<p>What year was there a new law saying that all types of student loans are no longer dischargable after bankruptcy?</p>
<p>^I think it was called the Bankruptcy Reform Law of 2005.</p>
<p>Under this act, are they saying student loans canāt be discharged after 2005 or they are saying loans given after 2005 canāt be discharged? In other words, can a person who took out loans in 2004 discharge them if they file a bankruptcy now?</p>
<p>^I believe it applies to student loans incurred after passage of the new law, but Iām not positive.</p>
<p>I beleive the 2005 act changed the rules for banktuptcies after that date, regardless of when loan incurred. So much for not changing the rule after loan negotiated. Guess those protections only apply to banks. </p>
<p>Rules changed in 1998 for Govt Loans</p>
<p>Personal responsibility is a wonderful thing - but what about institutional responsibility? </p>
<p>I donāt think anyone wants an easy out for kids whoāve borrowed frivilously and want an easy exit when the bill comes due; but the tragic side of borrowing too much often comes from the first generation college student with less than stellar grades attending a school that has given more access to education than funding for it.</p>
<p>Truly the best solution is education for parents and students so that irresponsible decisions arenāt made in the first place, regardless of the opportunity to do so. However - this will be a long uphill battle after much of a generation has wallowed in debt and created many ripples of decline throughout our society. Experience is always the best teacher, so while we struggle to educate students of high school age to ignore the lovely college marketing and informational brochures that weāre holding in our other hand a lost generation of educated individuals will come into the work force (or the unemployment line as the case may be) and what should be a productive middle class will not only continue to errode at an ever increasing pace, it will be threatened with utter extinction.</p>
<p>We have to stop asking only the 18 year old to be responsible in his or her choices. Colleges need to do a better job of explaining their financial packages and the pitfalls of debt. I donāt see any reason that banks shouldnāt accurately asses the likelihood of repayment on private educational loans - not only in terms of parental assets and credit history, but what is the student getting a degree in and are they academically equipped to complete the course of study, what are the employment prospects, etc. etc. Banks are well staffed with actuaries and risk managment types - they need to better utilize these employees and accept their part of the risk.</p>
<p>So what about Credit Card debt ā the bank doesnt get anything back on that.</p>
<p>Thatās why the interest rates are so high. The credit card companies are making so much from the interest to compensate for any bankruptcies. </p>
<p>*On credit card debt the interest rates are much higher than on student loans, and the amount someone can borrow is much lower, until they have a good credit history. *</p>
<p>trueā¦you usually have to have a good income to qualify for large credit limits.</p>
<p>
ā They donāt have to be what they are. As a society, we collectively have a choice about the regulations we impose on entities that are critical to the countryās infrastructure, including banking, telecommunications, natural resource development and delivery and so on. Through our actions or INACTIONS, or general political cowardice, we choose NOT to impose the types of safeguarding regulations on core industries that other countries are perfectly comfortable regulating.</p>
<p>So you canāt really just say ācaveat emptor.ā If youāre not part of the solution, youāre part of the problem, right? Meaning, you have to be willing to say WE are the scorpion because we do not protect the prey in our society by regulation, and WE ARE ALL responsible for this deficit. Thatās the brass tacks (or tax 
) of it!</p>
<p>That said, I actually would not want to see student loans be discharged in bankruptcy, because Iām pretty sure it would be abused, and that others would suffer for it.</p>
<p>What Iād like to see is :
A) The abolition of Out of State tuition - complete intra-state reciprocity (But Umich could no longer afford to be Umich if that happened!)</p>
<p>B) Student loans funded and administered at expensive private schools but regulated by the government ā EG. MAKE THE PRIVATE SCHOOL CHARGING 40 K TUITION FINANCE AND RECOVER THE LOAN! AND CAP WHAT INTEREST THEY CHARGE ;)</p>
<p>C) In the case of private (and school-sponsored) loans, affording some of the same remedies as the government subsidized loans, such as scaling repayment amounts to income, partial interest reduction for public service, etc. Penalizing usury-level penalties and fees.</p>
<p>D) Make a rule that says SLns are 1% above prime. WHATEVER kind. (You will see banks immediately ratchet down the volume of SLoans, I suspect.)</p>
<p>Call me madcap, but I actually think a world like that could work ;)</p>
<p>Mom2, I would suggest that benefit of lower interest rates for student loans is so far outweighed by the excessive loans to many that it should be stopped. Our society can not afford this. </p>
<p>Here are the groups that support change of the bankruptcy law</p>
<p>ā¦National Association of Student Financial Aid Administrators
ā¦American Association of Collegiate Registrars and Admissions Officers
ā¦American Association of Community Colleges
ā¦American Association of State Colleges and Universities
ā¦American Association of University Women
ā¦American Council on Education
ā¦American Federation of Teachers
ā¦Campus Progress Action
ā¦Consumer Action
ā¦Consumer Federation of American
ā¦Consumer Watchdog
ā¦Demos: A Network for Ideas & Action
ā¦Empire Justice Center
ā¦The Greenlining Instutute
ā¦The Institute for College Access & Success
ā¦National Association for Equal Opportunity in Higher Education
ā¦National Assocation for College Admission Counseling
ā¦National Center for Public Policy and Higher Education
ā¦National Consumer Law Center
ā¦National Consumers League
ā¦National Council of La Raza
ā¦Rock the Vote
ā¦U.S. Public Interest Research Group
ā¦United Negro College Fund
ā¦United States Student Association</p>
<p>=======================</p>
<p>And here are the groups that oppose</p>
<p>ā¦American Bankers Association
ā¦Consumer Bankers Association
ā¦The Financial Services Roundtable</p>
<p>I know which side I am on.</p>
<p>bchan1ā¦I agree with you about trying to educate young people, and as I stated in all my posts I lay blame on all parties in this whole process - the loan takers, the loan makers, the universities that have increased college costs well in excess of the rate of inflation, state and federal governments (both parties bear responsibility hereā¦no partisanship allowed), etc. If High Schools around the country want to teach a class that truly has implications towards helping their students prepare for adulthoodā¦make it one that emphasizes personal finance issues in the real world (mortgages, insurance costs, auto loans, student loans, utility costs, credit card debt, etc.). While this āclassā ought to be taught by parents at home, maybe this would be a suitable alternative for those who donāt have the proper guidance at home. My bottom line point in all this was that of all the negligent parties in this mess - irresponsible lenders, irresponsbile universities, irresponsible government agencies - irresponsible borrowers are the one component that these folks had control over (i.e. themselves). As you may have guessed , it royally ticks me off when people play the āoh poor meā card over something that they brought on themselves. Weāve become a society that has been fed a line of crap from the Oprahs of the world that nothing is our own faultā¦thereās always somebody else to blame. I wish these people had more foresight before borrowing themselves into oblivion, but why do they deserve any special consideration or treatment? What about all the parents that borrowed within their limits and are financially stressed but making it work? Shouldnāt they get a bailout as well? Why do we continue to reward bad behavior in this country by putting the blame on āthe systemā instead of the individual? I agree with you that lending practices need to change, university financial practices (costs, FA policies, marketing) need to change, governmental roles in higher education need to change. But paying for college should first and foremost be a parental responsibilityā¦and that has become lost in the huge increase of college costs and the glitz and glamor of attending a ānameā institution. At no point in history has everyone been able to or deserved to attend the USNWR elite, nor should they aspire to. The value and quality of education at ānon-nameā universities has been underestimated and often denigratedā¦and too many people have bought into the hype. As parents we should do everything we can to save and prepare for our childrenās college costs, but when the time comes send your child to the ābest fitā school for them that you/they can afford. If thatās the local college or the State U down the roadā¦then so be it. You do them no favors by burying yourselves in debt to obtain what (in most cases) is probably only a marginally better educational experience. As many others have posted in various threadsā¦itās not where you get the diploma from itās what you do with it that matters. Now whether or not all that will fit into a 1/2 credit HS class or notā¦?</p>
<p>^^^ I bet you have some good points, but, honestly - Iām just not going to muddle through a wall of text like that. Please break your posts into paragraphs.</p>
<p>I agree with breaking your posts into paragraphs.</p>
<p>kmcmom13ā¦āIf youāre not part of the solution, youāre part of the problem, right?ā</p>
<p>Oddly enough, I was going to make that same argument about the folks that want some method (after the fact of course) to forgive the irresponsible loans that some people took. Youāve got some great ideas for proposed ways to change the system, and I stated in all my posts that I agree 100% that the system needs to change. I donāt condone anyoneās behavior in this mess, but I wonāt take pity on people who make irresponsible decisions that they didnāt have to make. If some would call me Scrooge for thatā¦then bah humbug!! I prefer to call it social and personal responsbility. Tomatoā¦Tomahtoā¦</p>
<p>kayfā¦Of course any entity associated with higher education wants the bankruptcy laws changed backā¦because keeping these loans from being discharged with the current cost structure is an untenable situation. Theyāre pricing the middle class out of affordability for college and they donāt want to see their gravy train come to an end. If massive student debt is allowed to be discharged again it will once again start the abuse of the system that drove the change in the law in the first place. It stinks to be trying to send children to college as things stand now, but the only way things are likely to change (unfortunately) is when the bubble bursts. I hope that doesnāt happen, but weāll just have to wait and see. And being opposed to the āuniversity sideā of this argument certainly doesnāt mean Iām aligned with the banking side of it. Iām on the third teamā¦the āYouāre Both Wrong and Weāre Caught in the Middleā team. A little wordy maybeā¦but appropriate</p>
<p>chaos and notrichā¦Sorry about the long post. I wasnāt intending it to be so long, but the more I typed the more ticked I got. Hard to believe I know.</p>
<p>You totally fail to see that there wonāt be abuse of the system because the banks wonāt make those loans anymore.</p>
<p>And if they do, thatās the BANKāS FAULT for being an IRRESPONSIBLE LENDER.</p>
<p>Wolverine, I donāt want loans foregiven. Bankuptcy is not a good result, imho. I want banks to stop making irresponsible loans. All the people who talk about kids having some skin in the game, how about banks having some skin in the game?</p>
<p>kayf and polarscribeā¦Again, how is it the bankās fault for doing exactly what theyāre in the business of doingā¦making money? Can the rules (interest rates, caps on amounts, etc.) be changed to somewhat protect the consumersā¦absolutely!! But irresponsible loans CANNOT be made unless irresponsible consumers sign on the dotted line. We all agree (I think) that all sides in this bear some of the blame, but there are plenty of responsible parents who didnāt bury their families in debt to pay for college. How did they manage to avoid the pitfalls if the system is so rigged? Common sense.</p>
<p>Wolverine</p>
<p>Some parents are more astute than others. That doesnt mean kids should get taken. The big winners in the system are banks and colleges. Mostly for-profit, but not all. We have plenty of laws on books to protect people. What you keep ignoring is that the banks won an exception to general BK rules. You keep saying banks have some responsiblity, yet they dont bear any burden. Education hasnt helped.</p>
<p>Wolverine, </p>
<p>I donāt think you quite understand the other side of the argument. If the loans cannot be discharged under any circumstances, there is absolutely no risk to the banks at all to make as many loans as they can, to as many people as they can find, for as much as they can get them to agree to. And yes, the banks make money doing that. They are in business to make money but the current system stacks the deck on their side, and actually incents them to recruit irresponsible borrowers. Who is that benefitting?</p>
<p>I think the current model works like this - the bankās risk management and actuarial types spend their efforts figuring out how many impractical loans they can make, and at how high a dollar limit, and still come out ahead when the folks signing on the dotted line either 1)die before they pay up 2)disappear into the wilderness and live off the grid for the rest of their lives because they canāt pay 3)struggle in poverty with suffiicient fortitude to keep the bank in the black. These same numerically gifted types could be better employed determining the feasibility of a given loan - just as they do in all other loan situations.</p>
<p>There would not be hoardes of students in the bankruptcy courts at age 22 because they wouldnāt have convincing evidence of a need for debt discharge - silly loans for unreasonable amounts would no longer be made.</p>
<p>The ripple effect in such a world would mean that many fewer students would spend their senior year cranking out 20+ applications and colleges would have to take a serious look at what they charge and how to fund their programs apart from using undergraduate tuition to support a system that isnāt always focused on the welfare of the undergraduate the way the glossy brochures make it seem that they will be.</p>