$200,000 in debt for a bachelor's degree

Exactly. This is the reason the IBR and ICR were created. She can make income-sensitive payments for 20 years, and then they are forgiven. Assuming they are all federal. If they're private, well, I guess that's what BK court is for.

 

You don't get it. Private student loans are rarely dischargeable in bankruptcy court. As the NY Times puts it:

In other words, if you borrow too much for a fancy house, or a sports car, or a home theater, or even for gambling, you can declare bankruptcy and get a second chance.

But if you borrow too much for your education, you're sunk for life.

 

Personally I am sick of hearing people complain about lenders loaning money... the fault lies in the person who agrees to take the money and its time that we all own up to that instead of trying to use lenders as the culprit to take the blame for our own stupidity.. It really comes down to know what in the hell your getting yourself into before you sign on the dotted line and if you don't well sorry for your luck you should have gotten educated and asked questions instead of just thinking that something magical would happen and pay back your debt. Lets stop blaming the lenders or anyone else for that matter and start owning up to our own mistakes and stupid moves. These people all say the same things, they didn't realize what they were getting into.. well why the hell not?

Bottom line is that its not a lender's fault for our stupidity (and this does not include ones who use tacky moves in the first place) so lets put the blame where it belongs

 

I think USC put it best:

 

The only reason that you think that people are giving her money is because she's telling you that people are giving her money. Doesn't she serve her own purpose by trying to demonstrate that her cause is worthy enough that SOMEBODY SOMEWHERE thinks it's a worthwhile donation? I'd be willing to bet that no one has given anything but that she's encouraging you to give by say that others have already given. Why would you believe anything on that website? Don't be a sucker.

Here's my donation: Go out and get 2 jobs and then start making payments.

 

Was the girl stupid for taking out such loans to further her education? Yes. But many of us would credit her intentions, which were to get a bachelor's degree from a good school. So she was well-intentioned, but stupid.

Were the lenders stupid? No. The lenders are no doubt supported by highly-paid attorneys, MBAs, and lobbyists, who are surely very smart -- much smarter than the average 20-year-old girl. But many of us would question their intentions, which were to put such students in debt slavery for life. So they are smart, but arguably with questionable ethical standards, regardless of the legality of their lending practices.

So we have two parties here:

- on the one side, we have a party who is stupid, but well intentioned
- on the other side, we have a party who is smart, but evil

Neither of these is an ideal combination of qualities. But personally, I sympathize with the first more than the second.

 

Perhaps we should raise the age at which you can sign for student loans. Or at the very least have the parent/s co-sign until the student is a certain age. Surely the parents would think twice before allowing their "child" to get into too much debt when they're on the hook too. And don't think I'm blaming the parents here. She was of legal age. She could've sought counsel before signing.

 

The only thing that is necessary to completely fix the situation is to make student loans like any other loan -- dischargeable in bankruptcy.

Lenders, as conceded above, are smart. They know perfectly well that a 20-year-old girl has little chance of repaying a $200,000 for a BA in sociology. So why did they give it to her? Because current US law makes it essentially impossible for her to discharge the debt. She's on the hook forever.

If a 20-year-old girl asked for a $200,000 loan to buy a house, or to start a business, or to go shopping, she would be flatly rejected. Lenders would (correctly) perceive the loan as too risky. It's obvious that the borrower might run into financial problems, and declare bankruptcy, and then the lenders might not get their money back. Duh.

But lenders don't face this risk with student loans. If they did, then their lending policies would change overnight.

 

Good point by you. :iagree:

 

I'm old enough to remember when student loans were able to be discharged in a bankruptcy. The law changed because far too many students who had just graduated from law school and medical school (with mountains of debt) but who didn't actually have a paying job yet (because they had just graduated and hadn't started working yet in order to make this work) would file bankruptcy showing 200k of debt and 0 income.

But sadly nothing in the new law would prevent someone from borrowing so much money to get a degree in...SOCIOLOGY...

Honestly, what was she thinking? Who gets any sort of a job with a bachelor's degree in SOCIOLOGY?

 

In the movie "Valentines Day" Liz had a $100K student debt but she figured out a way to pay it off. hone:

 

If she was smart enough (doubtful) then she might have taken enough education courses to become a school teacher. Otherwise I'm thinking that she's the night manager at McDonalds. "Fries with that?"

 

I completely agree with you!!

Great posts!

 

Perhaps changing student loans to be declarable in bankruptcy court is exactly catalyst that is needed to resolve certain major issues currently in the higher education industry?

 

"Would you like fries with that, and how about my insights into modern culture with a chocolate shake?"

 

Am I the only one here old enough to remember when student loans could be discharged in a bankruptcy? The law changed to end the practice (which was alarmingly common) of law school and medical school graduates declaring bankruptcy just before going to work so that their petition showed $200k or so of debt, and zero income.

As it turns out, fixing one problem seems to have created another.

 

Hi

Here in Canada, student loans were originally fully dischargeable in bankruptcy. Some years ago (1970s, 1980s) I was working in the credit business. Back then, IIRC, before legislative changes, about one in eight personal bankrupcies involved student loan default. In those days, student loan balances were much lower than now. I can remember very few over $10,000 and many for around half that. These days, $40,000 would not be unheard of, but it'd be beyond the average, which I think is around $25,000 for a person graduating with a Bachelor's degree.

Nowadays, the pendulum has swung the other way. Student loans were at first made ineligible for automatic discharge in bankruptcy, unless the bankrupt had "ceased to be a student" (left school) for 10 years or more. That period has now been modified to 7 years. If the bankrupt has been out of school for a lesser time, the Registrar (Bankruptcy Judge) will make a ruling as to what portion (if any) may be discharged and what is repayable - depending on the individual's circumstances.

Here's a summary of how it works, in case anybody's interested: Canada Student Loan Bankruptcy Legislation

We have our problems in Canada - but yours (U.S.) seem much worse - for everyone except the lenders!

Johann

 

Here's how serious it has become in the US: as of 2010, Americans have more student loan debt than credit card debt. According to the Wall Street Journal:

Of the $830 billion in student loan debt, it was estimated that about $300 billion was incurred just within the last four years.

For credit card debt, bankruptcy is an option of last resort. But as the WSJ notes: "student loan debt, in many ways, is different than credit-card debt. These loans typically can’t be discharged in bankruptcy."

 

Again the lenders are being blamed for something that each person chooses to do! She chose to attend that school and clearly knew what the tuition cost before choosing to go there. Therefore she chose that debt, but apparently lacked the forethought to think about how she was going to pay it back. I get that the lenders have high paid attorneys etc etc but they did not hold a gun to her head and tell her to sign or else (or anyone else for that matter). She made all those choices herself. No one forced her to go to a school that she clearly could not afford and on top of that get a fairly useless degree.

It is not the lender that are saddling students with the debt its the students themselves. I have seen many many posts on this board about people who have gotten degrees from great schools with little or no debt so it can be done. I feel no sympathy nor do I credit her intentions. I am sure there were plenty other more affordable good schools she could have attended that would not have left her with 200k in debt.

 

I completely disagree with you. If you allow them to be discharged by bankruptcy you will then have every body choosing to go to schools that they have no business going to the first place because they cannot afford them, and then filing bankruptcy after they gradate and can't get a job to pay back that debt. How would that fix the situation? That would hurt more people than just one.

If we want to fix the situation we should have better debt counseling for student loans and make damn sure that students understand how much they are borrowing, when they will have to pay it back, and how much they will have to pay and for how long and I dont mean some online intro to student loans. I mean a live person at the students chosen school. Another way to fix student loans if to stop qualifying someone for a student loan that cost 200k for a degree that they can be lucky to make 40-50k per year.