Hacker News Reader

Comment by dragonwriter | Hacker News Reader

> Limit the federal education loan guarantee to 15k per year.

> Presto. Watch education prices drop like a rock

Why would raising the limit have that effect?

The limit for federally guaranteed loans (which are also, for nearly a decade, exclusively federal direct loans) is already $57,500 total for undergraduate education, and the maximim per year limit (it is lower for dependent students) is $9,500 for first-year students, $10,500 for second-year students, and $12,500 per year thereafter.

https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsid...

View on HN

I'm guessing the poster is actually proposing changes that would allow the portion of student loan debt above 15k per year to be dischargeable in bankruptcy.

More or less. I actually think that the debt above 15k (or whatever) should be shifted back to the school, should the graduate be (provably) unable to pay it back in 10 years. ;)

> I actually think that the debt above 15k (or whatever) should be shifted back to the school

Shifted back to the school, not the lender? Or are you assuming that the school is the lender?

I think he meant "the school must pay back the lender if the student can't pay back the loan after ten years"

I.e., our institutions of higher education should be forced to bail out our banks when the banks issue risky loans that don't pan out. This is definitely good idea because divorcing banks from the downsides of their risky loans has worked out so well this century /s

Yes. Apparently I'm having trouble writing today.

My rebuttal was probably a bit too sassy. Sorry.

I agree with the idea that higher ed should have "skin in the game", which is I think what you're trying to find mechanisms to achieve?

But I think the best way to achieve our overall goals (affordable and appropriately accessible higher education) is to force it to be democratically accountable by publicly funding nearly all higher education (maybe except $300 or $500 a semester just to force some "skin in the game" from students).

The "appropriately accessible" part is what makes this so difficult. The highly educated and deservedly successful petite bourgeoisie is going to have a tough time hearing that their second child who needed multiple tries to make it through "College" Algebra and could never make it through even a ridiculously watered-down Calc I course don't belong in universities at all...

Thanks for the correction. Is there not some kind of government guarantee underlying the massive student loans the press runs stories about? I thought that student debt was in a special class, where it could not be easily discharged (and was backed by government guarantees).

> Is there not some kind of government guarantee underlying the massive student loans the press runs stories about?

Yes, the vast majority of that is federal debt or federally-guaranteed debt originating before the issuance of federally-guaranteed debt was restricted tomthe federal government, but the $15k annual limit proposed is above the limit for such debt.

> I thought that student debt was in a special class, where it could not be easily discharged

There is a higher bar for discharging student debt than other unsecured debt in bankruptcy, yes.

But debt subject to that but not subject to the limit on federally guaranteed loans isn't a big share of the problem (nonfederal private student loan debt is less than 5% of outstanding student debt—$64 billion compared to $1.5 trillion in federal/federally-guaranteed student loan debt [0]), so there's not a lot of reason to believe a policy change that would limit the applicability of the restriction against discharge to a level higher than the limit on federally guaranteed loans would have a noticeable effect on the overall problem. It would further push private lenders out of the student loan market, but they aren't a big factor anyway.

> (and was backed by government guarantees).

Yes, most student debt is backed by government guarantees, but isn't in excess of $15k/student-year for undergraduate education.

[0] https://www.nerdwallet.com/blog/loans/student-loans/student-...

Reply on news.ycombinator.com