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A student loan collector must halt collections (nytimes.com)
59 points by twunde on Sept 19, 2017 | hide | past | favorite | 62 comments



It's mind-boggling how a nation is able to develop a system that forces its young to spend a large part of their life paying for the salaries of bank employees and managers, simply because they want an education. It's even more mind-boggling that these students can then get rid of this dept easiest by joining the system themselves, simply shuffling around money to make more money to pay off their dept.

And then Jamie Dimon calls Bitoin a ponzi scheme... Our entire economy is a ponzi scheme.

All of our money is created as dept, as such banks collect money on all of the money ever created. They create nothing of value for this. Why do we accept this?


Why do we accept the out of control increase in cost to get a degree? Why is it possible to get a loan for a degree that will be highly unlikely to lead to a career that will pay off the loan?

The schools seem to have way too much power here. If this was any other industry, there would be more oversight and regulation.

The easy money from lending immunizes the schools from being cost conscious because it shifts the burden to the students, who are told they'll go to heaven if they only get a college degree.


> Why do we accept the out of control increase in cost to get a degree?

Because that degree is valued, not for the education the student received, but as a formal gating mechanism: those who do not obtain it (and it better be from a "good" school) are (with a few exceptions) excluded from all possibility of ever having "good" jobs.

In other words, our hiring practices are the root of the problem.

Even in tech (where I know from experience that skill and education are only mildly correlated), education on the resume is still a gatekeeper and my company's recruiting of novices comes primarily from the better college campuses.


I don't have a degree and never had an issue finding good work in the tech industry.

I've found there are so many people trying to get into IT that your portfolio counts for more than your qualifications (much like with a photographer).


> I've found there are so many people trying to get into IT that your portfolio counts for more than your qualifications

I'd expect qualifications to matter less if there are few people trying to get into IT, since employers can less afford to miss a good candidate. If they get a hundred applicants for each position, they'll be more inclined to use a weak filter to throw out half of them on a first pass.


Maybe there is a glut of average candidates then? Either way I've found no issue getting jobs - even for positions which specifically state an IT degree as a requirement. And I'm always honest about qualifications as well.

Obviously I'm not advocating people skip university. But I think it's important to remember that you can still compete in the job market without a degree.


I'd say it's the banks/banking system. They skew the market and give money to the people from their own future. If this was impossible education simply couldn't be that expensive and perhaps only possible by paying it from taxes (which is money that does not require a "bank-owning elite fee" in the form of rent) and naturally limited to what a country can produce in the now instead of in some possible future that may or may not come to pass.

Banks allow for an inefficient, non market driven educational system. Banks, as they are now, are not part of the free market, they even needed saving using public money instead of letting market forces decide their fate.


> Why do we accept this?

Because buying a new car/house/collegedegree with money you don’t have is easier than with money you do have.

Hell, you’re on HN. Chances are your salary comes from somebody convincing somebody that they should be given money because in just a few short years they’re gonna have like so much more money. I know mine does


These items are only so expensive that we have to get a loan because we can get a loan. And banks benefit from every loan, which is basically a claim on your future productivity.

And I'm guessing your salary comes from a rich person, not from a bank that created the money as dept from thin air and now asks someone to pay them rent for said service.


"Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires." John Steinbeck


People repeatedly post this [1] as they think it shows how stupid Americans are. I read this and I think it shows how exceptional and amazing America is (and I'm not American). In Venezuela they are currently telling people to eat rabbits as Socialism is working out so well for them.

[1] https://hn.algolia.com/?query=Socialism%20never%20took%20roo...


It's not about how stupid Americans are but the insane vilification of anything that reeks like socialism. You (*see edit below) live in the richest country on the planet which is incapable of providing clean drinking water to all of its citizens. That's unfathomable to me.

Some context; I know the USA better than most Europeans, having lived and paid taxes there for three years, whilst working and traveling all over the USA. I would never call Americans stupid. I've met some stupid ones though obviously. But Americans as a whole are as interesting and diverse and awesome and loathsome and everything in between as any other countries' citizens.

The collective results of the media, political developments of the past few decades, the countries' legal makeup (local, state and federal law) and what not more together result in stupid situations. One of them being that the USA is incapable of providing clean and affordable drinking water to all of its citizens.

And if you have to resort to compare yourself to Venezuela you're losing anyway. It's a bit like the: "hey, at least we're not THAT bad". But you STILL cannot provide clean drinking water to your citizens. What's that saying again? Never be the smartest guy in the room? Maybe compare yourself with countries doing better than the USA and then try to improve things?

And no, not everything is that bad and there are tons of things I like way better in the USA than in Europe. Things are hardly ever that black and white. But comparing yourself to Venezuela is one of the weaker arguments here.

EDIT: just realized that parent comment stated he's not American; doesn't take away from any of my points regarding the Steinbeck quote and the Venezuela comparison.


And in Sweden they're enjoying both record economic growth and free education and healthcare. I guess socialism is not a monolithic bogeyman after all.


Sweden also isn’t as big as America


I constantly see this used as a reasoning, but I don't get why country size changes anything. Could anyone explain?


Do you understand why large companies can't do the same things that small companies do? I expect that the two problems will share many of the same structures.


The USA is 52 small companies though, and if you divide the population equally it's less per state than Sweden.


Then the proper comparison is between Sweden and a state, not Sweden and the US as a whole.

But I think the federal government exerts more control over US states than anyone exerts over Sweden. (Maybe the EU? I'm certainly no expert.)


The deep rooted fear of 'socialism' in the US, as a response to the 'red scare', doesn't show how amazing America is, merely how the population was manipulated to shore up support against a perceived enemy.


...Which is the calculated and deliberate result of a long-standing social engineering project.

Or "propaganda" as it's more usually known.


Raising rabbits for food was a thing in my grandparents' time (Depression era farmers in rural NY).


>In Venezuela they are currently telling people to eat rabbits as Socialism is working out so well for them.

I don't mean to sound like the stereotypical "leftist" by saying that Venezuela isn't a Socialist country, but I'll have to in order to get the simple point accross that Venezuela operates a capitalist economy, protects private property, and the working class as a whole is not in power of any branch of the government; if Socialism is the dictatorship of the proletariat, it simply does not exist in Venezuela. It's very simple when I say that there is no such thing as wage labour within a Socialist economy. Socialism isn't just when the government does stuff; that idea is a false one, so much that it would be wise to call it "vulgar Socialism".

The idea also that Socialism requires the implementation of policies that Venezuela has implemented is farcical, too. By "Socialism" Steinbeck, nor any other Socialist author is referring to price centrols; Oscar Wilde, George Orwell, Steinbeck, Marx, Engels, Chomsky, Bookchin, Bakunin etc. had a very specific idea in mind; there's no need to be intellectually dishonest to advance the idea that Socialism makes you eat rabbits. It doesn't. They didn't eat rabbits in the Paris Commune nor in revolutionary Catalonia, nor to my knowledge Burkina Faso under Sankara.

If you want to read up on the modern advances in Socialist economy, I'd recommend looking at Paul W. Cockshott's Towards a New Socialism; to dismiss it without doing this research reeks of laziness or worse dishonesty. But please don't make assumptions about what Socialism is about while you have clearly failed to do the required research.

Perhaps because the quote by Steinbeck likely wasn't said, have one by Vonnegut instead:

"Socialism is no more an evil word than Christianity. Socialism no more prescribed Joseph Stalin and his secret police and shuttered churches than Christianity prescribed the Spanish Inquisition. Christianity and socialism alike, in fact, prescribe a society dedicated to the proposition that all men, women, and children are created equal and shall not starve."


>>If you want to read up on the modern advances in Socialist economy, I'd recommend looking at Paul W. Cockshott's Towards a New Socialism; to dismiss it without doing this research reeks of laziness or worse dishonesty.

Not really. I'm sure Socialism looks great in book form, but the implementation has never worked. I'm more interested in the reality than the theory.


>I'm more interested in the reality than the theory.

Reality requires theory; you simply can't claim to make a comment on modern Socialism without reading about what theories modern Socialists have created as to how the economy should be run. I provided counterexamples to the idea that it "never worked", too. Though even if you choose to dismiss 20th century Communism, I hope you realise how ignorant it is of you to dismiss modern innovations in theory, which has not yet been put to the test. Do you see how silly it is to dismiss a theory you haven't even read about?

At the moment you appear to be the monarch who says that civil liberties for the populace look great in book form, but implementation of liberties has never worked. What of Lockean liberalism or even capitalism, which has thus far had disastrous consequences and foundations in terrible subjugation and enclosure in Western Europe?


>> Reality requires theory; you simply can't claim to make a comment on modern Socialism without reading about what theories modern Socialists have created as to how the economy should be run

Reality does require theory, but in the same way I don't really need to care about how an internal combustion engine works to drive a car, I don't need to care about your theories. The evidence for whether a theory is any good or not is how it works in reality. Do either of the two examples you gave still exists?

I think it ironic that you raise the subject of civil liberties, given that they are complete anathema to socialism and must be overcome for any sort of socialism to be implemented.


> they are complete anathema to socialism and must be overcome for any sort of socialism to be implemented.

False, Oscar Wilde writes about how Socialism is the very peak of individualism, core freedom for artists and scientists especially who nowadays are limited severely in their freedom by the tyranny of want and the subservience of market forces which degrades culture until it is only the shell of what it once was. He's not the only one; Marcuse and Adorno have also noted this. George Orwell too. In fact, Communism is called the epitome of free association of people for the reason that it is so liberating.

>The evidence for whether a theory is any good or not is how it works in reality.

Not really, but if you want to go by that measure then capitalism must be immediately replaced.

>Do either of the two examples you gave still exists?

No, they were both crushed by invading forces; in the case of the Paris Commune by the French government and in the case of Revolutionary Catalonia by Franco while being attacked also by the authoritarian Soviets. You seem to be ignorant of the fact that it is within the interest of governments to oppose Communism, because Communism is a liberation movement which opposes the state. It is also within the interest of capital to crush such movements which attempt to free themselves from it. This is extremely obvious.

>I don't really need to care about how an internal combustion engine works to drive a car

So you choose to remain ignorant as to what philosophy drives the world which you live in? Why would you do such a thing? I just don't understand it, other than perhaps laziness.


it is mind boggling how much we allow State colleges to charge for an education. From the amount of money spent paying salaries of administration level employees, professors who turn over many classes to assistants, to high end sports programs, and finally overly indulgent facilities.

Young people are being used not to prop up the bank employee and managers but instead overly expensive faculty and facilities of college campuses, many of them are state run facilities! Better yet we don't stop there, we then roll them on the costs of supplies; namely books but it can include specific software; to just obtain their education. In many cases fees and such are added at the end to obtain certification needed to gain a license, something that should have been proven by their completion of the course load.

finally, not everyone needs a college education and not ever degree is worthy of financial aid.


Most people will not complain or even consider change as long as their basic animal needs are met.

Water, food, shelter and enough entertainment, alcohol or prescription painkillers to keep them docile enough to never question the actions of the genuinely obscenely wealthy and powerful that actually direct the course of human society for their own benefits.

If you want a change to this system you're going to need a total collapse first, which won't happen for a few decades at least (if it ever does) as the system is so geared towards maintaining itself (the status quo and every career politician produced by it) and resisting change.

A good start mibght be including three subjects in the education curriculum from childhood; Personal Financial Education, Ethics and Civics. I can guess why these things are longer part of the mandatory education systems in the west though.

That's why you end up with FPTP political systems where neither of your potential leadership candidates are even worth considering, and why financial services corporations continue to behave the same way they did prior to each and every economic crash they caused in the last century.

Of course, the burden of repairing the damage caused by the outrageously greedy and irresponsible always falls to the lowest working and middle classes.

Political philosopher Sheldon Wolin described the current system in the US as an Inverse Totalitarianism;

https://en.wikipedia.org/wiki/Inverted_totalitarianism

You could extend that to the UK too probably.


>Why do we accept this?

Because not enough people are fed up with it, or at least not fed up with it directly, in order to organise and change the system; there are many easier things to blace one's blame on, things which seem easier to change but are just as temporary and broken - like small changes in the tax level or as another commenter said school fees. Reducing school fees is merely tangential to your point, but people are convinced it's the right thing to do - because other solutions seem so helplessly out of reach that they are invisible to many such that they are not identified as problems at all.

We accept democracy in our politics, but the economy has just as much if not more influence over our lives, yet it is free from control. Adam Smith called the free market as "free" for this exact reason.


There is no formal concept of "economic democracy" - and of course there should be, because without managed wealth redistribution you have plutocracy, not democracy.

In fact the US and UK do have managed wealth redistribution - from working people of all classes to banks, investors, and property owners.


"Those borrowers had made payments after being sued over loans that were legally uncollectable, either because the statute of limitations had passed or because National Collegiate lacked the documentation needed to collect the debts in court."

This sounds a lot like what was happening during the financial crisis a decade ago. Lenders were selling mortgage loans to Wall Street to be bundled into collateralized debt obligations. After those CDOs got sold a few times, people lost track of who actually owned a particular loan. When borrowers defaulted, it was in many cases impossible to prove who was legally entitled to collect on the debt.

(A line in a spreadsheet that says John Doe owes you $500K is not very convincing evidence to a judge - you need to be able to provide a document with John Doe's signature on it.)


My son got a letter insisting he owed money on his college loan. He never had a loan. I paid for his education without any loans. He asked for documentation and they stalled. I finally had my lawyer write a letter on his behalf and, sure enough, they had made an error and were deeply sorry for our inconvenience.

Notably, they didn't offer to cover my time, his time, and the expense of the lawyer. I value my time more than I value money. I consider these things theft of my time.


Did you consider taking them to small claims court to recover your costs?


Not really. The thought crossed my mind but I figured it'd just be more of my time being spent. I can make more money. My time is a finite commodity. I'd rather waste it on fun things.


Didnt you think for a minute of your precious time that you had perfect opportunity to teach them a lesson and burn some of their money in the process? These scumbags dont exist because we dont have laws strictly prohibiting what they doing - they exist because only very tiny fraction of people they tried defraud will do something about it.


Nope.


This, I don't consider myself a vindictive person, but financial vultures need to be punished.


I doubt that would go over well. He could have simply stuck to asking for proof before paying and that might have been the end of it.


I doubt it.

The nature of debt collection, and many other legal pickles is that if you are seen to be passively ignoring it, then it just ramps up.

Merely asking for proof is indistinguishable from ignoring claims because it leaves no paper trail. You have to actually get documents from them (or from a court) saying that they have no claim. And it costs a lot (whether in time, money or both) to get that.


  > You have to actually get documents from them
  > (or from a court) saying that they have no claim.
Naturally this varies in different jurisdictions, but generally speaking, the burden of proof is on the person making the claim.

If I say that you owe me money, it's not necessary for you to obtain documents (from either me or from a court) stating that you don't owe me money - the onus is on me to _prove_ that you me money.


Why would the burden of proof be on the person in debt? How do you prove a negative?


Apologies, perhaps my post wasn't clear - I agree, the burden of proof is on the person making the claim (i.e. claiming that someone owes them a debt), rather than the person supposedly in debt.


Actually, it’s my fault. I was agreeing with you in the form of a question


In Germany it would have been sufficient to ask for proof in writing with a return receipt. There's your paper trail. If they insist after that, threaten criminal charges. This worked wonders for me in the past. Additionally, loser pays (unfortunately, not for my time, though). This would never go to court.

But you can't ignore it, that's true.


Asking for evidence of the debt is hardly ignoring it.


Had he been sued and not been there at trial time, he'd be screwed. Judges shouldn't just dismiss the cases, they should professionally sanction the lawyers for knowingly filing fraudulent lawsuits, and fine the companies something like 3X the amount sued for.

Even if I owe money...why should I pay you? Prove you bought the loans, tomorrow someone else can ask me to pay for it again.


"Even if I owe money... why should I pay you? Prove you bought the loans, tomorrow someone else can ask me to pay for it again."

That's an excellent point. The fact that you paid off a fraudster doesn't in any way change the fact that you still owe money to the legitimate owner of the loan. So you need to demand proof that whoever is asking you for payment is the owner of the loan and not a fraudster.


> After those CDOs got sold a few times, people lost track of who actually owned a particular loan. When borrowers defaulted, it was in many cases impossible to prove who was legally entitled to collect on the debt.

Sounds fishy. The borrower was paying somebody at least up until he defaulted. Would not that entity be the one entitled to try to collect? Or were loans actually in default being sold around?


They would be paying the loan originator (the bank where they got the loan from), who is still servicing the loan (in exchange for a fee from whoever they sold the loan to). But the original paperwork goes to the new owner of the debt.


Not quite, they'd be paying the servicer, whoever the loan holder contracted that to.


http://www.nolo.com/legal-encyclopedia/produce-the-note-defe... for some more detail. But it was, initially, a good strategy if you were being foreclosed to demand the person filing the motion could prove they held the note.


Yes, exactly the same problem. I don't get how lawyers could have signed off on bundling without documentation. I mean, databases can store BLOBs.


Cost vs benefit? The loss was acceptable enough maybe. Some of the loans are bought for 3 cents on a dollar...you get what you pay for


> ... bought for 3 cents on a dollar ...

So some jerk is buying a $50K loan for $1.5K. But trying to collect $50K, plus fees and penalties. And ruining someone's credit in the process.

That's insane.


Don't you think it's priced at 3 cents because they only collect the full amount 3% of the time?


Sure, but those 3% have their lives 100% destroyed. So it's still a crime. I mean, if I try to poison 100 people, and only get three, is that cool?


Flip side is paper documentation is poor UX.


Student loans are becoming insane.

My own loan was initially government issued with a reasonable interest rate, but a year after finishing uni, it was sold off to a private fund that decided to jack up the interest rate to nearly 7%! In the UK, education used to be free. Now kids are leaving 3rd grade universities with 50k GBP debt, a ridiculously high interest rate and no quality job prospects. That's a lot of pressure on young shoulders (my sibling is going through this currently, and I can see how distressing it is).

And they wonder why young people can't get on the property ladder! The ignorance on behalf of the government is astounding! I'm not sure I'd want my kids to go through that, even if it means missing out on the social experiences of university.


The UK system has the weird and politically contingent "forgiveness at retirement" element, which means that theoretically it has a lifetime cap and behaves a bit like an income tax on graduates.

The catch is it's something like a 9% income tax!

The worst thing is that the three big national parties(+) all have their fingers on this, so I'm not sure who you could rely on to fix it. And whether it might have to come with rationing to a certain fraction of the population being able to get free university.

Not to mention that education is a vital export industry which the Home Office keeps trying to destroy.

(+) The third largest party by MPs is the SNP who only stand in Scotland, where they have ruled out tuition fees


"A random sample of nearly 400 National Collegiate loans found not a single one had assignment paperwork documenting the chain of ownership, according to a report they had prepared." https://mobile.nytimes.com/2017/07/17/business/dealbook/stud...

Why aren't judges fining them /their lawyers? Can I sue John Doe and demand that he pay me the money he took for his mortgage? Before filing a lawsuit, the "I bought your loan so pay me" chain should be settled in an acceptable way. Otherwise it's fraud.


Sanctioning a lawyer isn’t as easy as people think it is. It took years to take down the Prenda lawyers


I'm obviously very old compared to the target audience. I was accepted to Columbia and Texas A&M and chose Texas A&M because I had various scholarships that paid for my tuition and room/board. I had some scholarships to go to Columbia but was facing debt of ~20k/year so I choose to go to A&M instead. My life is fine but I don't have a lot of sympathy for people who take out huge loans. (I had to work after my freshman year and I didn't go out a lot etc.) Not seeking sympathy for me, just saying I don't have any desire to "forgive" the loans for anyone.

I don't know the solution but having the govt secure all loans and think about forgiving them is not going to help the next generation. Where is the incentive for univ to bring their costs down? Also, where is the incentive for people to either shop for a college they can afford, or even forgo college in favor of some other training or on the job experience?




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