When your Social Security check disappears because of an old student loan

Discussion in 'Off-Topic Discussions' started by decimon, Dec 20, 2016.

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  1. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    The way around it is not to discriminate, which has historically been a problem in lending, and not just ancient history.
     
  2. Ted Heiks

    Ted Heiks Moderator and Distinguished Senior Member Staff Member

    There is a very good reason why student loans are not dischargeable in bankruptcy. There are two kinds of bankruptcy: balance sheet bankruptcy (your liabilities exceed your assets) and cash flow bankruptcy (your monthly payments exceed your monthly income). Suppose the bank gives you $300,000. You then buy a nice little starter home with the first $100,000, a top of the line Porsche with the second $100,000, and a PhD in History with the third $100,000. If you fail to make your mortgage payments, the bank takes away your nice little starter home and gives it to someone who will pay. If you fail to make your car payments, the bank will come to your house and drive away with your Porsche and give it to someone who will pay. If you don't make your student loan payments, the bank has no asset that they can sieze from you in satisfaction for your debts. The home loan and the car loan are both secured debts (you have something that can be taken away to pay the debt) while the student loan is an unsecured debt (you have nothing that can be taken away to pay the debt). With the home loan and the car loan, you have $100,000 in liabilities and $100,000 in assets ... your balance sheet balances. With student loans, you have $100,000 in liabilities and $0 in assets ... your liabilities exceed your assets; hence, you are bankrupt.
     
  3. Life Long Learning

    Life Long Learning Active Member

    Maybe if colleges made kids take personal finance, economics, etc., and not garbage socialized propaganda GEN ED courses university students might not be so debt stupid.:banana:

     
  4. Ted Heiks

    Ted Heiks Moderator and Distinguished Senior Member Staff Member

    How can one be older than their incurred debt?
     
  5. Ted Heiks

    Ted Heiks Moderator and Distinguished Senior Member Staff Member

    College seems a bit late, how about requiring personal finance in high school?
     
  6. jhp

    jhp Member

    I would not only vote, but pay for this, despite all my kids are out of school. Dave Ramsey has a class that I hear is good for High Schools.
     
  7. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Virginia has a required personal finance and economics course. My eldest laughed all the way through it, it was a useless joke.
     
  8. Ted Heiks

    Ted Heiks Moderator and Distinguished Senior Member Staff Member

    Why is personal finance a useless joke?
     
  9. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    This particular course, not the subject itself.
     
  10. Life Long Learning

    Life Long Learning Active Member

    Even better..........

     
  11. Davewill

    Davewill Member

    I'm trying to figure out how anyone could be YOUNGER than their incurred debt. I'm comfortably older than all my debts...always have been.

    Where did you get that idea? The reason people don't get turned down (much) is because the credit card companies have figured out that the cost of writing off debt is cheaper than forgoing the business from all the people with mediocre or no credit. As others have said, people with REALLY bad credit do get turned down. That's why bankruptcy doesn't have as much of a stigma as it used to. People figure the credit companies deserve what they get when they insist on extending credit to people they shouldn't.

    As far as student loan debt goes, I don't think there's a way to tweak the current system...we need to come up with a better system all around. The current system of helping to finance private colleges just encourages tuition inflation. If we're going to publicly fund higher education, then we need to control the costs as well. Which to me means making more of our system public, and saying no to high administrator salaries, expensive sports complexes and buildings. Let the private sector figure out how to fund that stuff (not the public and NOT the students) if they really want it.
     
  12. cookderosa

    cookderosa Resident Chef

    we start this when are kids are toddlers - I'm not exaggerating, it's true. We teach our kids how to spend, which is entirely different than teaching kids how to save- which is the lame sum total of the personal finance courses I've perused.
     
  13. cookderosa

    cookderosa Resident Chef

    it's tongue in cheek. In the story, the debtor's advanced age seemed to be used as a reason she shouldn't have to pay. The fact is that we all get old, and just because you get old-er doesn't mean you should get a free pass.
     
  14. Life Long Learning

    Life Long Learning Active Member

    It was beneath my University (BS Business) to teach personal fiancé back in my day. Fact, not any of my University business classes were worth much (300-400).

    I took "personal finance" at the local community college and it was my second most useful business class ever.

    Years later, I took another class called "Real Estate Investing" at that same local community college and it was personal finance on steroids. We completed a 12-page portfolio for a grade; personal net worth statements, insurance statements, balance sheets, and lastly investment options. 20-years later I still use this.
     
  15. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Sounds reasonable.

    This... not so much. It makes it sound like you think the key to efficiency is to bring more of higher education into the public sector. That's pretty much the opposite of what economics tells us.
     
  16. me again

    me again Well-Known Member

    Credit card companies can also give a risky person a new credit card with a $200 credit limit. It won't buy much, but it can quickly ascertain of the person will live up to his credit obligations.
     
  17. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Yes, a low limit or a ghastly interest rate. Or both.
     
  18. Ted Heiks

    Ted Heiks Moderator and Distinguished Senior Member Staff Member

    My bad here. When I read that comment about being older than one's debts, I misread it, thinking that it said the incurred debt was older than the person.
     
  19. Ted Heiks

    Ted Heiks Moderator and Distinguished Senior Member Staff Member

    I don't know. Is it possible to inherit debts?
     
  20. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    No. You can end up responsible for debt you co-signed if the debtor dies, but that's not the same thing.
     

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