General Frustration & Student Loans

[flyinbroke]

I agree with Ohio; I think it had a lot to do with a long history of abuse. People would bail out when they were new and broke, even though many had degrees that would take them into the six digit range in short order. Once BKed, no one could come after that nuclear physicist or aerospace engineer or anesthesiologist to make them pay. not everyone winds up in lucrative career tracks, but there were many who successfully worked the system. When I took mine out it was more than stressed that they could not be discharged in BK.

I don't know why the private loans are covered though; many of them don't even seem to require proof of being in school as a passing student or actual costs (see the one thread about the PA woman and Sallie Mae.) Private loans were dischargeable until the '05 reform.

[Dst1]

Just read the OP's thread, got a question about student loans. Were they considered dischargable in BK before the 2005 BK reform laws took place?

Only private student loans.

[Dst1]

It's justified because of historic abuse.

Say I run up $100,000 student loan debt to become a nuclear physicist. When I graduate my income is only $65,000 but I realize I'm on a track to earn $120,000 in 5 years. I bankrupt the student loan debt now so I don't have to carry the burden of the debt to my higher earning years.

But that's stuff and nonsense. First, as far as I know student loans (government ones) have never been dischargable. But maybe I'm to young to know about what happened 40-50 years ago. But even if then twas true then the world has changed a lot.

Second, I think the higher earning years argument would make sense IF student loans were based upon an ability to repay. But they are not. They are based upon the cost of education. The average earning potential of some BA degrees (like psychology) is minimal. I'd be with you in a heartbeat if the cost of education reflected a person's earning potential. But it flat out doesn't.

[Dst1]

This exactly! Everyone would simply take out student loans, go to the best schools, graduate and then file bankruptcy. It would be a rite of passage. Why wouldn't everyone do it? It opens the door to abuse.

.

But it's already being abused. How is that any different from what is being done with housing? You buy a house, take out a second mortgage on the house, use that money to pay for your education, and you can walk away from that debt. I'm seen it done by smart players.

I stand by my point. Why should we subside housing and not student loans in BK. I think the only answer is that most people who own houses vote and most students don't. But there is nothing fundamentally fair about what's going on with housing nor has there ever been. Talk about a field with a history of abuse; that's housing.

[OhioFiler]

But it's already being abused. How is that any different from what is being done with housing? You buy a house, take out a second mortgage on the house, use that money to pay for your education, and you can walk away from that debt. I'm seen it done by smart players.

I stand by my point. Why should we subside housing and not student loans in BK. I think the only answer is that most people who own houses vote and most students don't. But there is nothing fundamentally fair about what's going on with housing nor has there ever been. Talk about a field with a history of abuse; that's housing.

Who is subsidizing housing in a bankruptcy? You stop paying, the bank takes possession of the asset. You keep paying, you keep the house.

Now a diploma can't be recovered by the lender can it?

[OhioFiler]

I have a simple solution for those who wish the government to subsidize their college education. Join the military.

[flyinbroke]

Unfortunately, no one has stressed the fairness factor. FHA and VA are government backing programs. The only thing I can think of that is different (and thereby dischargeable) is that homes are secured and student loans hold not guarantee. They can recoup something from a foreclosed home whereas they get bupkus with a student loan. Unfortunately, this is what a lot of students get as many majors are now pretty much worthless in today's job market.

Ohio, I still needed loans to finish my degree in the military. The GI bill is parceled out piecemeal by how many hours of school you are taking per month. This prevents the govt from ever paying out the full amount.

[forgotten]

If my debts cannot be discharged, then neither should yours. And if you want to come back with the line "have you not benefitted from that education" yea, I have benefitted. But did you not benefit from that fancy house, those nice cars, that weekend at Disneyland, that time at the craps table, that fancy Rolex watch/Louis Vuitton handbag?

Are you forgetting that you filed bankruptcy too?

And allow me to quote you from a previous post:

....
In 2006 I ended up at Macy's, where being around so much nice stuff was a major weakness. I racked up debt like there was no tomorrow while working there.
....
It was an awful time. I just kept spending and spending money on the strangest of things. In hindsight, it was all stupidity.
....

I'm sorry you are stuck with your student loans, but you filed bankruptcy to help with your dischargable debt yet seem upset that other people have done the same. That doesn't really make much sense....

[flyinbroke]

Ah, should have done a search. Hypocritical much? Wal-Mart fashion not good enough for ya? What was that whining about not spending on designer s*** again?

So you got stuck paying for an education that was not worth it. Suck it up and join the millions that have, but kwitcherb****in' about how BK rules did not benefit you. They sure as hell did....you are paying for far less than you had to, good job or not.

[BKOnce]

Uh oh.... did I smell.. sum rat !???

[Mi Bankruptcy]

I have a simple solution for those who wish the government to subsidize their college education. Join the military.

My GIBILL paid jack.. It wasn't until after I got out that they realized they barely paid enough to fund 1 year at a state college ( classes only)

[flyinbroke]

My GIBILL paid jack.. It wasn't until after I got out that they realized they barely paid enough to fund 1 year at a state college ( classes only)

Same here. My grad school was 2200 a class and I got 1074 a month if I was full time (terms were 9 weeks long.) Full time was two classes. If you go less than full time, you get even less. That racket is a great deal but is not rigged in your favor. Each month you use, you lose. So if you only get a quarter of that amount for 6 months, you don't get the extra down the line...but lose those six months...believe me, the government won't do anything that pays out in a big way unless you are AIG.

[Faust]

My GIBILL paid jack.. It wasn't until after I got out that they realized they barely paid enough to fund 1 year at a state college ( classes only)

I know, they don't really pay for shit. I think they have increased the amounts in the last year or two but I don't know by how much.

[flyinbroke]

I think it is up to 1300-1400 IF you are a full time student. If you drop to half time, you cut this in half. Less than half drops it to 25 percent.

[keepmine]

At one time, federally guaranteed student loans could be discharged in bk. If you had been in default for 7 years prior to filing bk, they were included in the discharge.
However, in 1998, former President Clnton signed an amendment to the Higher Ed. Act that closed that lophole and made student loans near impossible to discharge.