
Judge rules that student loan debt is dischargeable in bankruptcy - jrs235
https://finance.yahoo.com/news/student-loans-discharged-in-bankruptcy-kevin-rosenberg-190151284.html
======
clarkmoody
The non-dischargeability of student loan debt is the linchpin of the higher
education bubble.

Let's play out a causal chain:

1\. If it becomes possible to get out of student debt through bankruptcy, then
there must be additional collateral posted by the debtors.

2\. This will cause fewer loans to be made, which will reduce the available
pool of money sloshing into higher ed.

3\. Enrollment and revenues will fall, forcing universities to:

a. Fight for some other form of government-ensured revenue stream (beyond the
funds that state schools already receive). Get the popcorn out for this
political rhetoric.

b. Reduce scope and conserve the more limited funds coming in the door. This
probably starts with eliminating the endless program offices and initiatives
that serve to swell the ranks of non-teaching staff.

c. Compete on price and return on investment by improving quality and
employment rates of graduates.

~~~
systemtest
From a Dutch point of view, would you save money by mimicking our University
system? So no sports, no stadiums, no (or less) scholarships, privatise
fraternities, privatise dorms, privatise cafeteria, privatise extracurricular
activities, six-figure cap on income for all staff. We have a projected
average student debt of only €21,000 which I believe is less than US students.

~~~
VoidWhisperer
The issue with removing scholarships is that there are some groups of people
that would preclude from being able to seek higher education at all - There
are plenty of people in the US who absolutely cannot afford college without
taking on loans or scholarships, and in many cases they may require the
scholarships if they are unable to get the loans that they need (IE they have
extremely bad credit).

Also, random side tangent, but I doubt you'd be able to convince America to
get rid of college sports, it is too big of a thing here..

~~~
systemtest
> Also, random side tangent, but I doubt you'd be able to convince America to
> get rid of college sports, it is too big of a thing here..

Times change. Old wealthy white males selecting men based on athletic
abilities, big muscles and ability to work hard and then not paying them for
their work in return for free housing. We used to call that slavery, now we
call it college sports.

~~~
bogomipz
Hasn't there already been a shot across the bow on this racket though with
California’s Fair Pay to Play Act? [1]

[1] [https://www.npr.org/2019/09/30/765834549/college-athletes-
in...](https://www.npr.org/2019/09/30/765834549/college-athletes-in-
california-can-now-be-paid-under-fair-pay-to-play-act)

~~~
srndsnd
Sort of, but not entirely. The law doesn't mandate that universities pay for
the athletes to play for their school, but rather that athletes can profit off
their likeness and image. So, a football player could be paid by the local car
dealership to go sign autographs as part of an in-store promotion, rather than
receiving a stipend or salary from the school.

------
a-dub
this is huge. this terrible bush era provision set up some really perverse
incentives for college administrators.

if you think about it, it's really pretty sick. let's soak young people who
know nothing about money with nondischargable debt in the name of something
that is supposed to be good before they're even eligible for a credit card.

if you ask me, i think people should be losing their jobs and/or going to jail
for this sort of predatory behavior.

~~~
pkulak
I always thought that the reason it wasn't dischargeable was because the
product couldn't be taken back in bankruptcy either. Like, why wouldn't you
just go to medical school for 12 years, then declare bankruptcy? I'm probably
missing something about how bankruptcy works, but it seems like you'd be set
for life in that situation.

~~~
vkou
If I borrowed money from you, bought a bunch of whskey, and drank it all, you
can't take that back, either.

That doesn't mean that credit card debt should be undischargeble through
bankruptcy.

~~~
pkulak
Sure, but as long as you are no longer drunk, that whiskey is no longer of any
value to you either.

------
0898
This could be an epic house of cards.

A speaker I follow made this one of his predictions for this decade [Source:
[https://www.perrymarshall.com/52453/10-predictions-
for-2020-...](https://www.perrymarshall.com/52453/10-predictions-
for-2020-2029)]

"A charismatic college grad drenched in debt will stand up and shout: “I’m NOT
paying back my student loans. You can repossess my car, evict me from my
house, revoke my diploma, throw me in debtors prison… but I’m not paying.
EVER. Who’s with me?”

"When the Mall in Washington DC is jammed with Millennials standing together
in solidarity, the dominoes of higher education will fall."

"The art of manipulating 18 year olds into non-dischargeable loans leading to
dead-end careers has driven tuition into the stratosphere."

"Schools and banks are guaranteed their dinero, even if the student never
lands a job, even if the degree is in Elizabethan poetry… and not even
bankruptcy gets you out of hock."

"This runaway train WILL crash. The bubble WILL pop… this decade."

------
anoxor
It reads like the guy had the ability to pay off the debt, but left a job he
didn't like. I feel like he made a mistake going into a field he didn't like
or just started at a bad company and could have used those skilled he borrowed
to get to pay it off and made a decision not to.

The student loan situation isn't great, but this doesn't seem better.

If this becomes common, so will having to secure loans against likely the
assets of your family, which a lot of people don't have that as an option.

The current situation of 70k a year college is predatory, but a student
accepting that cost should be smart enough to know what that means.

~~~
quadrifoliate
> The current situation of 70k a year college is predatory, but a student
> accepting that cost should be smart enough to know what that means.

Potential college students are 18-ish years old, hardly old enough to have
enough mental composure to make the "no" choice in a country that bombards
them with the message that going to an elite college is the ultimate goal.

Also, after thinking about it a little, your argument of "they should have
been smart enough" pretty much applies to _every_ bankruptcy situation.
Homeowners, many of whom are much older than these students should be smart
enough to know what they are getting into with that mortgage, et cetera.

~~~
Mirioron
> _Potential college students are 18-ish years old, hardly old enough to have
> enough mental composure to make the "no" choice in a country that bombards
> them with the message that going to an elite college is the ultimate goal._

If they aren't responsible enough to take out that loans then they probably
shouldn't have the ability to take out these loans. That would make it simple,
right? If you're poor and can't get scholarships then no college for you.

At some point, we need to be able to hold people accountable for their
actions. Otherwise we're going to lose a lot of privileges in society.

~~~
freehunter
This is a country where people are able to take out hundreds of thousands of
dollars in loans and kill or be killed in a foreign war before we trust them
to buy alcohol or cigarettes, and before we trust them to rent a car. And the
same country's legal system will treat a preteen child as an adult and
sentence them to life in prison (Lionel Tate, 2001).

Maybe "at some point we need to be able to hold people accountable for their
actions" but the first step might be figuring out an actual age where they
_can_ be held accountable. Perhaps the youngest age someone should be able to
take out student loans is 21, when they're able to buy a pack of smokes and a
case of beer? Or maybe 12, when they're responsible enough to serve life in
prison?

~~~
Godel_unicode
Given that Tate's sentence was overturned for reasons of mental competency, I
think we can safely put that example to bed.

~~~
harry8
But not overturned because he wasn't tried as a minor? If so the point
absolutely stands nowhere near a bed if what is being discussed is the
application of law based on age.

~~~
Godel_unicode
Mental competency in this case referers to the capacity of a 12 year old to
reason about the consequences of his actions. In other words, 12 year olds are
not adults and cannot be treated like adults.

------
ryeights
No, no, no! A judge ruled in _one specific case_ that a certain individual’s
student loan debt was dischargeable under the Brunner test for undue hardship.
Yes, it is a more lenient application than usual, but this does not mean that
anyone’s student loan debt is now dischargeable!

~~~
turkthrower123
Precedent has been set, now other judges can refer to this ruling while making
their decisions.

Everybody should just stop paying their student debt. Let the system crumble.

~~~
ordinaryperson
That's not how the law works.

The "Brunner test" that the OP commenter mentioned looks at 3 things:

1) Based upon your current income and expenses, you cannot maintain a minimal
standard of living for yourself and your dependents if you are forced to repay
your loans.

2) Your current financial situation is likely to continue for a big part of
the repayment period.

3) You have made a good faith effort to repay your student loans

In this specific instance the judge ruled the litigant had passed the Brunner
test. It may have been a lenient application of the test, but the law remains
the same.

Other judges cannot look at this case and abandon the Brunner test, which is
what you seem to be implying should/will happen here.

If you want the system changed you'll need Congress to pass a law.

~~~
turkthrower123
The problem with the Brunner test is that it is very rarely applied, and
applied inconsistently. The test itself is incredibly vague in specifics and
is pretty much at the discretion of the judges, who generally always rule on
the side of the government, which makes sense, the government pays their
salary.

I have one friend who is permanently disabled and spent 4 years trying to get
his student loans forgiven. He gave up and fled the USA.

The courts have fought tooth and nail in the interest of their corporate
overlords to prevent the Brunner test being invoked.

If more judges do the right thing and allow the Brunner test to actually be
applied, it will have a significant impact.

~~~
charwalker
Precedent here would be the Brunner test and its application plus quality of
evidence/testimony from the defendant to support the judges decision.

Moving forward, judges can cite this as an example/landmark case without
excess research or work in their own decisions. It's a good thing, I think,
but definitely not a rubber stamp to discharging loans.

------
jefftk
The ruling: [https://www.scribd.com/document/442408640/In-Re-Rosenberg-
Ba...](https://www.scribd.com/document/442408640/In-Re-Rosenberg-Bankruptcy-
Decision)

------
bensonn
I hear the term predatory used with school loans but I don't get it, what is
predatory about them? Almost all of these people are HS graduate adults. These
adults have choices- no college, trade schools, community college, online
college, state, private, etc. Most (the normal non-star athletes or geniuses)
people who choose college pursue the college, the college doesn't pursue the
person. Those who choose college normally apply to a few different colleges
because they may not get in. The student has to fill out a lot of paper work
that takes time, this isn't some ToS agreement where looking at a college
means you accept any loan and debt.

If colleges cold called prospective students and lied about the cost of
education that would be predatory. The borrowers are not passive victims- it
is only by their overt choices and actions that they go into debt.

250k for a 40k per year job is a bad investment but simply being a bad
investment isn't predatory. A TV is a bad investment, Starbucks is a bad
investment- they aren't predatory.

What is it about student loans that makes them predatory?

For those who believe people 18-24 are still developing and need special
protection- do you think the voting age should be raised?

~~~
geekster777
I always saw the lenders themselves as predatory. If a student tried to take
out a mortgage, the bank would look at their ability to feasibly pay back the
loan before denying them or approving them at a lower amount. It seems like
folks just get their student loans rubber stamped. Since it's so easy to get
lent more money, colleges are incentivised to charge more.

I'd be interested to see a world where your degree itself was factored into
the equation. Pursuing biology? Nope, we've got too many of those and
biologists don't make enough money on average. You'll only get lent a safe
amount. Pursuing law? Now that's a safe loan with good payback odds! This
would likely incentivize schools to put more scholarships in the less
lucrative fields, and potentially keep those fields from becoming
overpopulated. Or maybe folks will need to start their education in a
community college or state school to build credibility. I'm sure the
implications would be more nuanced than that, but I think that the incentive
system for lenders is currently not working as intended.

------
mberning
People claim this is a huge problem, and at this point I suppose it is, but it
was not always so. The government should get out of the business of giving and
guaranteeing education loans and this debt should be disposable in bankruptcy.
The problem would go away very quickly. Lenders would have to take a close
look at the borrower, their academic record, their major, career prospects,
etc. before making these loans. Which is how it should be in the first place.
Of course there will those that whine about access to higher education, but I
think that argument has already failed spectacularly. We are witnessing first
hand that higher education is not for everybody and for many degree programs
has zero bearing on future financial success.

------
Traster
The weird legal protections for student loans seems bizarre to me. The effect
of making these loans exempt from bankruptcy just inflates their value which
puts colleges into a position where they can inflate their fees - safe in the
knowledge that banks will lend practically anything and students have very
little choice. But I'm still left wondering- what is the reason that
bankruptcy exists at all, and if there is a good reason, why does that reason
not extend to student loans?

~~~
toasterlovin
The argument for bankruptcy protection for student loans is that, at the end
of college, students are in a uniquely advantageous position to file for
bankruptcy. They don’t have any assets, they don’t have any significant income
earning history, etc. I think the original intent was to incentivize more
lending, and thus more access to higher education, by giving lenders more
protection.

It was a mistake, IMO.

~~~
whyenot
It seems like having a bankruptcy on your credit report for the next seven
years would be disincentive enough, especially now when everyone from the
phone company, to your landlord, to your employer may look at your report.

~~~
paul_f
Brilliant strategy - graduate college, file bankruptcy, get rid of the student
loan debt. Most college graduates rent for the first few years and with the
utility of VISA debit cards, no need for a credit card. Live in a city, use
public transport ad Uber, no need for a car loan. In 7 years, you can buy a
house.

~~~
heavyset_go
> _Most college graduates rent for the first few years_

Many landlords are loath to rent to recent graduates, those with poor credit
and a history of bankruptcy. It's an owner's market, and someone who checks
all three risky boxes will be skipped over for another tenant who comes with
less risk.

~~~
dodobirdlord
If it was a common practice for college graduates to declare bankruptcy in
this manner then landlords would take that into consideration. But of course,
if it were a common practice it would also promptly be banned and we would be
back in the same place we are now.

~~~
colejohnson66
It is banned already. It just has another name: _fraud_. Taking out a loan
with the intent to not pay it is fraud.

------
mrnobody_67
Anybody have any good data as to what % of a $200K 4-year degree actually goes
to pay faculty and classrooms, vs. stadium, $2m/year football coach, etc.?

~~~
chrisco255
None. Football programs have their own income in the form of tickets,
licensing, retail sales, broadcast rights, etc...

~~~
burkaman
Only the very best Division I programs generate positive revenue:
[https://www.ncaa.org/about/resources/media-
center/news/growt...](https://www.ncaa.org/about/resources/media-
center/news/growth-division-i-athletics-expenses-outpaces-revenue-increases)

~~~
bb2018
I think it is a bit misleading. A college may reasonably come to the
conclusion that a certain percentage of their alumni contributions are because
of a high-profile sports program. Additionally, at many schools alumni
networking revolves around large football and other sporting events.

I admit I do not have the numbers to back it up, so attack it all you want,
but it is undeniable a high amount of social cohesion is created by these
sporting events at many schools. Is it ideal - no - but like marketing, it is
often about what people want rather than what they say they want.

------
pmorici
“Finally, Rosenberg advised borrowers to understand what kind of loans they
had since federal loans are treated differently from private loans.”

The article doesn’t ever say what type of loans were discharged in this case
but ends with the above statement. If this case wasn’t about federal loans
then that doesn’t help many people because most student debt is federal.
Private debt is only ~10% of the market.

------
jmpman
Does this now result in no more private student loans? If I were a lender,
there’s no way I’d now lend on a student loan.

~~~
asdfasgasdgasdg
I wouldn't bet on it. First of all, this ruling could be appealed. Second of
all, it seems like the bar for whether student loan debt can be discharged may
still be much higher than typical debt. Third, since this isn't an appeals
court, I don't believe it sets any kind of binding precedent.

It's also not entirely clear that this ruling even represents a divergence
from the general pattern. There are circumstances where student loans may be
discharged, but it is rare for those circumstances to be satisfied. Perhaps
this was just one case where they were.

------
lolc
> After he graduated in 2004, Rosenberg consolidated his loans and held a
> little more than $116,000 in student debt as of April 2005. That number
> ballooned to about $221,000 over the next 14 years.

Legal usury. The article doesn't say how much they extracted of him before he
got free.

~~~
hn_throwaway_99
In fairness to his lenders, a lot of this debt was for getting his law degree,
but then he decided not to become a lawyer. That is, the assumption was he
would have a (relatively) high paying job to pay back his loans, but, by his
choice, he did not.

Note, though, that lenders still loan multiple 10s of thousands of dollars for
students going to cookie school or getting art degrees, largely because
discharging student loans is so difficult.

~~~
endothrowho333
A decade of JD underground, and various other law school forums, yet there are
still those that believe law school -- much less anything outside of Top 5 --
to be a worthwhile investment.

------
olliej
One would hope this will result in universities having to drop there absurdly
high fees.

The ability to pay absurd fees is dependent on the loan providers providing
huge amounts of debt - but they only do it because they know that that debt
can never be escaped. If it becomes established that student debt is
dischargeable, then they availability of credit will be reduced. Ideally that
would put downwards pressure on university fees.

That said this absurd “pay by semester” model taken by US universities - which
further inflates fees, while limiting the ability to work at the same time
forces students into debt, so maybe universities will start recognizing that
that isn’t tenable in the long term.

~~~
Google234
Maybe universities in the US will finally get rid of the huge number of
administrators and non-academic staff that they have bloated themselves with.
Maybe they could also start providing fewer unnecessary services to students
for free. Dorm rooms where much less opulent if you go back 30 years or more.

~~~
olliej
Agree about the excessive admin, but don’t get the dorms comment - they’re not
significantly fancier (outside the ivy leagues that all have a tonne of money,
and for which most students have rich families).

Also: 30 years ago the public universities also had substantially more
government funding. By drastically cutting the tax rates for the wealthy (and
in CA prop13 essentially was a variant of that), state and federal governments
were “forced” to cut education funding, thus putting more pressure on
universities to increase fees.

Honestly I’d be all for a platform to return taxes to the levels that the
boomer generation got to benefit from.

~~~
zaroth
Educational funding has not been cut in the slightest. It’s grown rapidly for
decades, even in terms of “constant” (inflation adjusted) dollars — from
~$3,000 per pupil in the 60s to about $14,000 per pupil today for primary and
secondary education. [1]

Research “cost disease”.

[1] -
[https://nces.ed.gov/programs/digest/d17/tables/dt17_236.55.a...](https://nces.ed.gov/programs/digest/d17/tables/dt17_236.55.asp)

~~~
olliej
The per student cost has many contributory factors, the most obvious are:

* historically underfunded education for minority groups, disguising the reason for reduced cost

* In CA at least use to underfund many schools, until the state Supreme Court ruled that all children were entitled to equal education resources - literally same $ amount per student, which again significantly increased the _average_ cost per student, so the story is more “rural and poor communities subsidized education of other areas”

* cost of living increasing at above inflation rates - teachers need to be paid enough to cover the cost of living, so if your funding increases at a rate lower than cost of living your actual funding has decreased.

That said the relevant measure is tertiary education - that’s the part of
education we’re talking about, and that’s the part that is bound by legally
mandated free access.

~~~
zaroth
$14,000 per pupil means we are paying for a class of 20 students, on average
nationwide, $280,000 for a K-12 education per school year.

That’s an insane amount of money to teach a small group of kids the things
which the average K-12th grader are actually being taught.

The problem is definitely not that the cost of living for the average teacher
for that class of 20 average students is anywhere near even $60k. Or that the
depreciation on the capex for the portion of the facilities used by those 20
kids and 1 teacher is anywhere near $20k.

The problem is the other $200k is being burned in an administrative and
political dumpster fire.

~~~
olliej
Again, I agree with you on the prodigious increases in admin costs - many of
which are forced by the politicians frequently complaining about costs.

But also, pre-college education is funded completely differently from tertiary
(large parts of the US actively hate higher level education, so its much
easier to defund)

~~~
zaroth
There’s $1.5 trillion of student loan debt. ~$800 billion of that is Stafford
loans. 11.4% is delinquent.

How much of that debt could have been issued without the Fed guaranteeing it?
That is a huge subsidy in and of itself.

Also, whether it is [currently] _dischargeable_ or not, a massive percentage
of that debt is probably not actually serviceable.

That means the Day of Reckoning will come where the Fed takes a haircut on
that loan balance. And that will amount to the largest ever recognized subsidy
in tertiary education in the history of the world.

It was sold as a Federally guaranteed loan program, but when you make a
massive loan to someone who can never repay it, it’s actually a grant. It’s
just not politically convenient to admit it (yet).

------
tanilama
It always a surprise to me why US college education is SO expensive, like
order of magnitude than the rest of the world.

I mean if it isn't that expensive, it will surely not lead to this student
loan crisis.

~~~
adventured
That's a recent phenomenon. As recently as the late 1990s, that was not the
case. You can track the explosion in university costs directly in line with a
chart showing the growth in student loan debt. Student loan debt went from
~$250 billion in 2002 to $1.2 trillion in 2015, approximately.

You won't see very many people asking the obvious questions: what the hell
caused that sudden extreme spike in costs and who is responsible? Mostly what
you see is complaints about it. The system worked before (pre cost explosion),
then they broke it.

The government caused it by incentivizing the ability of universities to
perpetually raise tuition prices, even against the extreme economic
destruction of the great recession; they did that via loan guarantees that
kept inflating (and as they inflated, the schools raised prices right along
with it). The outcome of perpetually raising loan guarantees was obvious and
they did it anyway.

Being able to discharge student loan debt more easily, will help deflate the
government's bubble. It can't happen soon enough.

For decades the US had a cost effective, wildly successful university system
nationally. It was the envy of the world, to put it mildly. Every other
developed region on the planet spent the post WW2 era trying to copy its
extraordinary results in terms of economic and scientific output. The rest of
the world still has nothing to compete with the top 100 US universities as a
whole.

These days, as far as quality of education goes, public schools in-state still
provide tremendous value at a modest cost compared to what it does for your
job and income earning prospects for life.

------
hurricanetc
Income Share Agreement. The financial value of a college education varies
wildly from degree to degree and from school to school so why shouldn’t the
loan structure?

We created this student loan debt problem by pretending we live in a fantasy
of equality that does not, never has, and never will exist. Not all degrees
are equal. Not all colleges are equal. Stop pretending otherwise. Price
student loans based on the school and path of study and let the numbers-nerds
crunch the numbers.

------
sudoaza
Free Public Education anyone? It amazes me how countries like USA and Chile
indebt their youth basically for life, specially nowadays that having a degree
doesn't even guarantee a decent job anymore.

~~~
daenz
Can we stop calling it "free"? It is never free unless everyone is doing the
work for $0. If people are still being paid, then someone is paying. I'm fine
with the idea of socially investing in future generations, but it's an
investment, not "free stuff."

~~~
pbhjpbhj
It's called free because it's "given without charge". Nothing would be free
under "had no costs involved in production" (not even a smile!).

It's free in the same way a Christmas gift is free; but with giving education
we're also guaranteed a return in an improved society with people capable of
performing roles we have need of.

Better to give education than to structure society around greed and demanding
a profit in return for education?

~~~
martinald
I don't think it's a guarantee. In the UK (where tuition is capped at
£9k($12k)/year), a whole heap of majors were shown to reduce lifetime earnings
vs not going to university.

The difficulty is that you are going to earn a lot less while you are at
university, so if you spend 3 years there earning $0, it really drags down
lifetime earnings unless the degree adds a somewhat decent %age above baseline
in terms of earning power.

~~~
Dylan16807
> The difficulty is that you are going to earn a lot less while you are at
> university, so if you spend 3 years there earning $0, it really drags down
> lifetime earnings unless the degree adds a somewhat decent %age above
> baseline in terms of earning power.

You'd have to have a less than 7% earning power increase, and I wouldn't even
call that a decent percentage for _one_ year of dedicated self-funded
training.

------
dragonwriter
It's black and white in law that student loan debt is dischargeable in
bankruptcy, and the newsworthy thing here is apparently the judge applying the
main legal test as articulated in the case in which it was created rather than
pretending to apply it while adding new and perversely punitive terms.

~~~
throwlaplace
i love this game of semantics.

[https://fas.org/sgp/crs/misc/R45113.pdf](https://fas.org/sgp/crs/misc/R45113.pdf)

"Even though Section 523(a)(8) renders student loans _presumptively_
nondischargeable, however, it does not render them _completely_
nondischargeable".

italics not mine. so it is all but nondischargeable.

"Even though Section 523(a)(8) renders student loans presumptively
nondischargeable, however, it does not render them completely
nondischargeable. Section 523(a)(8) as currently written allows a debtor to
discharge a student loan if “excepting such debt from discharge . . . would
impose an undue hardship on the debtor and the debtor’s dependents.” 33 In
order to discharge a student loan on undue hardship grounds, the debtor must
ordinarily file a separate complaint against the creditor holding the student
loan debt. 34 The debtor must then prove by a preponderance of the evidence
that repaying the student loan would impose an undue hardship on him"

BUT

"The Bankruptcy Code does not define “undue hardship,” 72 and the legislative
history of Section 523 does not precisely specify how courts should determine
whether a debtor qualifies for an undue hardship discharge."

i.e. it's not written into law. it is _stare decisis_ on the other hand that
the brunner test _can_ be used.

note i do not have student loans (i.e. no dog in this fight) but i do believe
it is disingenuous to make it seem more straightforward to discharge student
loan debt than it actually is. the reason this person's discharge is
newsworthy is exactly because of how exceptional it is.

~~~
dragonwriter
> italics not mine. so it is all but nondischargeable.

“Presumptively” does not mean “all but”.

~~~
egdod
It does mean that this is a gross misstatement: “It's black and white in law
that student loan debt is dischargeable in bankruptcy”

------
nojvek
American system of predatory student loans is really weird. Almost as if they
went generations of students to be in debt for most of their life.

That, healthcare and gun violence.

These are all pretty well solved problems in other modern countries like
Australia and Canada.

The state of politics really baffles me. Like FUUUUUUUU (meme)

------
irjustin
It is interesting that bankruptcy does not discharge the debt as in normal
cases. Apparently home mortgage is difficult as well[0].

The reasoning is if it is hard to get rid of the debt, then it keeps
investment money flowing in because the loans are 'secured'.

Clearly the whole system is inflated and needs to find a new 'norm' on the
student side. Loans for school are too easy, so schools charge more, faculty
charge more, etc etc. Vicious loop.

[0] [https://www.forbes.com/sites/stephendash/2015/10/25/why-
stud...](https://www.forbes.com/sites/stephendash/2015/10/25/why-student-
loans-are-so-difficult-to-discharge-in-bankruptcy/#4a08468f7202)

~~~
syshum
Mortgages are not hard to discharge if the person wants to, however they are
secured debt so if you discharge the debt you have to give up the asset.

It should not be possible to discharge the debt AND keep the asset, that is
recipe of disaster

~~~
freeone3000
So if you go bankrupt with student loans, the government repossesses your
degree?

~~~
teamspirit
What then is the value of:

Education: University of Higher Eductaion, M.S. Computer Science,
(repossessed)

on a resume? I ask only half jokingly.

~~~
jefftk
The government could repossess your degree by making it illegal to tell people
you have it. Since the vast majority of the value of the degree is as a signal
to potential employers, repossessing would maybe kind of work?

(Still half jokingly)

~~~
yjftsjthsd-h
Nope, violates 1st amendment.

~~~
skissane
Under Texas Penal Code 32.52(b)(1)(C), it is a misdemeanour to claim to have a
degree (for purposes of employment/etc) if that degree has been revoked. So,
if some law was to say that bankruptcy discharge of student loan resulted in
degree revocation, and that law applied to you and you knew about it, then it
would be a misdemeanour to use that degree in Texas.

Does this violate the 1st Amendment? As far as I'm aware, that provision of
the Texas Penal Code has never been struck down on First Amendment grounds.

[https://codes.findlaw.com/tx/penal-code/penal-
sect-32-52.htm...](https://codes.findlaw.com/tx/penal-code/penal-
sect-32-52.html)

~~~
dragonwriter
> Does this violate the 1st Amendment?

Probably not if applied _extremely narrowly_. (If you tried to prosecute
someone for saying that they had earned the degree but has it revoked for non-
payment of debt, it probably would violate the 1A.)

But, more to the point, that would only matter for most practical purposes for
bachelor's degrees (and sometimes for more advanced degrees) if the degree was
revoked before one had any substantial record of experienced based on it,
since beyond entry level positions most positions rely on a pattern of
experience to which a bachelor's degree is a typical (though often not
exclusive) entryway, not the degree itself.

------
apta
Ah yes, interest strikes again. There's a reason that (practicing) Jews don't
lend each other money with interest. Interest is also prohibited in
Christianity and Islam. When will people learn? It seems that greed is so
powerful that it blinds many.

------
twic
The article doesn't go into any legal detail. If anyone has a link to a non-
paywalled article that does, i'd be interested to see it!

~~~
phonon
[https://images.law.com/contrib/content/uploads/documents/292...](https://images.law.com/contrib/content/uploads/documents/292/59748/RosenbergBankruptcy.pdf)

[https://www.law.com/2020/01/09/law-grads-221k-loan-
discharge...](https://www.law.com/2020/01/09/law-grads-221k-loan-discharge-
has-bankruptcy-bar-buzzing/)

------
mrfusion
How big of a deal is this on a scale of 1-10?

~~~
swagasaurus-rex
How big is your scale on a scale of 0 to crippling debt?

~~~
mrfusion
Just wondering if it’s a minor legal curiosity or does it mean a large portion
of student debt will now be discharged?

------
turkthrower123
Curious question, however. If he was a naval officer, he not only qualifies to
a $73k hand-out for the Montgomery bill, but the military will put you through
university as an officer handout.

Soldiers also get an (unfair) entitlement financially. They are allowed to get
special mortgage terms backed by the VA, which allows them to walk away from
mortgages with no penalty, no ding on the credit report. I'm surprised this
doesn't exist for student loans.

------
turkthrower123
This is huge! Student debt in the USA is slavery. Donald Trump is allowed to
write off $150m for a failed casino, but I'm not allowed to write off $100k if
I'm disabled and will never be able to pay back. That's not right.

America just cut our education budget by 10% ($7bn), while increasing our
holy-war budget by $30bn. Considering we give $4bn per year to Israel to fight
it's wars, I'm starting to wonder what the hell I get for the $50k I give
Uncle Sam every year.

No education, no healthcare, no housing, but more war, more welfare for
billionaires and big-oil/big-agriculture, but NOTHING for the average Joe.

Maybe it's time for a #calexit, or just a civil war.

------
3fe9a03ccd14ca5
Students are blindingly taking on debt that they won’t have any reasonable
path of repaying. The government — and by extension the taxpayer — is
underwriting loans that are manifestly toxic.

So if neither the student or the taxpayer is coming out ahead, who is? The
pain in loan reform should fall on those who benefited from the loans.

~~~
anoxor
College has become massively political to the point that professors swing 90+%
in one political direction often without 1 in 100 or 1000 registered in the
other direction.

The political side that college swings now wants college free and more common.

I got a phd and then taught at college for a number of years. Professors
preach political stances as much as some religions. I'm probably clinically
centrist / not aligned either way, and it was clear that was an unacceptable
if not heretical position to hold as a professor. Students of different
politics than their professors frequently feel like they have to lie in papers
to parrot their professors worldview to get a good grade. I left I'm part
because I got sick of my coworkers mocking people who don't think like them or
aren't a proud atheist as stupid, and the opposite politics is frequently
demonized.

If you want to know who is coming out ahead, that part can't be removed. If
you want to maximize the number of people who are preached a particular set of
politics and worldview, our current policy would be in line with that. Even if
that's not the core reasoning, it's too tightly aligned to be removed. If
college is free next election it played like a football every 8 years back and
forth.

------
syshum
One of the biggest problems I have with the "student loan" problem is there
was/is no accountablity for how the money was actually spent.

More than a few people have taken out student loans, then used that money not
for tuition or even books, but for anything from housing to vacations to car
payments, to paying of higher interest credit card debt

Privately Held Student loan debt should ABSOLUTELY be discharged under
bankruptcy.

However I refuse to agree that tax payers should be on the hook for it.

~~~
gravypod
Are housing and transportation not valid applications of a student loan? I am
currently close to graduating from college. During my last 3 years I haven't
had a stable enough family life to consider living with my parents. I'm very
fortunate in that I've spent a large amount of time, throughout my childhood,
developing a skill set that is highly valued and I also had the energy
required to work full time as a SWE while doing my degree. Had any of those
cases not been true I'd have to either give up on getting a degree and live
with the sunk costs or I would have had to take out larger loans to cover
housing.

It feels like if I was someone with a chronic medical condition that made it
impossible for me to work 75hr to 90hr I would have effectively been barred
from getting a degree.

~~~
syshum
>>Are housing and transportation not valid applications of a student loan?

IMO, no

>> I would have effectively been barred from getting a degree.

One thing we need to get away from as a society is this belief that everyone
should get and/or is entitled to a degree.

I am very much in Mike Rowe's camp on this issue, the idea that the default
position is every child should spent until the age of 24 in schooling costing
in general about $500,000 to "educate" a single child is a complete waste of
resources.

We need to refocus the work force and have more opportunities for people that
do not have a degree. The vast majority of jobs in society should not (and do
not in reality) need a degree. Sure Doctors, Engineers, etc may still need
that level, but one should not need a 100K+ Computer Science degree to write
LOB apps in python, or to be a mid level manager in some office.

------
gchamonlive
Isn't the fact that you can go bankrupt in the first place displaying a
problem in our financial system? The system should be such to protect the
citizens from going bankrupt, at least with efforts comparable to what lengths
government go through to save banks from bankruptcy.

~~~
kube-system
Bankruptcy _is_ a consumer protection. It gives people buried in debt an out,
and it also discourages the banking system from making predatory loans.

I can’t think of any alternatives that accomplish both of these things.

------
burfog
This ruling can't stand. It would crush the economy.

You can't just wipe out $1.5 trillion in debt without consequence. That is
about 7% of our GDP, or 1/3 of our federal budget.

Drastic and desperate measures would be required to stabilize the economy. We
would need to get about $10,000 in tax from every family for the bailout and
probably to avoid hyperinflation.

As of now, the economic devastation is limited only by the slowness of our
soon-to-be-clogged bankruptcy courts and by the feeling some people have that
bankruptcy is immoral.

~~~
chrisseaton
> only by the slowness of our soon-to-be-clogged bankruptcy courts and by the
> feeling some people have that bankruptcy is immoral

Doesn't bankruptcy also have long-lasting effects on your credit and other
factors? I'm often asked in applications for all sorts of things if I've ever
been bankrupt. I'm not sure what they do if you answer yes but I bet it's not
great.

~~~
david927
My understanding is that it lowers your credit score for a few years. Not
ideal but not formidable either.

