Cancel student loan debt?

[rockinkt]

Or the words.


Actually, though, in case you don't understand the reaction, from your post it is hard to tell what you meant when you said "It's called bankruptcy." It could mean two things.

Option 1) You believe that people unable to pay student loans should just declare bankruptcy, but you are unaware that it is impossible to discharge a student loan via bankruptcy.
Option 2) You think that laws should be changed to allow people to discharge student loans via bankruptcy.


So, tell us what you're advocating, and we'll decide which of us should provide an outraged response to your messages. Without further clarification, we might all do it.

This is another example where a person who is totally ignorant on a subject is declaring absolutes when that is not the law. Please try to use informed discussion on a sceptics board

We are talking about the US and the federal government as that is the purview of the President. The test is that your bankruptcy is a valid one and not one just to stiff your creditors (e.g. Trump).

You may have your federal student loan discharged in bankruptcy only if you file a separate action, known as an "adversary proceeding," requesting the bankruptcy court find that repayment would impose undue hardship on you and your dependents.

https://studentaid.gov/manage-loans/forgiveness-cancellation/bankruptcy

Over the years, a myth has taken hold that you can't get student debt reduced or wiped out through bankruptcy. But many bankruptcy judges and legal scholars say that's wrong. And bankruptcy can be a way to get help.

https://www.npr.org/2020/01/22/7973...ptcy-can-wipe-out-student-loan-debt-after-all

 

[Meadmaker]

This is another example where a person who is totally ignorant on a subject is declaring absolutes when that is not the law. Please try to use informed discussion on a sceptics board

We are talking about the US and the federal government as that is the purview of the President. The test is that your bankruptcy is a valid one and not one just to stiff your creditors (e.g. Trump).

You may have your federal student loan discharged in bankruptcy only if you file a separate action, known as an "adversary proceeding," requesting the bankruptcy court find that repayment would impose undue hardship on you and your dependents.

https://studentaid.gov/manage-loans/forgiveness-cancellation/bankruptcy

Over the years, a myth has taken hold that you can't get student debt reduced or wiped out through bankruptcy. But many bankruptcy judges and legal scholars say that's wrong. And bankruptcy can be a way to get help.

https://www.npr.org/2020/01/22/7973...ptcy-can-wipe-out-student-loan-debt-after-all

Interesting. i was one of those people with whom the myth had taken hold.

Rockinkt is right, folks. Read the articles for more details.

 

[gnome]

Holy crap, someone admitted someone was right on the Internet.

2020 IS the final season, folks!

 

[acbytesla]

This is another example where a person who is totally ignorant on a subject is declaring absolutes when that is not the law. Please try to use informed discussion on a sceptics board

We are talking about the US and the federal government as that is the purview of the President. The test is that your bankruptcy is a valid one and not one just to stiff your creditors (e.g. Trump).

You may have your federal student loan discharged in bankruptcy only if you file a separate action, known as an "adversary proceeding," requesting the bankruptcy court find that repayment would impose undue hardship on you and your dependents.

https://studentaid.gov/manage-loans/forgiveness-cancellation/bankruptcy

Over the years, a myth has taken hold that you can't get student debt reduced or wiped out through bankruptcy. But many bankruptcy judges and legal scholars say that's wrong. And bankruptcy can be a way to get help.

https://www.npr.org/2020/01/22/7973...ptcy-can-wipe-out-student-loan-debt-after-all

Thank you for this. I was under a misapprehension

 

[Modified]

Thank you for this. I was under a misapprehension

A very common one, to be fair, which was in past years stated as fact fairly consistently by the media. Only recently have I come across news articles explaining that this is not true.

 

[Brainster]

How do you figure? A forgiven loan is written off; it's not as if the federal government would be paying out the outstanding balance of the forgiven loans, since the creditor is itself.

This is incorrect. The federal government guarantees the student loans, but the actual funding is through Sallie Mae, a quasi-governmental agency, which then issues bonds backed by the loan payments. So the people holding the bonds need to be paid.

 

[acbytesla]

A very common one, to be fair, which was in past years stated as fact fairly consistently by the media. Only recently have I come across news articles explaining that this is not true.

I very much believed this to be true.

But after reading that a few times It does make me wonder about the following. It says "You may have your federal student loan discharged in bankruptcy only if you file a separate action, known as an "adversary proceeding," requesting the bankruptcy court find that repayment would impose undue hardship on you and your dependents.
What is the practical application of this? What is "undue hardship"? Is proving it a formality, or does this requirement make it extremely difficult? Is it possible the reason this myth is pervasive is this requirement makes the likelihood of discharging the debt a practical impossibility?

 

[TragicMonkey]

I'm surprised that apparently filing bankruptcy is an acceptable solution to predatory lending for so many here. So what if people can bankrupt out of student loan debt? That hardly solves the problems of education being overpriced and underperforming, and bad loans being made. Amputation is a fix for gangrene but that doesn't mean we throw up our hands (or stumps) and cheer that everything's fine, we've got a solution!

 

[acbytesla]

I'm surprised that apparently filing bankruptcy is an acceptable solution to predatory lending for so many here. So what if people can bankrupt out of student loan debt? That hardly solves the problems of education being overpriced and underperforming, and bad loans being made. Amputation is a fix for gangrene but that doesn't mean we throw up our hands (or stumps) and cheer that everything's fine, we've got a solution!

I don't like it. But that's not really a good analogy. We need a long term solution certainly, but there is an immediate problem.

 

[rdwight]

I very much believed this to be true.

But after reading that a few times It does make me wonder about the following. It says "You may have your federal student loan discharged in bankruptcy only if you file a separate action, known as an "adversary proceeding," requesting the bankruptcy court find that repayment would impose undue hardship on you and your dependents.
What is the practical application of this? What is "undue hardship"? Is proving it a formality, or does this requirement make it extremely difficult? Is it possible the reason this myth is pervasive is this requirement makes the likelihood of discharging the debt a practical impossibility?

From what I read it appears to be an added expense in bankruptcy proceedings, as well as what the NPR article quoted above had around 50% chance of succeeding. It also is up to each individual judge to determine what undue hardship means. This could be codified by congress to change this moving forward, but they haven't jumped at the opportunity just yet.

This is also a last resort, and while I haven't researched Income Driven Repayment plans, they also allow for forgiveness of loans after a set period of paying, generally 20-25 years. That is on top of the monthly repayment amount being limited to 10-20% of discretionary income. This is also in addition to other programs that reduce your total loan debt if you enter into a public service job such as teaching.

 

[acbytesla]

From what I read it appears to be an added expense in bankruptcy proceedings, as well as what the NPR article quoted above had around 50% chance of succeeding. It also is up to each individual judge to determine what undue hardship means. This could be codified by congress to change this moving forward, but they haven't jumped at the opportunity just yet.

This is also a last resort, and while I haven't researched Income Driven Repayment plans, they also allow for forgiveness of loans after a set period of paying, generally 20-25 years. That is on top of the monthly repayment amount being limited to 10-20% of discretionary income. This is also in addition to other programs that reduce your total loan debt if you enter into a public service job such as teaching.

I wish it wasn't true but I know for a fact that it is. Discrimination is pervasive in our judicial system. I would love to see the statistics to see if that is a factor in bankruptcy judge's decisions.

 

[rdwight]

I wish it wasn't true but I know for a fact that it is. Discrimination is pervasive in our judicial system. I would love to see the statistics to see if that is a factor in bankruptcy judge's decisions.

Two things bother me about this reply. First, it completely side steps everything I pointed out. There are currently programs that lower payment rates to reasonable levels and put a hard timeframe on how long they will be paid until the remaining balance is forgiven. This is before reaching the attempt in bankruptcy, which is successful 50% of the time in lowering or completely absolving student loan debt. Those seems like important discussion points.

The larger one is more a problem I see with the messaging that is put forth for things like this in regards to "helping black families". It's ********. By any measure, the overwhelming amount of student loans forgiven will be on white families. As I have already pointed out, many of whom are already high earners, capable of paying it back. While black burrowers having higher overall debt per person in comparison, this is not some targeted program to help black America.

If they want to remedy the problem that in every category in regards to student debt, black burrowers have been hit harder, have the student loan forgiveness only apply to black borrowers. At least that would be an honest response to the framing that is being thrown out there.

 

[TurkeysGhost]

This is another example where a person who is totally ignorant on a subject is declaring absolutes when that is not the law. Please try to use informed discussion on a sceptics board

We are talking about the US and the federal government as that is the purview of the President. The test is that your bankruptcy is a valid one and not one just to stiff your creditors (e.g. Trump).

You may have your federal student loan discharged in bankruptcy only if you file a separate action, known as an "adversary proceeding," requesting the bankruptcy court find that repayment would impose undue hardship on you and your dependents.

https://studentaid.gov/manage-loans/forgiveness-cancellation/bankruptcy

Over the years, a myth has taken hold that you can't get student debt reduced or wiped out through bankruptcy. But many bankruptcy judges and legal scholars say that's wrong. And bankruptcy can be a way to get help.

https://www.npr.org/2020/01/22/7973...ptcy-can-wipe-out-student-loan-debt-after-all

I'm not really seeing a debunking of the myth here.

The idea that student loans cannot be discharged may be exaggerated, but it remains clear that student loan debts are uniquely difficult, and may be impossible, for otherwise bankruptcy eligible people to get rid of.

The article you link states that it's about 50% of people who are already discharging other debts through bankruptcy action are successful in likewise discharging or modifying student loan debt. It explicitly states that the law is written to make the standards for determining "undue hardship" ambiguous, and whether or not someone is successful is largely a coin-flip based on a given judge's understanding of this non-descript term.

It seems that more people should attempt to discharge these debts, and 50% success rate still means a lot of people would be helped by a process they don't know to pursue, but that's hardly a debunking of the idea that student loan debt is uniquely inescapable. If even bankruptcy lawyers are under the impression that it's hopeless to attempt this route, clearly there's a systemic problem that needs addressing.

It would be a good thing if more people attempted this remedy, but it remains clear that legal reform is necessary.

"So I think that's really important for bankruptcy attorneys to see that there are judges out there who are willing to grant undue-hardship discharges and that people are much more likely to obtain relief in bankruptcy for their student loan debt," Iuliano says.

Savvy lawyers should venue shop for the right judge to help their clients dismiss this debt, but that's hardly a sign that the system is working well. The recommendation remains that these laws need to be rewritten to make the debts less uniquely difficult to discharge.

 

[Modified]

It seems that more people should attempt to discharge these debts, and 50% success rate still means a lot of people would be helped by a process they don't know to pursue, but that's hardly a debunking of the idea that student loan debt is uniquely inescapable. If even bankruptcy lawyers are under the impression that it's hopeless to attempt this route, clearly there's a systemic problem that needs addressing.

I have read articles describing cases where bankruptcy lawyers were under that impression, or at least gave that impression to their clients. It seems that is no longer the case though. I also get the sense that judges have softened up on this in recent years.

 

[acbytesla]

Two things bother me about this reply. First, it completely side steps everything I pointed out. There are currently programs that lower payment rates to reasonable levels and put a hard timeframe on how long they will be paid until the remaining balance is forgiven. This is before reaching the attempt in bankruptcy, which is successful 50% of the time in lowering or completely absolving student loan debt. Those seems like important discussion points.

The larger one is more a problem I see with the messaging that is put forth for things like this in regards to "helping black families". It's ********. By any measure, the overwhelming amount of student loans forgiven will be on white families. As I have already pointed out, many of whom are already high earners, capable of paying it back. While black burrowers having higher overall debt per person in comparison, this is not some targeted program to help black America.

If they want to remedy the problem that in every category in regards to student debt, black burrowers have been hit harder, have the student loan forgiveness only apply to black borrowers. At least that would be an honest response to the framing that is being thrown out there.

One, I'm not trying to sidestep your points. I think your points are excellent. Two, I was just curious about laws that leave a lot of discretion in the hands of a single individual and how in practice, that is adjudicated.

My experiences in courtrooms shows that people of color are treated more harshly by the system at almost every turn. Most of it does not seem to be deliberate racism but unconscious preferences and learned stereotypes. Poor whites are mistreated by the system as well.

 

[Dr. Keith]

One problem with bankruptcy as a "solution" is that you have to have a certain amount of money to afford bankruptcy.

The truly indigent, having no assets or income, will have a hard time retaining counsel and bankruptcy is not really a field of law that is welcoming to the DIY plaintiff.

If you are 25, have a very low paying job, no assets and $200k in student loan and credit card debt, how are you going to pay a $5k retainer to bankruptcy counsel who will go the extra mile to try to get that student loan debt taken care of? And trust me, at this point your whole family is done with helping you out, just this one time.

For companies it can be a bit easier. Stop paying all invoices for about two months and most business will have saved up tens of thousands of dollars to weather the bankruptcy. Then the trustee can weed through the unpaid bills and pay them pennies on the dollar.

 

[acbytesla]

One problem with bankruptcy as a "solution" is that you have to have a certain amount of money to afford bankruptcy.

The truly indigent, having no assets or income, will have a hard time retaining counsel and bankruptcy is not really a field of law that is welcoming to the DIY plaintiff.

If you are 25, have a very low paying job, no assets and $200k in student loan and credit card debt, how are you going to pay a $5k retainer to bankruptcy counsel who will go the extra mile to try to get that student loan debt taken care of? And trust me, at this point your whole family is done with helping you out, just this one time.

For companies it can be a bit easier. Stop paying all invoices for about two months and most business will have saved up tens of thousands of dollars to weather the bankruptcy. Then the trustee can weed through the unpaid bills and pay them pennies on the dollar.

This.

 

[TragicMonkey]

And it's not like personal bankruptcy fixes all your problems--you'll have bad credit afterwards, that you'll have to rebuild.

 

[theprestige]

Which calls into question the whole premise of these loans.

 

[acbytesla]

Which calls into question the whole premise of these loans.

Are you saying we shouldn't loan students money?