not good.
govt paying off student loans just makes them a sure bet and validates the behavior.
Govt has the power to allow you to default, but why don't they?
Excessive rents and debts are a drain on consumer spending and ultimately harm the economy. The root cause isn't greedy students wanting an education (weird way to think about it), but tuition costs ballooning out of control.
The root cause are greedy loan providers that know payment back is a sure bet. My 50,000 foot view of the problem is that it is far to easy to obtain a huge sum of money to go to school for a career with no job prospects. My solution would be to factor in degree and ability to repay, making loans much harder to get. Also, I would revoke many degree paths from the ability to get approved federal loans.
This falls right in line with my thinking. I've listened to so many NPR stories about students suddenly realizing right at graduation that, "oh, holy shit, I have to pay $900/month loan payment!"
Student debt is harder to discharge than other debts. You cant even discharge it through bankruptcy. One reason this was done was to reduce interest rates.
I've never seen anyone cite convincing evidence that there was a real problem with students declaring bankruptcy to get out of their loans.[0]
On the other hand, having our bankruptcy system not apply to a meaningful portion of U.S. lending does create some incentive problems, like the fact that lenders have no incentive to make sure you'll be able to handle repayment, so you can take out huge student loans and find out at the end you have earned a worthless degree and that it will be massively difficult or nearly impossible for you to repay the loan.[1]
Currently, a debtor may discharge student loans in bankruptcy only upon establishing that repaying such loans would impose an undue hardship, but this has not always been the case. Prior to 1977, student loans were automatically discharged in bankruptcy.
Perceived abuse of the bankruptcy system, as opposed to any real abuse, drove Congress to change this state of affairs. A 1976 GAO report had found that less than 1 percent of all
federally insured and guaranteed educational loans were discharged in bankruptcy. In other words, no abuse.
I should be clear that I wasn't trying to argue that the laws around student loan debt are just, or fair. I'm just saying that one of the alleged justifications for the current state of affairs is that the difficulty of discharging student debt leads to lower interest rates.
> Once you get an "education", you can't exactly have another company repossess that from you.
That's true of all unsecured debt (hence, “unsecured”), not a special feature of education debt that justifies treatment different than general unsecured debt.
