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It's a weird one, right? Why does student loan debt stick with you no matter what, while all sorts of other loans are dischargeable through bankruptcy? It turns out that there's a solid historical reason for this: This was first put into law in the 1970s, and, Moe Tkacik explains, there was a campaign against dirty, drugged-out, hippie students who saw student loans as free money. (So when I say it's a "solid" reason I mean that in the sense of "discernible and demonstrated by evidence," not in the sense of "good.")
A typical syndicated dispatch on the surge in student deadbeats was the August 27, 1972 exposé by Los Angeles Times reporter Linda Mathews, which began with the personal anecdote of an anonymous "Washington banker" who purported to have once "handed a $1,500 check" for the year's tuition to a nameless "18-year-old college freshman" only to be insouciantly told, "Oh, I never intend to repay this loan." The anonymous banker -who had since joined "the staff of the American Banking sic Association" - helpfully explained to Mathews that the kid was, "acting on advice in underground newspapers urging students to use bankruptcy to avoid paying loans."
In fact, just four percent of people filing for bankruptcy had any student loans at all. But despite tons of evidence that this was all made up, a law was passed making student loans impossible to get rid of. And that's when they became really big business:
And as the loans became more steadily impervious to the usual laws of credit and debt, they became bigger and more profitable. In the years since the Bankruptcy Reform Act passed in 1978, the nominal price of college tuition has risen more than 900 percent. Over the same period the median male income - again, nominally - has risen 165 percent. And since the percentage of the workforce boasting a bachelor's degree has expanded from less than 20 percent to nearly a third, I don't have to convince you that the median de facto return on investment on those diplomas has diminished greatly over the same years. Which brings us to the second way in which the student debt bubble differs from all the others you've seen: It is legally impossible to pop. By law it can only grow very fast.
Read the whole piece. It's astonishing what an abusive scam the whole student loan business is.

(Continue reading below the fold.)

A fair day's wage

  • Is your boss trying to get you to sign something saying you'll never join a union, and you're worried there'll be a target on your back if you don't sign? Sign away—it's not legally binding.
  • Postal banking services are just one of many good ideas of how to strengthen the postal service. Congress would never allow it, of course.
  • Striking Caterpillar workers voted to ratify a new contract and will go back to work next week. Workers hired before 2005 won't get raises, because Caterpillar management is fucking greedy.
  • Ha: "Union thugs don't wear shorts."
  • AT&T workers in Indiana get quite the unpaid lunch break: They can't listen to music, read newspapers, or go more than 1/2 mile from their work site.
  • A federal judge said that American Airlines had gone too far in trying to cancel its contract with pilots as it goes through bankruptcy.
  • Ikea workers, bus drivers, nurses, geothermal workers, and more have decided to join unions recently.
  • The lousy economy continues to fall on some groups harder than others. People who did not go to college are still struggling, and single people are regaining jobs more quickly than married people. (Not necessarily because they're single, but for other overlapping reasons.)
  • Some Chicago schools have opened for the year, and teachers are back on the job under an interim agreement while a full contract continues to be negotiated. Students will have longer school days, but rather than just telling teachers to find something to do with the added time without added resources, the district is hiring hundreds of new teachers. Teachers who had been laid off in the last three years get preference for hiring in these new positions if they had a satisfactory rating. Several major issues remain unresolved, including limits on class size, teacher evaluation methods, and staffing levels (despite the new hires under the interim agreement).
  • Tens of thousands of people rallied in Philadelphia on Saturday for a Second Bill of Rights, including full employment, a quality education for all, and full participation in the political process.
  • Workers at HealthBridge nursing homes in Connecticut are striking after management imposed a lousy contract (having previously locked out workers at one nursing home). And the replacement workers management has brought in are not doing an adequate job, leading to a variety of problems. But what's particularly low is that management accused striking workers of sabotage, including removing identification bracelets from Alzheimers patients. But the state Department of Public Health found that in reality:
    Many residents were not compliant with wearing the identification bracelets and were care planned as such. Identification involved referencing a photograph of each resident located in the Medication Administration Record (MAR) and verifying the identity with a reliable staff member. Due to the number of replacement workers on all three shifts, a reliable staff member who was familiar with the residents ... was not always available to identify.
  • Workers at the Oakland airport Subway concession say they were fired for complaining about wage and hour violations and trying to organize a union.
  • Motorola Mobility is laying off 4,000 workers, a third of them in the United States after being bought by Google in May. (Via)

    Making laws

    • What digby said, sick leave edition:
      Long ago in a former life, when I worked in the pink collar ghetto, I sat in very close quarters with about eight office workers in which the same cold cycled around through the group for more than six months. It was miserable. We were either getting it, had it or were just getting over it. None of us had adequate sick leave so we didn't use what little we had it for fear it would be gone when we got "really sick."
    • Where do anti-abortion groups stand on the Pregnant Workers Fairness Act? You'd think that ensuring that pregnant women could keep their jobs and still be safe and healthy would be a priority for those groups, but so far they're not speaking up for this bill. Shocking, right?
    • The U.S. Department of Labor has told the Georgia labor commissioner to reverse his decision denying unemployment benefits to seasonal school workers like bus drivers and cafeteria workers.

    Miscellaneous

Originally posted to Daily Kos Labor on Sat Aug 18, 2012 at 10:55 AM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  This Is a Blood Contract (11+ / 0-)

    It should be illegal to issue any debt that cannot be discharged in bankruptcy.

    "I'll believe that corporations are people when I see Rick Perry execute one."

    by bink on Sat Aug 18, 2012 at 10:57:46 AM PDT

    •  Er (9+ / 0-)

      We shouldn't have a law that allows debt to be incurred that can't be discharged in bankruptcy.

      "I'll believe that corporations are people when I see Rick Perry execute one."

      by bink on Sat Aug 18, 2012 at 10:59:02 AM PDT

      [ Parent ]

      •  Bain can destroy companies and file bankruptcy (8+ / 0-)

        Bain can go around and take out millions of dollars from companies.  This results in them taking on huge amounts of debt which ultimately forces them to file for bankruptcy.  Meanwhile, students have gone to schools, especially the for profit schools, where they don't even graduate let alone find a job and are stuck with huge amounts of student loan debt that can't be discharged through bankruptcy.  

        For example, there is a school in Florida called Full Sail that is a private for profit school that Romney likes to promote.  The problem is that the graduation rate is about 20% while the students are left with an average student loan debt of $50,000.

        •  Typical, isn't it. (7+ / 0-)

          Use false propaganda to justify a law, e.g. we must have voter registration laws so that that one guy who wasn't a citizen in 2006 in Houston who voted will never again be able to vote.  MEanwhile, millions of citizens will be denied their right.

          So, they've been doing this since the 70s.  And then they mandated use of private banks for student loans, so that private banks could profit at the expense of our students.

          And then business complains when they can't find any qualified workers to fill their jobs, but they continue funding Republican candidates who pass the laws that make it more and more difficult for Americans to fund their college education.

          It makes so much sense.  Let's keep going down this road.  This will really lead us to resurgence of the American Empire!

          •  I was thinking the same thing (1+ / 0-)
            Recommended by:
            hnichols

            except the example that came to my mind was "welfare queens" or "massive numbers of people on welfare using their checks to buy drugs" resulting in laws requiring drug tests before getting checks.

            liberal bias = failure to validate or sufficiently flatter the conservative narrative on any given subject

            by RockyMtnLib on Sat Aug 18, 2012 at 01:43:17 PM PDT

            [ Parent ]

          •  Just another six months (0+ / 0-)

            We'll know we're getting close when they begin resorting to Friedman units.

            No System of Justice Can Rise Above the Ethics of Those Who Administer It. (Wickersham Commission 1929)

            by No Exit on Sun Aug 19, 2012 at 09:03:31 AM PDT

            [ Parent ]

      •  One of the goals of lenders for a long time (7+ / 0-)

        has been to exempt debts owed to them by individual Americans  from the general relief offered by the bankruptcy laws. But not limiting their own virtually unlimited ability to unload union contracts, pension and health care obligations and the like with impunity.

        Hence the inability of the bankruptcy courts to deal with mortgages on primary residences, as well, the only kind of residence most people have. Ditto all those twirls and spins that are involved in other forms of debt which become nondischargeable if some sort of 'fraud' by the borrower is alleged, often a technicality he or she did not even understand, on every last bloody one of which the lender claims they relied detrimentally, so as to avoid discharge.

        And note that it is nearly impossible for ordinary folk to go Chapter 7 anymore, a flat out bankruptcy with discharge of all dischargeable debts, with individuals instead  forced into multiyear Chapter 13 provisions much stricter than the Chapter 11 provisions routinely available to and taken by businesses, at the risk of denial of discharge for any debts at all if all the bells and whistles of the Chapter 13 plan are not honored strictly.

        •  I am a Bk attorney. (5+ / 0-)

          It is a common misconception that it is difficult for "ordinary" folk to file chapter 7.  I file daily for two income families who own a home (subj. to mortgage/s).

          Anyone who owes more than 10k in credit cards should get a free consultation.  

          The inability to discharge student loans or deal with home mortgages is truly a shame.  

          No System of Justice Can Rise Above the Ethics of Those Who Administer It. (Wickersham Commission 1929)

          by No Exit on Sat Aug 18, 2012 at 12:38:02 PM PDT

          [ Parent ]

          •  Hardship discharges (0+ / 0-)

            No exit,

            As my handle suggests, I am not a bankruptcy attorney.  In your experience, how is a debtor ever able, in practice, to qualify for the hardship discharge exception?

            [For other readers' benefit, I've pasted below the law on student loan dischargeability, which is one of about 20 or so categories of nondischargeable debts]:

            11 USC § 523 - Exceptions to discharge

            (a) A discharge under section 727, 1141, 1228 (a), 1228 (b), or 1328 (b) of this title does not discharge an individual debtor from any debt—

            *  *  *
            (8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for—
            (A)
            (i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or
            (ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or
            (B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;

            -6.38 -5.33 "It is better to die on your feet than to live on your knees." - Emiliano Zapata

            by electionlawyer on Sat Aug 18, 2012 at 03:19:32 PM PDT

            [ Parent ]

    •  Would you also support a law (0+ / 0-)

      making it illegal to not lend a student money? Because if you make student loans non-economic from a lender's perspective, you deprive thousands of students from availing themselves of the opportunity to borrow money to attend college. If you support making student loans less attractive, you have to understand that there will be consequences.

      •  Y'know, if you play devil's advocate (6+ / 0-)

        often and forcefully enough, at some point it's not playing anymore.

        Government and laws are the agreement we all make to secure everyone's freedom.

        by Simplify on Sat Aug 18, 2012 at 11:39:05 AM PDT

        [ Parent ]

      •  Single-payer. Education for all. (14+ / 0-)

        Profitable in the extreme is what it is now. The system was set in place by the people who profit most, and guaranteed profitability by lobbying for purchasing favorable laws.

        Single-payer. Education for all.

        Similar to healthcare.

        Cheers.

      •  Some thoughts about loans (5+ / 0-)
        Recommended by:
        eps62, StrayCat, No Exit, 417els, Bronx59

        I'd rather support returning to some measure of sanity regarding student loans being dischargeable in bankruptcy proceedings. That'd be a bare start.

        Going radical for a moment, I'd support allowing student loan debt to be discharged after "x" years, "x" being some formula dependent upon a borrower's stated and prospective income. Yep, it means that an art major might, theoretically, "get away" with a larger part of their debt being discharged- theoretically.

        Practically, though, I'd bet $5 that it means tuition fees across the board decrease, as the fabulously wealthy private companies realize they can no longer charge Cadillac pricing for "less desirable" degrees.

        As a full wacky proposal, I'd remove the need to lend students money entirely by making higher education free, subsidized by stuff like, oh, say, actually reducing the size of the military's budget. But that's just pie-in-the-sky, that my taxes would go to support a fully funded education for all program.

      •  No, I Wouldn't (0+ / 0-)

        We are already graduating far too many people from college. A minority of college graduates put their degree to use. Many are saddled with huge debts that they have to carry on for life, regardless of the utility of the degree.

        "I'll believe that corporations are people when I see Rick Perry execute one."

        by bink on Sat Aug 18, 2012 at 11:47:49 AM PDT

        [ Parent ]

        •  Did you copy/paste this (0+ / 0-)

          from an Onion article?

          No Jesus, Know Peace

          by plok on Sat Aug 18, 2012 at 12:14:05 PM PDT

          [ Parent ]

          •  Show Me (0+ / 0-)

            The jobs that require a college degrees and show me the wages that let graduates pay back the loans.

            "I'll believe that corporations are people when I see Rick Perry execute one."

            by bink on Sat Aug 18, 2012 at 12:18:49 PM PDT

            [ Parent ]

            •  Oh no you don't (0+ / 0-)

              YOU said:

              1. Graduation rates are too high.

              2. Minorities use their degrees.

              3. Debt for life.

              Without providing data.

              There are hundreds of careers that allow payment of loans, even high ones.

              No Jesus, Know Peace

              by plok on Sat Aug 18, 2012 at 12:25:08 PM PDT

              [ Parent ]

              •  Oh, My Fucking (0+ / 0-)

                Jesus. Do you really not know that this is the worst job market in four generations and is not likely to return to full employment levels in our lifetimes?

                "I'll believe that corporations are people when I see Rick Perry execute one."

                by bink on Sat Aug 18, 2012 at 12:28:24 PM PDT

                [ Parent ]

                •  Well maybe it's one's situation (1+ / 0-)
                  Recommended by:
                  luckydog

                  I don't have a degree, and I am limited in pay at my current company because of it (even though I have 20 years experience and teach degree'd professionals).

                  My wife has 2 degrees and does not work, and we wouldn't have it any other way. She could work if she chose and would get a nice salary.

                  I have many friends and family with hundreds of thousands in school loans because they were fleeced and made bad decisions on school selection. But they are in good jobs and will do very well in the long run.

                  I would like to return to school to get a degree not related to my current field (for my own satisfaction). But I would not pay 100K or 200K for it for damn sure.

                  So you can see you and I have two very different views on this subject. So let's leave it at that.  But I do believe the education level of the citizenry will affect our survival. And just because corporations freeze markets and hiring when Democrats are in power is no reason to lower education standards.

                  No Jesus, Know Peace

                  by plok on Sat Aug 18, 2012 at 12:55:07 PM PDT

                  [ Parent ]

      •  The value of education (7+ / 0-)

        has been lost because of this law. If I were a bank and knew that student loan debt could not be written off then I would lend huge amounts of money. Hell I might even jack up tuition.

        America needs to decide if it wants it's people to be educated or not. If it does it would restructure costs.

        No Jesus, Know Peace

        by plok on Sat Aug 18, 2012 at 12:07:31 PM PDT

        [ Parent ]

        •  Higher education has been a nasty racket (1+ / 0-)
          Recommended by:
          George Hier

          Between public universities that raised rates purely in relation to what the govt would pay.  We would never have seen tuition sky rocket without a con commitant increase in the amount of money the govt was willing to lend.

          You have law schools for example falsely advertising the rosy employment statistics and hikin tuition through the roof knowing most of their graduates would be indebted for life.

          Bankruptcy protection too is a punitive austerity condition imposed on the future of our country...  Needlessly.

          No System of Justice Can Rise Above the Ethics of Those Who Administer It. (Wickersham Commission 1929)

          by No Exit on Sat Aug 18, 2012 at 02:26:52 PM PDT

          [ Parent ]

      •  Just provide students with a taxpayer-supported (3+ / 0-)
        Recommended by:
        No Exit, llywrch, George Hier

        (all tuition paid) public education through the graduate level. Sure its not fun working while in school, but most people could manage if they weren't building up massive debts while doing it.

        Full disclosure- I work full time and attend grad school full time, so yes, I'd very much benefit.

      •  I'd rather do what the President has adovated (2+ / 0-)
        Recommended by:
        StrayCat, 417els

        And have most of the loans run through the federal government instead of through the banks.

        Then we don't have to worry about the banks withholding loans in a mean spirited attempt to change laws back to what favors only them.

        Banks already want to overturn the federalization of the federal subsidized loans.  Think about that one for a min.  

        Used to be that I could go to a bank and take out a loan for college. The risk was borne by me, and by the government. Not the bank. The bank did the collecting, and if I defaulted the bank could go after the money I owed, and collect from the government too.

        There are pieces out there that explain it far better than I, but that's the gist of it.

        We need to demand that education is funded at appropriate levels from Kindergarten through college. I'm not asking for everyone to get a Harvard education for free, but enough funding that going to State U is a workable solution for most, and at least some community college is a solution for nearly all.

    •  I know people who've not reapid their loans (0+ / 0-)

      They seem to have the money and lifestyle to do other things, so not sure who it hurts.

    •  Eventually the bubble will pop... (0+ / 0-)

      ...for the simple fact that you cannot take money people don't have.  You can have the full force of the US government behind you, but you still can't extract blood from a stone.  

  •  Ah yes, (9+ / 0-)

    Dirty fucking hippie hating is a fine old conservative position.  Punish everyone who isn't rich - because they would be rich if they weren't DFH.  This is the same logic that will destroy Medicare to 'save' it.  

  •  Oh, I'm fine with it.... (2+ / 0-)
    Recommended by:
    Odysseus, marleycat

    ....if people like Donald Trump get perpetually saddled with their debts. Sauce for the goose, and all that.

    "They smash your face in, and say you were always ugly." (Solzhenitsyn)

    by sagesource on Sat Aug 18, 2012 at 11:07:21 AM PDT

  •  Maybe the For Profit Schools (10+ / 0-)

    which benefit from this boondoggle would like to pitch in and give back the money they steal from the taxpayers and students they exploit is revealed to be a scam.

    With the prime rate being...uh...zero....why are student loan rates so high anyway?  

    The last time I checked, my high interest checking account was paying less than .01%?

    •  The extent to which we're all played, all teh (4+ / 0-)
      Recommended by:
      niemann, nanorich, glbTVET, eps62

      time, is truly astonishing. A first world country, with high literacy and a fairly educated middle class, yet this.....

      Unreal....

      From Neocon to sane- thanks to Obama- and Kos.

      by satrap on Sat Aug 18, 2012 at 11:12:51 AM PDT

      [ Parent ]

    •  Amen to that (2+ / 0-)
      Recommended by:
      nanorich, eps62

      Our meager savings account does earn jack shitt in interest.  We have discussed taking the money out and putting it into our safe.  Banks are charging these college kids out the arse for loans, they are like sharks on a feeding frenzy.

    •  I don't know much about student loans... (0+ / 0-)

      ...but are they variable rate (perhaps tied to the prime rate or treasury yields) or are they effectively fixed rate (assuming the legislative process isn't moving them up and down through legislation)? I thought they were fixed.

      Something in the 3% range is quite reasonable if they are fixed rate. The thirty year treasury yield has been hovering around 3% for a long time. Historically, inflation runs roughly 3.3% annually.

      Well qualified buyers seem to be paying well over 3% for 30 year fixed mortgages with 20% down -- and that's a secured loan.

      The rates the bank pays you for your interest checking account (or any demand deposit for that matter) has little relevance to long term rates. The bank or you can terminate the relationship at any time or the bank can change the terms (and will -- either increasing your interest rate to keep you from moving your deposit to another bank, or decreasing it because they have more money than they need).

  •  It used to be there were a number of plans (2+ / 0-)
    Recommended by:
    nanorich, llywrch

    to forgive the loans for service of various kinds.  Have these dried up as well?

    •  Sort of. Remember teaching was one such, and (2+ / 0-)
      Recommended by:
      StrayCat, llywrch

      now Republicans are trying to reduce the number of public school teachers, in favor of home schooling and charter schools which charge money. No longer a priority to get additional teachers in difficult schools, so no benefit for teaching there rather than heading out to actual money earning jobs that Rs think are real jobs.

    •  You pretty much have to be able to serve (0+ / 0-)

      in the military or peace corp, or be a teacher in a low-performing area. And I think there's an option where you can have any remaining balance discharged after 30 years of payments, when using the Income Based Repayment.

  •  The problem here is moral hazard. (14+ / 0-)

    It is not the 1970s anymore.  Tuition and loan indebtedness have sky rocketed as wages have been stagnant.

    If a large portion of the national graduating class has significant five or even six figure student loan amounts, the rational choice is to walk away from those loans via bankruptcy, collapsing the system.  Unlike other loans, there is no real collateral behind the loan - a lobotomy cannot recover the capital, if there is any.

    The scandal to me isn't that student loans cannot be discharged.  The real scandal is the cost of a college education and the loss of good jobs for both college and non-college graduates.

    "The attack on the truth by war begins long before war starts and continues long after a war ends." -Julian Assange

    by Pierro Sraffa on Sat Aug 18, 2012 at 11:12:45 AM PDT

  •  The whole bankruptcy system is a scam (8+ / 0-)

    Just look at the career of donald trump. Hey, don't we all wish we could be deadbeats, but be personally shielded from it, and then be held up as a model of great success.

  •  What makes many student loans (3+ / 0-)

    a scam is the quality of the education purchased by the proceeds of the loans. People are borrowing tens or hundreds of thousands to pay private colleges for an education not worth a dime. The reason that student loans aren't dischargeable in bankruptcy is that for all intents and purposes a newly graduated student is bankrupt - all liabilities and no assets (from a dollars and cents perspective). So people graduating with a hundred grand in debt could just go through one BK process and get rid of the debt. If student loans didn't have this provision, no private lender would make them.

  •  If they were dischargable as other loans... (1+ / 0-)
    Recommended by:
    StrayCat

    They'd be harder to get like other loans.  Would institutions give loans out to prospective students going into a study field without much chance of a job to pay the bills once they graduate?

    Now the system is completely broken in that there is no incentive to rein in the exploding costs because no matter the skyrocketing tuition, the loans will always be there and students will always have to bite the bullet and take out the necessary loans.  
     

    An OFA Campaign Web Ad is the new Reid "sternly worded letter".

    by Jacoby Jonze on Sat Aug 18, 2012 at 11:20:41 AM PDT

  •  Student Loans Can be Discharged in Bankruptcy (2+ / 0-)
    Recommended by:
    Simplify, a2nite

    Student loans are difficult, but not impossible, to discharge in bankruptcy.  To do so, you must show that payment of the "debt will impose an undue hardship on you and your dependents."
    There are several Tests and ways you can prove this during a Bankruptcy. Granted it is extremely difficult but not impossible.

    •  I am a bk atty (0+ / 0-)

      Unless you will never work again, they are for all practical purposes non dischargable.  Student loans are a crime. Omitted against our youth.

      No System of Justice Can Rise Above the Ethics of Those Who Administer It. (Wickersham Commission 1929)

      by No Exit on Sat Aug 18, 2012 at 12:44:47 PM PDT

      [ Parent ]

      •  Did I say they were easy to get discharged? (0+ / 0-)

         First if you’re a BK attorney then you are aware of Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987).
          You in fact can have Student Loans Discharged during Bankruptcy, is it easy NO. Is it extremely difficult you bet your ass it is! Is it impossible NO. Can you have them forgiven Yes. Should you go through School and think I’ll just get them discharged? No because your chances are slim.
          Courts use different tests to evaluate whether a particular borrower has shown an undue hardship. A common test is the Brunner test which requires a showing that 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) the debtor has made good faith efforts to repay the loans. (Brunner v. New York State Higher Educ. Servs. Corp., 831 F. 2d 395 (2d Cir. 1987). Not all courts use this test, but most do. Some courts will be more flexible than others while using this test.
          Whether a student loan is discharged based on hardship is not automatically determined in the bankruptcy process. You must file a petition (called an adversary proceeding) to get a determination. Does this whole process all seem very vague yes. Are your chances good no. But they can be discharged.
          Please before anyone tells me you can’t get them discharged or you can but you will never be able to work again don’t my best friend was able to get them discharged by using the Brunner Test and he still works.

        •  Yes, it is possible... (0+ / 0-)

          And without knowing more about your friend's situation I won't comment on that.  The case law on these requests is very hostile to the debtor.  Whats the cases call a minimal std of living is can be pretty damn low.  And it must not only be minimal now but reasonably expected to stay that way.  So unless you have a compelling case or have the extra money to pay a bk atty to litigate the question (and it will be litigated as they have attys on staff for his very purpose) or you litigate it yourself, then for all practical purposes it's non dischargable.

          But then we're basically saying the same thing...

          No System of Justice Can Rise Above the Ethics of Those Who Administer It. (Wickersham Commission 1929)

          by No Exit on Sat Aug 18, 2012 at 04:28:31 PM PDT

          [ Parent ]

          •  Yes i think we are pretty much Saying the Same (0+ / 0-)

            You are correct it will be litigated,and its not a stroll through the Park. I wont go into details but i think he benefited greatly from a more lenient judge.
            My whole thing was the author said "a law was passed making student loans impossible to get rid of." That is not true I will say its going to be extremely difficult to get rid of them, but it is still possible.

  •  and phelps dad and mom were both public employees (2+ / 0-)
    Recommended by:
    eps62, 417els

    Sends that lazy union memo thing on its head, proving once again republicans are morons who live in an alternate reality

  •  makes me weep (8+ / 0-)

    I graduated from college in 1970 with $500 worth of student loans ... back then there were some great programs to help students through school and tuition at a state school was very reasonable. I went to grad school with no loans and my first job paid a tremendous $1000 a month.  I had my student loans paid off in a year with just a little bit of sacrifice.

    BUT ... when I put my kids through college, there were not many programs, etc. to get through school and so they got student loans and I got parent loans. Although I am now retired and mostly broke, I am still paying $40000 in parent loans ... and I need to either hurry or be very healthy because I will be paying until I"m 80+.  But in talking to others, I am apparently pretty lucky since I can still make my payments and eat.

    Kinda makes me wish for the 60's sometimes, and not only because I was young ... mostly because things looked hopeful back then.

    "Life without liberty is like a body without spirit. Liberty without thought is like a disturbed spirit." Kahlil Gibran, 'The Vision'

    by CorinaR on Sat Aug 18, 2012 at 11:30:10 AM PDT

  •  Why does everything in the U.S. ultimately have to (12+ / 0-)

    ... be about banks and corporations making profits?

    This just makes me so angry.  Why has that become the ultimate goal of everything?  

    Why has the final basis of everything become "economics" (which usually really means the profit margin of large corporations, and screw everyone else)?

    Are there no issues or purposes that should stand higher than that -- things that should be done no matter the cost, just because they're the right, smart thing to do -- like, say, having healthy citizens, or educated citizens?

    In discussions like this I always remember a friend of mine from Germany, now a particle physicist.  He got his Ph.D. for a sum total of about ... $3000.

  •  I'm somewhat sympathetic (0+ / 0-)

    to the argument presented that

    dirty, drugged-out, hippie students ... saw student loans as free money.
    I know from my own experience friends who took a summer class between semesters, not because they were academically motivated to take the class, but they wanted to qualify for the loan they'd get to help pay the bills through the summer.  I've also heard about students waiting on school loans to disperse in order to pay backed up bills.

    As a full time graduate student myself with no spare time to work, I rely on my school loans to help pay for my living expenses, which includes keeping a roof over, clothing, and feeding two kids.  Nothing aberrant about it -- it's expected (especially of non-traditional grad students such as myself) and factored into the school loan budget worksheets.

    That said, I see a possible compromise that addresses concerns on both sides.  What if bankruptcy laws permitted people filing for bankruptcy to discharge the portion of student loans that were paid directly to tuition, fees, and books.  The balance of that, presumably that went to unrelated living expenses that could potentially motivate the "drugged out hippie" trying to live off of school loans would remain non-dischargeable.

    That seems like a sensible compromise to me, or at least something we can do at a minimum.

    •  Sorry to Hear About Your Friends (6+ / 0-)
      Recommended by:
      luckydog, No Exit, emal, wsexson, eps62, David Kaib

      But do not hold the whole nation hostage to a bad idea simply because you happen to hang around a few people who made unethical choices.

      Debt that cannot be discharged in bankruptcy is a violation of human rights. It means that a human life is worse less than a paper contract. This is wrong. The human is always worth more.

      If banks want to cover the risk, they should raise interest on the loans.

      "I'll believe that corporations are people when I see Rick Perry execute one."

      by bink on Sat Aug 18, 2012 at 11:51:29 AM PDT

      [ Parent ]

    •  "student borrowers", the new "welfare queens"...? (6+ / 0-)

      ...not auto-labeling your comments, just pointing out the obvious.

      It seems fairly likely that number the folks who try to live unproductively off of student loans is probably proportionately fairly small when compared to the number of student borrowers who have demonstrated need and are working sincerely toward productivity in their education.

      Cheers.

      •  Proportionality (2+ / 0-)
        Recommended by:
        luckydog, LostBuckeye

        Very well said.  There is defense contractor fraud; it doesn't follow that we shouldn't have an army or a navy.  There is Medicare fraud; it doesn't follow that we shouldn't have a social safety net.  Fraud in which public dollars are stolen, while reprehensible, can be stopped with the criminal and civil statutes already on the books than can be used against those offenders.  It doesn't follow that the system needs to be dismantled or put off-limits for the misdeeds of a few.  

        The same argument about proportionality applies to voting fraud and welfare fraud as well.  You don't pass exclusionary laws just because someone, somewhere, was prosecuted or sued for wrongfully obtaining a public benefit.

        -6.38 -5.33 "It is better to die on your feet than to live on your knees." - Emiliano Zapata

        by electionlawyer on Sat Aug 18, 2012 at 03:33:38 PM PDT

        [ Parent ]

  •  Time has come that the 1% need stronger (4+ / 0-)
    Recommended by:
    a2nite, LostBuckeye, glbTVET, eps62

    governance. Maybe, time to break-up the 1% and bring them back into the "fold."

    Hope has a hole in it when Republicans come, bringing shackles and sorrow; branding their greed on the backs of the poor. - Wendy Connors

    by Wendys Wink on Sat Aug 18, 2012 at 11:39:06 AM PDT

  •  Short and Simple Answer (2+ / 0-)
    Recommended by:
    a2nite, LostBuckeye

    In the 70's the 'Higher Education Industry' was established for bottom line economics, not education, and not economic growth industries, by the liked minded 'free market reagan capitalist' who's results we've now been living in, as forecast back when it started by many who not only weren't paid attention to but ostracized even by their once admirers!!!

    Push as many into and loan the growing sums needed then lock them into paying back!

    Same time the flow of exporting our once envied trades, no real higher education classroom training needed as most who would attend that couldn't perform the multi tasking trades and thus constant education while working in were required with the developing critical thought cells and the common sense as to product, safety, much more!! So one had to get that piece of paper or be thought of in society as just labor, the lowest rung on the economic ladder!

    Vets On FLOTUS and SLOTUS, "Best - Ever": "We haven't had this kind of visibility from the White House—ever." Joyce Raezer - Dec. 30, 2011

    by jimstaro on Sat Aug 18, 2012 at 11:40:08 AM PDT

  •  The law of unintended consquences (1+ / 0-)
    Recommended by:
    a2nite

    What has happened is we're fast becoming a nation of "defaulters".  Bad law and bad behavior on the part of the financial institutions has resulted in a society which no longer sees paying their obligations as a virtue.  It's fast becoming a "meh" kind of virtue.  

    As many credit card companies and financial institutions are fast finding out you cannot indeed squeeze blood out of a rock.  And an unsecured loan is an unsecured loan.

    As one of my lawyer friends once told me:  You can get all the judgments you want.  Then try and collect.  

    •  This Is Wrong (4+ / 0-)
      Recommended by:
      aitchdee, LostBuckeye, No Exit, David Kaib

      Powerful people and institutions have never thought that there was something wrong with default. To them, it is a standard, ethical business decision it no longer makes sense to pay on a debt.

      Think of all of the bankruptcies that Donald Trump has been through. He doesn't care. It's all part of doing business.

      Or think of all of the companies that Bain and other private equity firms have forced businesses into.

      There is nothing wrong, morally or ethically, in defaulting on a loan if it no longer makes sense or you cannot any longer pay. You might incur additional costs -- sure. But it isn't a violation of any sort of moral imperative.

      "I'll believe that corporations are people when I see Rick Perry execute one."

      by bink on Sat Aug 18, 2012 at 11:54:31 AM PDT

      [ Parent ]

      •  don't hate tha playa... Lol (0+ / 0-)

        No System of Justice Can Rise Above the Ethics of Those Who Administer It. (Wickersham Commission 1929)

        by No Exit on Sat Aug 18, 2012 at 02:35:02 PM PDT

        [ Parent ]

      •  But the cost of potential bankruptcies (0+ / 0-)

        is built into the loans, into both their cost and their availability. That's why credit card companies charge 30% interest. They predict how many people will default and set the rates accordingly.

        Unsecured loans for large amounts of money are only available to people without assets and/or good jobs because the government subsidizes and guarantees them. When we talk about allowing people to default on student loans, we are talking about the taxpayers eating the cost.

        It would be better for the government to just give the students the money than to create a situation where we punish those who take the obligation seriously and reward those who walk away from it.

        People respond to carrots and sticks in very predictable ways. Young graduates (and dropouts) would have very little to lose by declaring bankruptcy and it is certain they would they do so in large numbers if they were allowed to.  In addition there would be no reason for them to restrain how much money they borrowed and therefore less reason for the schools to restrain their cost increases.

        Any changes to the current setup have to provide some strong disincentives to what is otherwise predictable behavior. I'm sure such disincentives could be worked out, but I'm not hearing the proposals.

        We decided to move the center farther to the right by starting the whole debate from a far-right position to begin with. - Former House Majority Leader Tom DeLay

        by denise b on Sat Aug 18, 2012 at 02:42:24 PM PDT

        [ Parent ]

    •  no this was intended (2+ / 0-)
      Recommended by:
      Egalitare, eps62

      The radical Republican party is the party of oppression, fear, loathing and above all more money and power for the people who robbed us.

      by a2nite on Sat Aug 18, 2012 at 11:56:04 AM PDT

      [ Parent ]

  •  Student Loans kill everyone (1+ / 0-)
    Recommended by:
    dfe

    Middle class people try to get ahead in this world and then they are screwed in the long run stuck in debt because they cannot pay it back. Then they are harassed and threatened.

  •  Even Secured Stafford Loans are Squirrly (5+ / 0-)
    Recommended by:
    No Exit, glbTVET, 417els, llywrch, bluebrain

    Secured Stafford loans are the safest loans as the interest is covered until the student graduates. But even these loans are offered in away that is completely unethical. When my daughter got her student loan package for her first year of college there was the standard Secured Stafford for $3600 a year and the Unsecured Stafford (you own interest from day one) for $1200. These amounts were decided by applying to the FAFSA site (Free Application for Federal Student Loans) which asks for the parents and child's financial information. We decided to get only the Secured loan.

    To get the loan all my daughter had to do was fill out a couple fields on a form and click submit. She was never presented with a document describing the terms of the loan or even the interest rate of the loan. We have searched all over the web and it is impossible to find any official documents all you get are help pages about how to repay your loan and how it is responsibility to pay them whether or not you are ever contacted regarding your loan payment. We still do not understand what has been agreed to. This is simply outrageous.

    The system is intentionally designed to make it easy to borrow money without considering the consequences. It is an utter disgrace and is in dire need of reform.

  •  Make private bankruptcy the same as business (5+ / 0-)
    Recommended by:
    No Exit, eps62, llywrch, bluebrain, LostBuckeye

    Why not start the reform by making private and business bankruptcy the same?  After all, businesses are "people".

  •  Same thing with students and food stamps (3+ / 0-)
    Recommended by:
    No Exit, glbTVET, eps62

    I had some friends who got food stamps back in the 70's and now they've made it really hard to get them if you're a student.  I imagine some hippies at one time got them and someone got their panties in a twist over it.

    "Forever is composed of nows." Emily Dickinson

    by Leftovers on Sat Aug 18, 2012 at 12:38:06 PM PDT

  •  I heard a different story that sounds correct (1+ / 0-)
    Recommended by:
    LostBuckeye

    Student loans were made by banks but guarantied by the US Gov., and my understanding is that in the 70s banks realized it was easier and more profitable to not bother pestering the borrowers -- just let some time go by with no real attempt to start collections, and then ask for the guaranty money, with the interest and penalties added of course.  This is the reason many students did not pay their loans - they were never asked to.  The large number of defaults then led to the unusual exception from bankruptcy discharge.

  •  debtor's prison (0+ / 0-)

    This is essentially a form of debtor's prison as students, parents, grandparents are put in a financial vice by rapacious banks and false promises made by private and in some cases public and community colleges.

    Economic growth today has plateaued not just here but all over the world. Sure some growth will still be seen in China and India, however, until innovation in renewable and sustainable energy takes hold we can't expect world economic growth to keep pace with population growth and to be able to pay living wages for the service sector jobs that will be created.

    The danger is that more Romney-Ryan types will gain political power here pushing fossil fuel consumption until every last drop of crude oil and every last particle of natural gas and coal is burned. All the while we will allow China and India to become the innovators in renewable and sustainable energy. The only outcome of this will be totalitarianism here in the US and perpetual resource wars possibly involving nuclear weapons. Doom and gloom? Maybe, maybe not.

    The corporations (bank, manufacturing) that demand new hires with advanced college degrees performing temp work should have a light shown on them like the cockroaches they are so we can watch them scurry around. Colleges that kow-tow to corporations should be shunned. Laws should be passed requiring all colleges to honor past academic credit no matter where it was done, no matter what course, and no matter how old.

    Our political system has been perverted by the idea that corporations are people and real people are prisoners to be manipulated by propagandists. Our consumption habits and patterns are very much partly to blame and until that changes there isn't much hope

    Knowledge is Power. Ignorance is not bliss, it is suffering.

    by harris stein on Sat Aug 18, 2012 at 02:35:32 PM PDT

    •  No I have to disagree (0+ / 0-)

      It isn't a debtors prison. There is a separate bunch of money scroungers that are doing that.

      The current system of student loans and the banks angling to try and go back to the sweet deals they had before is reprehensible, but until we start jailing the students/graduates they are not in debtor prison.

      Debtor prison in Michigan.

      Those are debtors prisons, where debt collectors are abusing the judicial system to be their enforcers, often with a very shaky debt.

      If we combine the two, then I'll agree completely. But, for now, student loans just have the potential to ruin someone's financial life instead of throwing them into jail.

      Full disclosure. I had Secured Stafford Loans, and Pell grants while I was in college. They are all paid off, though at the start it was a pretty massive struggle.

  •  Dirty rat bastards, as a phrase, comes to mind... (0+ / 0-)

    The circumstances that accompanied the eliminaton of my job in 2006 were also accompanied by a 600 mile move, an abusive ex, dire poverty, a foreclosure, a nasty custody battle and the last few required hours of my PhD.

    I was unable to finish, secure further employment with an organization, am still on deferment for my roughly $90K of student loans. The bipolar disorder and PTSD that all these events exacerbated/caused make it unlikely that I'll ever be able to hold a job again, yet am unable to qualify for disability because my employer did not contribute to Social Security.

    I was unable to foresee any of these circumstances, as much as I am how those loans are ever going to be paid. And what's more, the more I read stuff like this happening as a demonstrated business practice, the more I am convinced that I probably shouldn't worry about it, certainly not as a moral obligation.

    Anyone who scoffs at happiness needs to take their soul back to the factory and demand a better one. -driftglass

    by postmodernista on Sat Aug 18, 2012 at 04:11:00 PM PDT

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