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by johnm1019 2782 days ago
Then I guess I have a "fully developed adult brain" (whatever that is) and certainly couldn't fully understand all the effects of taking out a $120k loan to take a risk on a degree in a subject I don't know (by definition, otherwise why am I going to school for it?) - let alone long term risks and opportunity cost assessments.

I think it puts anyone looking to go to college and 'move up the ladder' in a very difficult position.
1 comments
Jagat 2782 days ago
Honest question. Why doesn't the lender require the borrower to explain how they plan to repay?

Or why do they continue to lend large amounts for degrees where there's a low probability of getting a good salary after graduation.

Or does the govt assume the risk of student loan defaults?

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jniedrauer 2782 days ago
Student loan debt can't be discharged by bankruptcy. Lending in this situation is decently low risk. You're basically rent seeking with humans instead of land. Once you've got one, you can siphon off their excess productivity for decades. You'll get your money back in the long run.
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dragonwriter 2782 days ago
> Student loan debt can't be discharged by bankruptcy.

Yes it can, though it is more difficult to do so than it is for other unsecured debt.

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mikestew 2782 days ago
Why doesn't the lender require the borrower to explain how they plan to repay?

No lender ever asks that. Lenders ask themselves, "how will I be repayed? And in the case of default?" In most cases, the answers are "by the borrower" and "take the house or car, the sale of which will offset some of the loss".

In the case of student loans, the answer to the second question is "the U. S. government will pay it, in cash". There is zero incentive to determine how the borrower will repay.

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dragonwriter 2782 days ago
> In the case of student loans, the answer to the second question is "the U. S. government will pay it, in cash".

No, it's not. While private student loans are still offered (sometimes, by predatory scammy for-profit schools themselves), none of them for quite a few years have been government guaranteed.

The former government guaranteed loan program has for some time had exactly one lender by law, the federal government itself.

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Gibbon1 2782 days ago
> No lender ever asks that.

I just bought a house and you're utterly wrong.

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