<p>From today's NY Times</p>
<p>The comments to this story include many truly sad ones. It is time to change bankruptcy laws.</p>
<p>This story is also available on MSNBC for those who can’t access the NY Times site.</p>
<p>I am having trouble trying to copy the link. Can anyone help?</p>
<p>Link at MSNBC</p>
<p>[NYT:</a> Grads squeezed by student loan burden - Business - U.S. business - The New York Times - msnbc.com](<a href=“http://www.msnbc.msn.com/id/42550787/ns/business-us_business/]NYT:”>http://www.msnbc.msn.com/id/42550787/ns/business-us_business/)</p>
<p>If a change happens in regards to bankruptcy, it would have to be with future loans, not current ones. The current loans were given under the rules that the debt couldn’t be forgiven, so the approval process was different.</p>
<p>I feel I need to ask: If tuition loans were dischargable in bankrupty, how many kids would not hesitate at all to take out loans for their entire pricey private school tuition and then declare bankrupty when they graduate. It’s a disaster waiting to happen</p>
<p>@3bm103 - yes, I believe that’s why the rule was put into place. Years ago, many students just walked away from student loans and the press/public were outraged. If we change back, that will surely happen again.</p>
<p>The borrowers are supposed to limit these loans to amounts they can repay. I think the main problem is, they are not doing it.</p>
<p>3bm103 – Before the BK act of 2005, the law was that private loans were dischargeable. It worked fine, imho. The bankruptcy law in general limits the ability to get loans discharged. </p>
<p>Mom 2 – I dont know what would happen. The Obama administration forced out GM creditors in favor of workers. How was that legal, to retroactively redo stuff.</p>
<p>WhydoI care – how about the lenders and particularly the private schools being responsible?</p>
<p>*I feel I need to ask: If tuition loans were dischargable in bankrupty, how many kids would not hesitate at all to take out loans for their entire pricey private school tuition and then declare bankrupty when they graduate. It’s a disaster waiting to happen *</p>
<p>This is true.</p>
<p>And, also, those large loans require co-signers, so the co-signer would also have to agree to declare bankruptcy…and many parents aren’t going to do that.</p>
<p>Mom, if you read all the responses in the times, there are parents who have guaranteed loans and are in deep financial trouble. Worried about their Social Security been levied agaisnt. This is a nightmare coming for the entire country.</p>
<p>So, let’s see:</p>
<ul>
<li><p>The kid taking out the loans should not be responsible (because everyone is entitled to attend their dream college - and not, God forbid, the local CC for a couple of years)</p></li>
<li><p>The parents who cosigned those loans should not be responsible (who should certainly have some financial sense and should realize that their retirement is looming)</p></li>
<li><p>The lenders who give out loans to anyone with a pulse should not be responsible (who know very well that the loan amounts they give out are ridiculously high) </p></li>
</ul>
<p>But the taxpayers, many of whom denied their own children’s dream college due to cost, should be responsible? We all know that those bankruptcy costs will ultimately be passed on to the taxpayer (in cases of government loans) or the consumer (in cases of private loans).</p>
<p>I’m really getting tired of paying for other people’s irresponsible choices.</p>
<p>Horsefeather, I agree with you, that the taxpayers should not be left holding the bag. But unless changes are made now, that will happen. IMHO. No one is suggesting that govt loans be dischargeable; that has been the law for many many years. Govt loans are restricted to reasonable amounts, reasonable interest. What do you think is going to happen when the borrowers are on social security and still can not pay their private loans? Do you think your children and mine will not be bailing them out? Dream on.</p>
<p>@kayf - I think the private lenders should go out of business if they make bad loans. The schools, we can’t expect much from. It would be like asking car salesmen and real estate agents to be responsible if their customers borrow too much. Caveat emptor.</p>
<p>For all the threads and posts on CC advising students and parents to be careful with debt, there are even more advising them to follow the dream, elite private is better than a good in-state school, a college education pays for itself, small differences in ranking are important, so on and so forth. There was even a professor (possibly biased?) quoted in your subject article, to the effect that college debt is “good debt” and this isn’t really a problem, so keep on borrowing.</p>
<p>People have to make their own choices and live with it. Parent co-signers, in particular, have to be smarter about it. I know kids and parents right close to home on the verge of making huge mistakes, and feel bad about it, but can I fix it? Nope. They’ve been making dumb choices their whole adult lives. They won’t listen now … not to me or anyone else … why do I (as part of the general public) have to bail them out later?</p>
<p>I guess we could change the rules back. But that would affect interest rates and access to funds, right?</p>
<p>Kayf, people who saved for retirement will be bailing out those who did not save, college loans or not. The only money left in this country is in retirement accounts. The rest of the country - from private citizens to local and state governments to the federal government - is in hock. Where else will the money come from, other than to take it (tax) the people who have been saving for years?</p>
<p>Making college loans dischargeable in bankruptcy will make debt even more attractive. If we want to discourage irresponsible borrowing/lending, we would have to severely limit the amount any student can borrow (regardless of whether the parents co-sign or not). For any student to come out of their undergraduate years with a six-figure debt is ridiculous. In almost all cases, there are affordable alternatives. Why should others have to pay because the students/parents don’t like those alternatives?</p>
<p>Of course, this is unlikely to happen. With society (and Obama) telling everybody to go to college, regardless of whether they’re suited for it or whether there will be jobs afterwards, it’s unlikely that the money supply will be limited anytime soon.</p>
<p>Making private loans dischargeable will, imho, cut down on predatory lending. Its not fair to pit banks against uneducated people. Yes, I agree, Obama is in the pocket of the bankers, and this is not going to stop.</p>
<p>In my grandparents and parents age people were less educated than they are now yet they had enough common sense to know not to spend money they didn’t have. People saved until they could afford to pay in full for the new car or the new sofa or the new tractor.</p>
<p>Today with the amount of education most adults have (certainly more than the 6th/8th grade level many elderly people had) there is no excuse for falling for the “dream school” mentality and co-signing outrageous loans for their kids.</p>
<p>Nothing in this country is going to change until people are willing to live within their means. For many it also means having the self discipline to say no. No to their kids and no to lenders who are willing to offer them money.</p>
<p>I feel bad for people who got caught up in the excitement and made an unfortunate decision but that doesn’t mean the govt or anyone else should be bailing them out.</p>
<p>When I was in college, banks and colleges did not aggressively push this stuff. I dont want bailouts, I want to prevent them. They way to do that, imho, is to stop encouraging predatory lending.</p>
<p>“For all the threads and posts on CC advising students and parents to be careful with debt, there are even more advising them to follow the dream, elite private is better than a good in-state school, a college education pays for itself, small differences in ranking are important, so on and so forth.”</p>
<p>It don’t agree with this statement. When I first joined, the spenders were running three or four to one against the savers. If you eliminate things obviously written by students, I’d say right now savers are well ahead of spenders I’ve only seen one adult this year who was willing to come out and say “Spend the money kid” and even that one quickly added a comment along the line of “if you can afford to”. For sheer spendthrift exuberance, and vituperation against the savers, nothing this year can compare to the early commentary in <a href=“http://talk.collegeconfidential.com/parents-forum/148852-what-ive-learned-about-full-ride-scholarships.html[/url]”>http://talk.collegeconfidential.com/parents-forum/148852-what-ive-learned-about-full-ride-scholarships.html</a></p>
<p>The best way to stop predatory lending is for people to live within their means. If there is no one to lend to, the predators won’t be able to practice predatory lending. There is a sucker born every minute, as the saying goes. There will always be people ready to capitalize on that fact. I don’t mean to say people shouldn’t borrow, of course. But they should do so responsibly, understanding the true costs & the reality of paying it back.</p>
<p>We would be far better off concentrating on raising citizens who understand how money works. I would like to never hear, “I want the kind of loan I don’t have to pay back” again. We teach our kids a lot of things in school … how about adding in something incredibly important … fiscal responsibility???</p>
<p>You have no idea how many students have NO CLUE how much they have borrowed.</p>
<p>I think a better way to stop inappropriate lending is for schools to stop putting private loans on finaid statements. How about colleges acting ethically? Maybe putting parent/family contribution, with an asterick and a footnote that this amount can be borrowed, but frequently is not adviseable.</p>
<p>I think the most educated people should take the lead in trying to stop excessive lending.</p>