Comment by ChuckFrank | Hacker News Reader

Comment by ChuckFrank | Hacker News Reader

I'm in arrears on my student loans. I'm one of the millions that is.

The first few lines of this article sums it up completely as to why.

"Between misdirected payments by one of the companies servicing his loan and the abusive collection tactics he encountered when he fell behind ..."

These companies that bought the loans on cheap from the secondary market, make more money from penalties they they do from loan servicing. And they have as many tricks up their sleeves as they can discover to help make that fact true.

They are the true sharks in the whole equation, with guaranteed support from the government and the tax payers.

I recommend that every last student default as things are now. If I were in charge of writing new laws for new student loans, which I am definitely not, I would allow them with three additional conditions. 1. They qualify for personal bankruptcy like any other consumer or investment loan, 2. they could NOT be sold off but would be held in a public trust fund, initially funded by public money, and topped up as needed, and 3. (Scandinavia does this) make repayment a modest surcharge in one's income tax. Make a lot, pay a lot and pay off fast. Make a little, pay a little and maybe never pay it off.

> They qualify for personal bankruptcy like any other consumer or investment loan

You can't do this, nobody will pay them back. I'll take 7 years of shit credit for 200k cash, thank you very much.

Then don't give them the loans. That's how the system works. And if they don't get the loans, force the colleges, and the college towns to compete for the lesser funds.

Why should student loan originators get a free ride, when other consumer or investment loan providers don't?

Because the thinking was that by allowing access to higher education to less well-off students, you could end or reduce the classism and perpetuation of same.

A loan for which no collateral can ever be repossessed necessarily has a different economic profile than a personal loan and even moreso than a real property loan.

Absent those protections, you would see a very different (read: people who need loans won't qualify) student lending market.

Whether that's good or bad is a matter of which there will be a variety of opinions.

Good. The market would quickly self-correct. It's pretty good at doing that. No more 6 figure loans for english degrees. No more automatic 80k loans for shitty technical colleges where most graduates can't even get a job. The whole thing would sort itself out overnight.

And remember, who is getting the money for those 6 figure English degrees? It's not the students. They are liable for the funds, and they do get the degree, but if you follow the money it goes to the universities, and within the universities, it goes increasingly to high paid administrators, who pad their work with increasing capital expenditures on building construction and the necessitated salaries that goes with so many projects on the table, and not the faculty.

This is partly true. What I've seen personally is that with each increase in the tuition I experienced they were busy throwing that money at facilities and whatever else they could think up. Some of it was decent like actual improvements to aging buildings, but most of it was BS facilities like completely redoing the student center which had no real issues and been renovated barely two years earlier. It seems like the universities are following the same pattern that many hospitals have done: if they have money they must spend it even if it's not to the benefit of its consumers or its shareholders. It's like these institutions have replicated the Stalinist "make every thing big" mentality.

It's the easiest way to justify the accelerating administrators incomes. And they say they have to do it to maintain the competitive advantage, over other schools that are doing the exact same thing.

See UC Davis, where they are building a huge new Art Museum, to compete with the one being built right now in Berkeley. Here's the thing, UC Davis is NOT an art school. It's an ag school and should be focusing its resources on that. But no, building an art museum justifies the salaries of all the people that are involved.

I don't think you understand. Even if they don't do this, people will default. There is over $1 trillion in outstanding student loan debt. The people who are defaulting have no assets, and don't have enough income worth garnishing. They are, for the most part, judgement proof.

Would you be okay with the new student loans be given out based on default risk? For example based of GPA, SAT, major?

Absolutely, and tuition could also vary accordingly. It would happen naturally if the system was allowed to self correct.

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