000 be grabbed from you and me if not from John. We're supposed to pay for an accounting artifact. That is as absurd as paying "reparations" for "slavery."

The real solution is for the government to delete the pretend-asset from the balance sheet and forget about it. As Michael Hudson notes, that won't have any effect on the real-world economy. If anyone ate the cost of the education, which obviously wasn't a very good education, then it was the university as it should be. No special laws making the university pay anything are necessary: it already paid, it provided the service basically for free. It doesn't owe any *more* to government, its partner in the would-be scam. And the university will suffer consequences long-term. The government is not going to be as willing to make predatory loans for any amount as it was in the past, so universities will have to lower tuition to get customers going forward. Everybody who should have got burnt was, and Johnny will be free to start a welding business and marry an energetic girl who will bear him a nation.

The only person stamping up and down in anger over this solution is Shylock/Uncle Scam, because this solution means the refusal of his intended swindle.

An angry S/US is still dangerous, though, so we taxpayers have to make sure that he doesn't take a pound of *our* flesh. Even if that means putting on Yellow Vests and...getting energetic.

Blogger JAG June 29, 2019 11:42 PM  

Yes, it was early 90s when college tuition decoupled from reality. My tuition quadrupled in mere two years from 1990 to 1992. Rates had been stable for the previous decade, then suddenly took off like a rocket.

Blogger rumpole5 June 30, 2019 4:23 AM  

I don't see how college cost inflation is a Boomer issue. The bad policies that caused the inflation were adopted well before Boomers had significant power. Gen X and Millennials together now wield more political power than Boomers. If giving 18 years olds the power to put themselves in improvident debt is a problem, then Change The Law. If a whole or partial jubilee of existing student debt is called for, then pass a law forgiving all or part of that debt. Boomers are retired old geezers and do not have the power to stop you. Moreover, many Boomers would support a student debt forgiveness program. I am a Boomer and I would. I am going to have to help my son pay off his student debt, so why wouldn't I? Just today I had lunch with a retired cousin. She is a nurse, and is considering going back to work to contribute to the financial needs of her Gen X daughter's family. Many Boomers do give a damn about their kids' and grandchildren's welfare.

Blogger ChicagoFire June 30, 2019 7:32 AM  

Nothing really much to add here but good job Vox! It seems like the boomer cucks (aka the worst generation the world has even seen) here have been triggered. There was another comment saying you've been on a roll and I agree. Has Bernie finally been of use in his life? You bet. Moving the overton window to get Trump off his butt and making some more promises he won't keep I guess haha. Enjoy the decline!

Blogger James Jameson July 01, 2019 3:59 AM  

The whole debate is just wrong. The debt should be cancelled, but it should be the universities and lenders refunding the literal children they conned.

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