Certain Senators Think Pesky Student Loan Debt Is Getting in the Way of Home Debt, So Let's Just Discharge It

You know, if you can't afford your student loans, you probably can't afford a mortgage or kids either. According to Illinois Senator Dick Durbin, the solution is to allow you to discharge your private student loans in bankruptcy so you can get on with "buying" that house you can't afford. Only a politician would think that's a good idea.

Consumerist reports:

The Fairness for Struggling Students Act of 2015 [PDF] would amend the current bankruptcy code, restoring the availability of bankruptcy relief for private student loans.

The act, which was introduced by Illinois Senator Dick Durbin, and co-sponsored by senators Sheldon Whitehouse (RI), Al Franken (MN), Richard Blumenthal (CT), Patty Murray (WA), Jack Reed (RI), Elizabeth Warren (MA), Ron Wyden (OR), Barbara Boxer (CA), Tim Kaine (VA), Brian Schatz (HI), Kirsten Gillibrand (NY) and Mazie Hirono (HI), aims to address the current student debt crisis, which has propelled student loan debt to more than $1.2 trillion.

Currently, student loan debt averages $29,000 for borrowers leaving school with a Bachelor’s degree.

“Too many Americans are carrying around mortgage-sized student loan debt that forces them to put off major life decisions like buying a home or starting a family,” Durbin says in a statement. “It’s not only young people facing this crisis, it is parents, siblings and even grandparents who co-signed private loans long ago and are still making payments decades later. It’s time for action. We can no longer sit by while this student debt bomb keeps ticking.”
This news comes at the same time President Obama is trying to make the federal student loan repayment process "easier" for borrowers.

The president's memorandum -- Student Aid Bill of Rights -- explains thusly:

College remains an excellent investment, and student loans enable many who could not otherwise do so to access further education. However, there is more work to do to help students repay their loans responsibly. In 2013, college graduates owed an average of $28,400 in Federal and private loans. More than one in eight Federal borrowers default on their loans within 3 years of leaving school. My Administration has already put in place significant protections that ensure borrowers with credit cards and mortgages are treated fairly. We can and should do much more to give students affordable ways to meet their responsibilities and repay their loans.
Now, I'm all for reasonable consumer protection. But at what point does it become the government's job to protect the consumer from his or herself?

If you default on your loan 3 years after leaving school, student loans are the least of your problems and no intervention on the part of your nanny government can help you.

Back to the Fairness for Struggling Students Act of 2015, which likely won't even make it out of committee. Durbin has tried this before and it didn't work then so why would it work now? How is it fair for someone else to eat the cost of your education? Debt doesn't magically disappear with the swipe of a hand. Unlike vehicles that can be repossessed if the borrower doesn't make their payments, there's no recouping an asset in the case of student loan default.

Perhaps instead of trying to vaporize the debt, we should address why it costs so damn much to get a degree nowadays anyway. If student loan debt tops $1.2 trillion, that seems to be the bigger issue. Otherwise you're just encouraging people to take on more student loan debt than they can manage because who cares, it'll just disappear anyway later if you can't afford it. SOUND FAMILIAR?

I don't feel sorry for people like the Corinthian 15, who went to "colleges" advertised during Maury Show commercial breaks, FFS. You enrolled in that bullshit school. You applied for the loans. You are responsible. I bought my car from a shady dealer and have awful payments but guess what, I read the contract and knew what my final payoff would be for an $18,000 car. No one put a gun to my head and said YOU BETTER BUY THIS CAR OR ELSE.

Are there predatory loan outfits out there? Sure. But -- forgive me for this crazy idea -- maybe we should understand what we sign before we sign it instead of needing the government to get us out of it later.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


wcvarones said...

Allowing bankruptcy in private student loans and then ending federal student loans would be a great way to bring the price of college back to earth.

Krupo said...

Welcome back. You're reminding me about my own piece of Internet real estate

Wannabephilanthropist said...

As a 28 year old at the moment who has defaulted on his loans having hindsight is about as useful as an asshole on your elbow. Too late now, hmmmmmmmm.... If only at 18 I was mature enough to understand what 100k in student loans actually meant.. There is no way out, my life is ruined unless they pass this some day. Sure I got the job I wanted but the pay doesn't outweigh the payment and the interest.. Good luck telling 18 year olds "sorry kid you can't be what you want when you grow up because the cost of education will ruin your life". Rich get richer poor get poorer, don't be blind everyone knows top 10% hold like 90% of the money... I don't care if some fat cat can't get his new yacht because I default on a bank loan. They are greedy if I was sitting on billions I would be spending all of it improving others lives saving homeless kids and shit.. not buying mansions and being rich scumbags. They owe us.. These assholes are using us more then you can imagine..but hey that's consumerism and we live in America and its not hurting anyone... Directly. But your obviously very naive.

*you're. Did you not take an English class for that $100k degree?

D.M. Beltramo said...

By this writers assessment, he should have been outraged at the bailouts. However, I'm sure he didn't pen such a lengthy bit of BS in that case. No doubt, in his feeble mind that bailout--in which the public ate the costs of businesses bad decisions--was acceptable because the poor businesses were overcome by the mean publics decisions which caused the economy to tank. This is just some blowhards uninformed, unsubstantiated, unresearched opinion. Everyone has one of these, and they all stink... including this one!

HooperDooper said...

I keep looking at the jobs available. Customer Service jobs paying $11 dollars and hour..bachelors degree required. Why on earth would you need a degree for a job that pays $11 an hour and how would you put a roof over your head and pay on your student loan without going into default. The entire student loan business is racked with fraud by collection agencies who's only purpose is to put students into default. Those loans in collections pay more than ones that are on time. The Department of Education should take back all Federal loans and service them and do away with collection agencies completely.

simone said...

The author wrote" Are there predatory loan outfits out there? Sure. But -- forgive me for this crazy idea -- maybe we should understand what we sign before we sign it instead of needing the government to get us out of it later. " What about private loans dude? Someone in government slipped in a bill that didn't allow bankruptcy for private student loans in 2005. Why would they do that ??? Who had their hands in the pockets of these collection agencies and took a consumer loan that was NOT backed by taxpayer dollars and then turn it into a non dischargeable loan. Tell that line to Donald Trump who filed for bankruptcy a few times. Tell that to a lot of CEO's who filed for bankruptcy so they could have a clean start. Why does this author not feel the outrage over all cases of bankruptcy and only singles out those attached to student loans.

tharbert said...

Sounds freakin' awesome! And you'll love it!

Here are a few recommendations from a northerner who lived in Tallahassee for a spell before moving to Seattle:

First, Thomas Jefferson's Monticello (Charlottesville, VA). Take the tour, see the house, walk the grounds, learn how he obtained the property, and learn how he died loaded to the gills with debt!!!

Second, George Washington's Mount Vernon Home (Mount Vernon, VA). Take the self-guided tour, but don't skip the introductory film in the Ford Motor Company Theater. Laugh hysterically at Pat Sajak's costume changes (Sajak in a three point hat and full-on revolutionary gear was priceless - Ford must have paid him a fortune for this work) during the flick and his fall out the chair cross sell of the on-site restaurant's bread pudding. Don't let him talk you into it - it's just ok tasting. Learn how the home went into complete disrepair and he also died neck deep in debt!!!

No trip to the South is complete without a trip to New Orleans. Yeah, take the street car through the Garden District and meander through the French Quarter. But also go to the suburbs. Go to the church festivals (food, fun, games, and great conversation) and talk to Katrina survivors. Four-Five years ago, significant portions of the city were still working on recovery. The country should be ashamed! Sometimes the Omni there offers great rates so you can stay in the French Quarter. Oh, coffee and beignets from Cafe DuMonde (go early in the AM to see the artists set up shop in the streets and enjoy the sunrise AND go late at night for more people watching and to enjoy the glow of the place in the dark).

If possible, drive from Jacksonville, Florida, to Tallahassee, then head straight south to drive along the Gulf Coast of the Florida pan handle, then back up to I-5 thru Alabama and Mississippi on thru to Louisiana. Stop frequently. Talk to folks and try the boiled peanuts!!!! Trust me, this northern boy misses them. Man, I miss the thunderstorms coming off the Gulf....that my friend, is the south!

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Lil25 said...

We just had an offer accepted on a house. My husband and I both have FICOs over 800. We were approved for way more than the sales price, but we are so stressed by our student loans because of the high interest rates (they're all federal loans from grad school) that we've decided to walk away from the deal.. We'd love to buy a house, and we found a house we could easily afford without student loans, but if we pay at the 10 year rate, we've come to realize that we will be paying $27,000 in interest over the life of the loan. So, we've decided to back out and put our downpayment money into our student loans and try to pay them off in three years instead of ten. Doing so will save us $15,000. If the interest rates weren't so high on our student loans, we could afford that house right now, and we would be happy to buy, but we just can't live with the stress of our high interest rate student loans hanging over our heads day and night.

Tracy Marks said...

What a dick. Blind and stupid too and I guess you don't have to have student loan debt to be an idiot after all.

Tracy Marks said...

You can go to opensecrets.org and see exactly who got paid off. Private laons are the biggest problem. At least you can manage some relief. There is NOTHING to help you with private loans. At least with government loans you have IBR and other payment programs. Student debt is more than $1.16 trillion now. It's a shame our Journalist here only knows how to copy and paste instead of research.

Frankly I am tired of being judged for being fiscally irresponsible when OUR GOVERNMENT is over 16 TRILLION in debt... with massive amounts of money totally unaccounted for in departments across the board. Not to mention the waste and continuous MISTAKES.

OH MISTAKES... students aren't allowed to make those. Actually no one is allowed to make those. Except the ones who are REALLY cheating the American people.

Global worker said...

"Why on earth would you need a degree for a job that pays $11 an hour"

It's a trend. As long as there is a global supply of unemployed workers with degrees the employer can require anything from the job seeker. It has nothing to do with your needs, but what is currently allowed by the desperate job seekers.

Imagine what they are paying the CS without a degree.

beaverbeliever said...

What a bunch of rubish. How about we remove bunkruptcy protections from all loans (including Credit cards, car loans, home loans, medical debt, etc.) and see how that works for everyone who falls on hard times? Why aren't students allowed to start a clean slate when they can't manage their finances but Donald Trump can do so as he pleases? Why is someone who gambles thousands of dollars that he pulled out his credit card or charges lavish trips on his CC, allowed to delcare bunkruptcy? how about medical debt? Either remove all bunkruptcy protections from all loans or reinstate them to student loans as well.

NoMoreDraggingBehindUncleD said...

I see what you did there, and you are not wrong.

Tristjyn n said...

I've been wondering for years as to why they even classified pot as bad as heroin two facts that Ik for a fact is heroin is a man made chemical with some natural substance in it pot is a all natural plant that unless messed with is very healthy think about is a ciggerate ( sorry if my spelling is wrong) but it has tar formaldihyde and lots and lots of chemicals that can kill u pot does not have extra chemicals like that it is natural the government is just keeping the ciggerette companies and alcohol companies interests first before the publics if they say it causes cancer as I have read in some arrivals which is bs but u have to think that everything now a days causes cancer or has anybody seen half the drugs the Fda approves ? Can cause this that and yonder and even death its all bs government just wants to make it sound like they are doing the right thing

How the fuck do you know the author doesn't? Fail.

I'm sorry you can't read.

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