Comments on: Counterparties: America’s trillion-dollar student debt burden http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: dfille http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/comment-page-1/#comment-39026 Tue, 15 May 2012 14:35:51 +0000 http://blogs.reuters.com/felix-salmon/?p=14005#comment-39026 Because of the 2005 (BAPCPA) it is not simply difficult to clear private student loans in Bankruptcy, it is essentially impossible. Student loan debt will follow the borrower beyond the grave. Two bills specifically address this terrible situation. House bill H.R. 2028: Private Student Loan Bankruptcy Fairness Act of 2011 (http://www.govtrack.us/congress/bills/1 12/hr2028) and Senate Bill S. 1102: Fairness for Struggling Students Act of 2011 (http://www.govtrack.us/congress/bills/1 12/s1102). Please go to the URLs to send email to your congressional delegation to support these bills.

Normally there is a balance in the risk associated with a loan. But BAPCPA removed the risk from the lender since the loan cannot be cleared in Bankruptcy. Lenders will loan any amount to anyone. Universities will raise tuition in turn since they know that lenders will loan any amount. and students will borrow whatever it takes. Restore the risk to the lender, and allow the free market back into play.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/comment-page-1/#comment-39020 Tue, 15 May 2012 12:41:53 +0000 http://blogs.reuters.com/felix-salmon/?p=14005#comment-39020 “At least one plan is to enable student loans to be discharged in bankruptcy.”

That is a sensible solution (and fair in that it provides relief to those who really need it rather than spreading the bailout scattershot). If it leads to higher loan rates, that is a GOOD thing. I want people thinking about the costs.

“higher education so obfuscates the costs that I doubt most students even know what they are paying”

The students are teenagers, in 11th and 12th grade as they are applying. Don’t know how much experience you have with that age group, but most of them have NO perspective on financial matters. Their parents ought to have a better idea, but perhaps are trying to be “hands off”?

But yes, the costs are obfuscated by the process. You are already deep into the application/selection process before you find out about any financial aid you might receive.

Truth in pricing, perhaps with a six-year lock on tuition and fees for admitted students? What a concept!

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By: Curmudgeon http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/comment-page-1/#comment-39019 Tue, 15 May 2012 11:53:59 +0000 http://blogs.reuters.com/felix-salmon/?p=14005#comment-39019 At least one plan is to enable student loans to be discharged in bankruptcy. For guaranteed loans, this means a government bailout. For other loans, it likely means higher interest rates (think credit cards) and other costs as lenders attempt to recoup losses.

TFF, higher education so obfuscates the costs that I doubt most students even know what they are paying. Until we have truth in pricing, they won’t stop paying. If this were any other industry (oops, there’s a nasty business word again), we would have successful lawsuits and government regulation by now.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/comment-page-1/#comment-39018 Tue, 15 May 2012 10:25:43 +0000 http://blogs.reuters.com/felix-salmon/?p=14005#comment-39018 KenG, isn’t that what the clamor is for? Having Congress appropriate a trillion dollars to pay off student loan debt for everybody? Of course they would need to BORROW to do so. Debt doesn’t go away, it just gets passed around like a hot potato.

Curmudgeon, tuition will stop rising when people stop paying it. Whether or not colleges are businesses is irrelevant — they can’t fight the law of supply and demand.

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By: Curmudgeon http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/comment-page-1/#comment-39015 Tue, 15 May 2012 05:14:40 +0000 http://blogs.reuters.com/felix-salmon/?p=14005#comment-39015 In my experience, the entire problem is driven by the fact that higher education as an entity doesn’t perceive any need to change how they do business in order to bring down their costs (my experiences as a former university professor is that academia is deeply offended by the very notion of being thought of as a business). Unless higher education comes to serious grips with the fact that tuition and costs simply can’t continue to outstrip both inflation and income, none of this is going to change.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/comment-page-1/#comment-39010 Tue, 15 May 2012 03:38:10 +0000 http://blogs.reuters.com/felix-salmon/?p=14005#comment-39010 TFF, who is going to forgive those loans? They aren’t owed to the government. Or do you want the government to pay them off?

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By: Dorothy95 http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/comment-page-1/#comment-38997 Tue, 15 May 2012 00:04:59 +0000 http://blogs.reuters.com/felix-salmon/?p=14005#comment-38997 While it is tempting to smoosh all the aspects of “student” loans together, let’s keep to this simple premise… CONGRESS created this assinine mess at the behest of lenders, not based in fact, for the purpose of increasing profits of the lenders, NOT to ‘help’ students.

If CONGRESS actually wanted to help students, they would have made up one set of simple rules… 3% above the federal rate, simple interest, payments applied 50/50 to the principal/interest, limits on fees and charges that do NOT get ‘capitalized’ to the principal, basic bankruptcy and consumer protections as on ALL OTHER consumer debt, statute of limitations AS ON ALL OTHER DEBT, limit the amount of guarantee to the original loan amount – NOT a ridiculously geometrically inflated balance – and forbid capitalization of interest.

But understand that the PURPOSE of student loans has changed – they are NOT designed to help anyone, they are designed to create perpetual debt that cannot be discharged, therefore perpetually inflate.

AND they did this RETROACTIVELY, so NO, a contract isn’t a contract when one side can change the terms at will RETROACTIVELY any time they are paid enough to do so.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/comment-page-1/#comment-38996 Mon, 14 May 2012 23:53:38 +0000 http://blogs.reuters.com/felix-salmon/?p=14005#comment-38996 If the lending programs are hugely profitable, then where are those profits going? Ought to be a paper trail somewhere…

In any case, I’d rather have less debt than cheap debt. Debt is like McDonalds food. If it is too easy and cheap, you keep eating more and more until you weigh 800 lbs and can’t stand up without a crane.

Let’s forgive debt for public servants. Forgive debt for those who went to public schools, if they truly need the help. But forgive debt for PRIVATE individuals who went to PRIVATE schools to work in PRIVATE industry? Not on my life!

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/comment-page-1/#comment-38995 Mon, 14 May 2012 23:34:49 +0000 http://blogs.reuters.com/felix-salmon/?p=14005#comment-38995 TFF, if the loans are paid back promptly (it sounds like they aren’t, as a third of the debt is owed by people over 40), and the loans are not shielded by bankruptcy, then the lenders will make even more money. I don’t think the risk warrants a huge margin.

I’m guessing you knew I would support bigger investments in public universities, but that’s as likely as to happen as any of my tax plans. Our education system was a primary reason the U.S. developed into the dominant economy of the last half century, and its decline (the education system, that is) is paralleling the decline of the economy. However, with so many people viewing college graduates as elitists, and spewing hate on teachers for their unions, we’d be lucky just to maintain the current sorry state of public university funding, let alone increase it.

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By: franksinwein http://blogs.reuters.com/felix-salmon/2012/05/14/counterparties-americas-student-debt-crisis/comment-page-1/#comment-38994 Mon, 14 May 2012 23:31:37 +0000 http://blogs.reuters.com/felix-salmon/?p=14005#comment-38994 Join the ‘student loan debt’ advocates & champions in the fight towards changing American perceptions; there is a movement to reach and change societal norms in regards of how people think of ‘student loan debt’ and the serious repercussions in aggregate when the next financial crisis hits. When the student loan bubble bursts, and it will; the devastation will be long reaching into our financial institutions, and then society will finally understand the foreboding economic condition and the actors who were involved in allowing this student loan debt catastrophe to happen: the responsible persons for the Student Loan Debacle, is majority of Congress & the Senate.

Robert Applebaum http://forgivestudentloandebt.com/ OR https://www.facebook.com/groups/forgives tudentloandebt/

Denise Smith https://www.facebook.com/groups/aging.wi th.student.debt/ who is feverishly working for those older students who are over 50 & also those who under 50 that are saddled with student loan debt.

Natalie Abrams https://www.facebook.com/OccupyColleges

http://www.studentloanjustice.org

Loan Reform Now: https://www.facebook.com/pages/Loan-Refo rm-Now/186052074801911

“The mission of Loan Reform Now is to encourage the passage of laws that protect students from the negative impacts of the private student loan industry and their misleading practices.”

“Reporter looking to do a piece on parents who owe a lot for their children’s student loans.” Please E-mail raeann.roca@gmail.com

for more info: http://studentloandebacle.blogspot.com/

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