> For loans with no collateral, like credit cards, the lenders use credit scores and other heuristics to determine the likelihood of making their money back, and deny applicants who don’t meet their standards.
But you can still file for bankruptcy.
Why? It's not because "hey, lenders have remedies available"... it's because without bankruptcy, things go to shit really fast.
Like with student loans.
Lenders should be allowed to loan money, and to attempt to profit from it. But society isn't obligated to protect their interests at all costs. And if they don't like that, they can just choose not to loan. Lenders that make bad loans put society in danger (if too many lenders make too many bad loans). Society actually has the right and the proper power to tell them to fuck off.
> I believe the intended effect of making student loans immune to bankruptcy was to make education more accessible
The perverse incentive though was delivering this loan accessibility in such a way as if it were financial aid. Young kids, barely legal adults at that point, didn't know any better. And colleges and universities chase that money (why wouldn't they... the money can only be spent on them) by turning their institutions into resort spas. Any increase in cost that came with that was turned around and passed right back to the students who "paid" for it in tuition and fees, but since "someone else" was doing the actual job of paying for it they weren't cost conscious. Granted, young people aren't usually cost conscious to begin with, but this just made it worse.
And the people "paying for it" just hang that bill back around the college kid's neck with ruinous interest like a boat anchor.
Were the colleges and universities at least decent enough to make sure these kids could get a good job that might make it all worthwhile in the long run? Hell no. Instead, they scream bloody murder about how it's more important that they not be turned into vocational schools, and they're teaching people something far more important than job skills... they're "teaching them how to think". What a load of horseshit. Even the law schools are a joke. Ever look into how they cook those books to make it seem like 80% or more of law school graduates have a job lined up within 12 months after graduating?
All in all, I don't know what the intended effect of this was. Maybe it really was wholesome. But I really wish we had legislators who were smart enough to not resort to the "but we meant well" excuses when it all goes to shit, or better yet wise enough to not fuck things up so badly in the first place.
> I expect that lenders will become more choosy in what students they lend money to,
Isn't that the way it should be though?
If you're not a good investment, why waste $60,000 or more sending you to school for a degree that amounts to little more than bragging rights?
In the meantime, we've spent 30 years training an entire industry (higher education) that they don't have to be careful and control costs. Even if we made things right, they'll go on doing what they've done for decades because they know no other way. So even those who should go to college will get reamed for it unnecessarily. But educators would be screwed too, because suddenly we'd need 1/3 or even 1/5 of what we needed before that reform.
Fucking good intentions. Road to hell, yadda yadda.
> I share your belief that (new) student loans should be dischargeable in bankruptcy.
Old loans too. Lenders aren't innocent in this. Where were their objections at the time? They could have complained, could have said "don't give us this power, we can't use it without risking abuse". Burn that slice of the financial industry to the fucking ground and let its former employees wander the earth as disgraced panhandlers.
But you can still file for bankruptcy.
Why? It's not because "hey, lenders have remedies available"... it's because without bankruptcy, things go to shit really fast.
Like with student loans.
Lenders should be allowed to loan money, and to attempt to profit from it. But society isn't obligated to protect their interests at all costs. And if they don't like that, they can just choose not to loan. Lenders that make bad loans put society in danger (if too many lenders make too many bad loans). Society actually has the right and the proper power to tell them to fuck off.
> I believe the intended effect of making student loans immune to bankruptcy was to make education more accessible
The perverse incentive though was delivering this loan accessibility in such a way as if it were financial aid. Young kids, barely legal adults at that point, didn't know any better. And colleges and universities chase that money (why wouldn't they... the money can only be spent on them) by turning their institutions into resort spas. Any increase in cost that came with that was turned around and passed right back to the students who "paid" for it in tuition and fees, but since "someone else" was doing the actual job of paying for it they weren't cost conscious. Granted, young people aren't usually cost conscious to begin with, but this just made it worse.
And the people "paying for it" just hang that bill back around the college kid's neck with ruinous interest like a boat anchor.
Were the colleges and universities at least decent enough to make sure these kids could get a good job that might make it all worthwhile in the long run? Hell no. Instead, they scream bloody murder about how it's more important that they not be turned into vocational schools, and they're teaching people something far more important than job skills... they're "teaching them how to think". What a load of horseshit. Even the law schools are a joke. Ever look into how they cook those books to make it seem like 80% or more of law school graduates have a job lined up within 12 months after graduating?
All in all, I don't know what the intended effect of this was. Maybe it really was wholesome. But I really wish we had legislators who were smart enough to not resort to the "but we meant well" excuses when it all goes to shit, or better yet wise enough to not fuck things up so badly in the first place.
> I expect that lenders will become more choosy in what students they lend money to,
Isn't that the way it should be though?
If you're not a good investment, why waste $60,000 or more sending you to school for a degree that amounts to little more than bragging rights?
In the meantime, we've spent 30 years training an entire industry (higher education) that they don't have to be careful and control costs. Even if we made things right, they'll go on doing what they've done for decades because they know no other way. So even those who should go to college will get reamed for it unnecessarily. But educators would be screwed too, because suddenly we'd need 1/3 or even 1/5 of what we needed before that reform.
Fucking good intentions. Road to hell, yadda yadda.
> I share your belief that (new) student loans should be dischargeable in bankruptcy.
Old loans too. Lenders aren't innocent in this. Where were their objections at the time? They could have complained, could have said "don't give us this power, we can't use it without risking abuse". Burn that slice of the financial industry to the fucking ground and let its former employees wander the earth as disgraced panhandlers.