[ClumsyPilot]

"loans can be discharged in bankruptcy."

To me the idea that in a 'free country' today you cannot clear your debts through bancrupcy sounds crazy, it's a practice that belongs in history books along with debtor prisons, bondage, endentured servitude, feudalism, having public holiday 'execution day' and slavery.

In the UK we used execute people for vagrancy.

[timavr]

For starters there are two types of loans in the system, federal(92%) and private(8%).

Federal is less of a loan, but more a subsidy that you have to repay at later date if you can. There is no market mechanism involved, government sets the terms and rules. Overall if you have your shit together(push paperwork on time), it is nearly impossible to default on that type of a loan. So for all intense and purposes, those loans are just another hidden tax.

The benefits of this system is arguable, but for America where people hate to pay taxes and government needs to put people through college, this is not a bad option.

But... There are two massive problems in the system, private loans and the way colleges charge for education. First a lot of colleges are free to set fees any way they like, as a result in many cases federal loans are not enough and people are forced to take private loans. The problem with private loans, that they are completely market driven(higher, fees, higher costs, depends on your assets etc), but you can't get rid off them via bankruptcy which is absolutely nuts.

Overall the whole system regardless of country is very unfair and regressive in nature(poor people pay more then rich) and represents an example of broken social contract between government and its citizens. As student debt skyrockets, it also impacts the broader economy and forces people to go into debt to pay day to day expenses.

But maybe it is all by design. It is much easier to control people if they are in debt very early on in live vs debt free.

[disgruntledphd2]

In order for modern society to keep working you need those people to get into mortgage debt, as that's (combined with children) the most effective way to keep people employed.

Even from the mustache-twirling evil perspective, it doesn't make a lot of sense to burden people with debt before they have even started to earn money to repay it.

[cat199]

good points.

being 'that guy' and pointing out that it's not:

> intense and purposes

but 'intents and purposes'.

a common eggcorn.

[koolba]

The argument for it is that without it a graduate with a large balance could default on their loan immediately after graduation. The classic example being a surgeon getting hundreds of thousands in loans for medical school, and then skipping out on paying them back when they begin making bank as a doctor.

[raverbashing]

Yes and it's a BS argument, because going through bankruptcy is not something to be taken lightly or something that you can "just do", because it's not only about "you owe X" but how well can you service your debt.

Of course this argument was an excuse to inflate education prices and make lenders more interest as well.

[istjohn]

I'm honestly curious why this isn't a problem in the UK. What are we missing?

[lawtalkinghuman]

Historically, it is because UK government-backed student loans (for English students: no student fees in Scotland after all) are (a) low-interest, (b) only repayable on money earned above a particular salary threshold, and (c) automatically gets written off eventually after a specified period (was 25 years, now 30 years).

(a) is arguably not really true anymore (given some graduates are paying 5% interest), but (b) is even more true now than it was under the old (Plan 1) scheme because the salary threshold is now £27,295 (compared to the old one of £19,985).

[alasdair_]

When I went to university in the UK for CS (20 years ago), my total student loan debt was close to zero. Indeed, they gave me money to study.

Even now, the cost for something like a medical degree is negligible compared to the USA where $400K for medical school and undergraduate is not unheard of. (A medical degree is an undergraduate degree in the UK)

[lmm]

UK student "loans" aren't dischargeable in bankruptcy either - legally they're a tax rather than a loan.

[reitanuki]

Thank you! A lot of people seem totally incapable of grasping the fact that it's more of a tax rather than a loan. I'm glad it's not just me who has remarked this — I've been very unsuccessful in explaining it to people who shudder at it and treat it as any other loan...

[dragonwriter]

It’s not a problem anywhere, it was just an excuse for a handout to the financial industry in 2005.

[peteretep]

I note this is the case in the UK too tho: https://www.citizensadvice.org.uk/debt-and-money/debt-soluti...

[AdrianB1]

In my country personal bankruptcy does not exist, never did. For us the idea that in a 'free country' one can take a loan and declare bankruptcy not to pay it back sounds crazy. This is evidence of cultural differences, nothing else - definitely not 'free country' or education.