Why can't student loans be dismissed through bankrupcy

[Just kiss me]

yea I was wondering why? mortgage, collections and all other debts are forgiven when you file for bankrupcy but not student loans why? why are they so special? What if you realize after 2 years of med school medicine is not for you you already have 2 years of student loans to pay off, I used to tell myself if that happens I will just file for bankrupcy but I just found out bankrupcy doesn't cover student loans

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[doapplicant2015]

Because of exactly what you just said. How many students coming out of college or grad school have no assets to worry about and will just declare BK, leaving the lender SOL. You game the system and you will get gamed right back.

Also, and not to pick on you OP, but your rationale is one of the reasons we continue to find ourselves in financial distress as a country. You're an adult, take responsibility, it's not the governments fault you took out $100k of loans and "medicine isn't for you"

 

[Just kiss me]

Because of exactly what you just said. How many students coming out of college or grad school have no assets to worry about and will just declare BK, leaving the lender SOL. You game the system and you will get gamed right back.

Also, and not to pick on you OP, but your rationale is one of the reasons we continue to find ourselves in financial distress as a country. You're an adult, take responsibility, it's not the governments fault you took out $100k of loans and "medicine isn't for you"

What if you never graduate?

 

[doapplicant2015]

What if you never graduate?

Then I guess you don't get a diploma

 

[Just kiss me]

Then I guess you don't get a diploma

yea but my point is why should you have to pay the loans back if you didn't graduate.

 

[PreciousHamburgers]

yea but my point is why should you have to pay the loans back if you didn't graduate.

You still have to pay for the appetizer and entree, even if you didn't order dessert.

 

[doapplicant2015]

yea but my point is why should you have to pay the loans back if you didn't graduate.

You paying tuition and you passing your classes/continuing school/whatever are two separate occurrences. You aren't getting loan money to graduate, you are getting loan money to pay tuition.

 

[MrLogan13]

yea but my point is why should you have to pay the loans back if you didn't graduate.

Because you borrowed the money.

 

[ridethecliche]

Thems the rules.

Everyone saying that it's because you borrowed money etc, have no idea what they're talking about because other kinds of debt can be 'forgiven' in bankruptcy. It's a way for banks and the government to make money, plain and simple.

 

[Just kiss me]

That is so unfair, how would you get a job to pay back if you don't graduate? the plan when you borrow is that you graduate get a good paying job and pay back the loan, but what if it doesn't happen? it's unfair.

 

[PreciousHamburgers]

It would be too much of a risk for banks to lend money for Student Loans if there was the possibility of the borrower declaring bankruptcy. They would be too afraid of losing money, and rightfully so, since the borrowers have no collateral or even a job. The government would have to guarantee they would be reimbursed.

 

[PreciousHamburgers]

That is so unfair, how would you get a job to pay back if you don't graduate? the plan when you borrow is that you graduate get a good paying job and pay back the loan, but what if it doesn't happen? it's unfair.

Contact your congressman and senator.

 

[doapplicant2015]

Thems the rules.

Everyone saying that it's because you borrowed money etc, have no idea what they're talking about because other kinds of debt can be 'forgiven' in bankruptcy. It's a way for banks and the government to make money, plain and simple.

Do you think they loan money for free? Other kinds of debt can be forgiven because you have assets that can be seized..student debt cannot be forgiven because there will be an epidemic of bankrupt students with no collateral. They offer their services (loan you money) and you pay for them (pay interest), the only difference between a mortgage and a student loan is that the bank can't auction off your years of medical education to make up for your default. Not sure what you don't understand here

 

[MrLogan13]

Thems the rules.

Everyone saying that it's because you borrowed money etc, have no idea what they're talking about because other kinds of debt can be 'forgiven' in bankruptcy. It's a way for banks and the government to make money, plain and simple.

I understand that, but I think the post is generating snarky comments because of the scenario presented by the OP: I changed my mind about med school, I'm going to drop out, and I want my debt forgiven. That's very different from a scenario most people would consider justifiable for having a debt discharged.

 

[Just kiss me]

I understand that, but I think the post is generating snarky comments because of the scenario presented by the OP: I changed my mind about med school, I'm going to drop out, and I want my debt forgiven. That's very different from a scenario most people would consider justifiable for having a debt discharged.

Not really, it could be as a result of failure, I'm not planning to fail but what if med school ends up being too hard I don't know I'm just exploring all the options I would have.

 

[cidem2065]

That is so unfair, how would you get a job to pay back if you don't graduate? the plan when you borrow is that you graduate get a good paying job and pay back the loan, but what if it doesn't happen? it's unfair.

No it's perfectly fair. You made a conscious decision to borrow money from someone and now you owe them. You don't need to graduate to get a job that pays you the money you owe.

P.S. Remind me to never, ever lend you money.

 

[ridethecliche]

Do you think they loan money for free? Other kinds of debt can be forgiven because you have assets that can be seized..student debt cannot be forgiven because there will be an epidemic of bankrupt students with no collateral. They offer their services (loan you money) and you pay for them (pay interest), the only difference between a mortgage and a student loan is that the bank can't auction off your years of medical education to make up for your default. Not sure what you don't understand here

Frankly, I don't care about the OP's scenario, but mortgage rates and auto loan rates are lower than student loan rates and can be absolved. I'm pretty sure those post bubble burst houses and old cars have a great return on investment when seized and auctioned off.

Loans, especially federal loans, are a joke. The response to the federal government raising limits on student loans was an increase in tuition/fees.

Edit: The OP's scenario is stupid. If you don't want to study, don't go to med school.

 

[wolfley]

That is so unfair, how would you get a job to pay back if you don't graduate? the plan when you borrow is that you graduate get a good paying job and pay back the loan, but what if it doesn't happen? it's unfair.

if that doesn't happen the student still has options. for example, my best friend graduated undergrad with a lot of student loans due to parents making a high income but refusing to pay anything towards his college. he graduated with around $70,000 and doesn't have a high paying job right now. he does the income based repayment plan. the government has things like that in place to help students with a lot of student debt who don't currently have high paying jobs.

 

[cidem2065]

Loans, especially federal loans, are a joke. The response to the federal government raising limits on student loans was an increase in tuition/fees.

Edit: The OP's scenario is stupid. If you don't want to study, don't go to med school.

And now every university out there has built state of the art new dorms and student centers for the purpose of competing with every other school courtesy of our tax dollars. It's an arms race at our expense.

 

[MrLogan13]

Loans, especially federal loans, are a joke. The response to the federal government raising limits on student loans was an increase in tuition/fees.

Edit: The OP's scenario is stupid. If you don't want to study, don't go to med school.

This is something I'll agree with you here. The advent of easy federal aid and loans has caused an increase in tuition that is based largely in part to the ease of access to money rather than a real market force.

I think there's too much emphasis on "everyone should go to college." College isn't for everyone, and it's okay to learn a skill and trade through technical training. I think that's more beneficial to a larger portion of the population.

 

[Just kiss me]

No it's perfectly fair. You made a conscious decision to borrow money from someone and now you owe them. You don't need to graduate to get a job that pays you the money you owe.

P.S. Remind me to never, ever lend you money.

How are they expecting people who didn't graduate to pay back?

 

[cidem2065]

How are they expecting people who didn't graduate to pay back?

Get a job.

 

[jl lin]

That is so unfair, how would you get a job to pay back if you don't graduate? the plan when you borrow is that you graduate get a good paying job and pay back the loan, but what if it doesn't happen? it's unfair.

There are NO guarantees. Life lesson no. 1. At least not when it comes to everything going your way in life. You have to be reasonably sure you are up to the task at hand and do well and get through. And when you are done, you still have to keep proving yourself to succeed. You never heard the expression, "Yesterday a hero. Today a zero." It means you have to keep on top of your game--only exceptions are severe tragedies and illness. And even then, you have to go through special challenges re: dealing with the student loans.

 

[doapplicant2015]

Frankly, I don't care about the OP's scenario, but mortgage rates and auto loan rates are lower than student loan rates and can be absolved. I'm pretty sure those post bubble burst houses and old cars have a great return on investment when seized and auctioned off.

Loans, especially federal loans, are a joke. The response to the federal government raising limits on student loans was an increase in tuition/fees.

Edit: The OP's scenario is stupid. If you don't want to study, don't go to med school.

I'm not going to argue with you because I agree, but student loans are inherently more risky than a mortgage and will command higher interest. As long as there is demand, there will be supply.

Think long and hard before you sign those papers. Student loan, mortgage or otherwise.

 

[Just kiss me]

if you just get a regular job to pay off 2 years of med school debt you will never finish ever ever, and you will be broke your entire life, not counting the under grad loans on top of the med school loans.

 

[doapplicant2015]

if you just get a regular job to pay off 2 years of med school debt you will never finish ever ever, and you will be broke your entire life, not counting the under grad loans on top of the med school loans.

Correct

 

[Old&InTheWay]

That is so unfair, how would you get a job to pay back if you don't graduate? the plan when you borrow is that you graduate get a good paying job and pay back the loan, but what if it doesn't happen? it's unfair.

How are they expecting people who didn't graduate to pay back?

I'm not trying to be unkind, but you sound really entitled. I personally do not think it's "unfair" for you to be required to repay money that you agreed to borrow, but who told you life is fair anyway? Also, who is "they"? And why should "they" care how you pay them back? Would it be fair to "them" to take their money and not pay it back?

 

[Old&InTheWay]

if you just get a regular job to pay off 2 years of med school debt you will never finish ever ever, and you will be broke your entire life, not counting the under grad loans on top of the med school loans.

Correct

Not correct.

Income-based repayment options and loan forgiveness would allow you to pay 10-15% of your expendable income and have the remaining balance be forgiven in 25 years (or 10 if you work for a non-profit).

 

[Just kiss me]

I'm not trying to be unkind, but you sound really entitled. I personally do not think it's "unfair" for you to be required to repay money that you agreed to borrow, but who told you life is fair anyway? Also, who is "they"? And why should "they" care how you pay them back? Would it be fair to "them" to take their money and not pay it back?

debt forgiveness i was hoping

 

[Mr.Zero]

This why you have to be sure medical school is right for you, before you sign your name on the loan.

 

[el_duderino]

How on earth is it unfair for a person who loaned you money to expect you to pay it back?

Who should take the hit if you'd don't graduate if not you? The school? The lender? Why should they be out $100,000 because you failed out?

 

[el_duderino]

Also, unlike car loans and credit cards, student loans are not subject to credit checks. No bank will give you a car loan if you have terrible credit, but you can still get student loans.

 

[doapplicant2015]

Not correct.

Income-based repayment options and loan forgiveness would allow you to pay 10-15% of your expendable income and have the remaining balance be forgiven in 25 years (or 10 if you work for a non-profit).

I guess it depends on your definition

 

[cidem2065]

if you just get a regular job to pay off 2 years of med school debt you will never finish ever ever, and you will be broke your entire life, not counting the under grad loans on top of the med school loans.

This is absolutely false. Do you really think being a doctor is the only paying job out there? You don't even necessarily need a bachelor's degree for some high-paying jobs such as IT.

 

[Just kiss me]

How on earth is it unfair for a person who loaned you money to expect you to pay it back?

Who should take the hit if you'd don't graduate if not you? The school? The lender? Why should they be out $100,000 because you failed out?

I know but if other debts can be forgiven I was hoping student loans would be forgiven as well. It's disappointing.

 

[Just kiss me]

This is absolutely false. Do you really think being a doctor is the only paying job out there? You don't even necessarily need a bachelor's degree for some high-paying jobs such as IT.

More student loans to study IT? what if I fail? I'm not an IT person anyways.

 

[Old&InTheWay]

I guess it depends on your definition

Of what? The word "correct"?

 

[cidem2065]

More student loans to study IT? what if I fail? I'm not an IT person anyways.

No, and I'm not giving you instructions on what to do with your life as if you expect to fail and expect help. That was just an example and my point was that you don't need any additional student loans/education to get a high-paying job.

 

[ridethecliche]

Go away OP.

Or work through the political process to change things.

 

[Apollo1]

Not correct.

Income-based repayment options and loan forgiveness would allow you to pay 10-15% of your expendable income and have the remaining balance be forgiven in 25 years (or 10 if you work for a non-profit).

You forgot to include the tax hit you'd have to pay for the forgiven amount, which is usually due up-front.

 

[journalistdoingscience]

It sounds like you're really afraid of failing OP, work on your self confidence! If you work hard you will succeed. There are lots of resources out there for medical students. I know current students who have had to take time off, who failed exams and were given a second chance, and some who even had to remediate their first year but they're still going strong. As long as you end up at a school that will support you (and the vast majority of medical schools really do) then you'll be fine and won't have to worry about dropping out or filing bankruptcy or whatever this nonsense is.

 

[Just kiss me]

No, and I'm not giving you instructions on what to do with your life as if you expect to fail and expect help. That was just an example and my point was that you don't need any additional student loans/education to get a high-paying job.

it's funny how our society makes it look like going to college is the only way to get a good job in life. Harold Hamm is one of many billionaires with only a high school diploma. Now I wish I were his wife , I would have been a good one , I wouldn't have been greedy like his ex-wife who is appealing a one billion dollar divorce decree

 

[PreciousHamburgers]

it's funny how our society makes it look like going to college is the only way to get a good job in life. Harold Hamm is one of many billionaires with only a high school diploma. Now I wish I were his wife , I would have been a good one , I wouldn't have been greedy like his ex-wife who is appealing a one billion dollar divorce decree

She wasn't his obedient property. She was an attorney and helped him build that wealth. It isn't just his to give her. She deserves more.

 

[PlaqueBuster]

it's funny how our society makes it look like going to college is the only way to get a good job in life. Harold Hamm is one of many billionaires with only a high school diploma. Now I wish I were his wife , I would have been a good one , I wouldn't have been greedy like his ex-wife who is appealing a one billion dollar divorce decree

First of all, you have to earn a Bachelors to get an average job. You have to get higher education (PhD, MD, DO, PA, Masters) for a better paying job. Nothing is funny about it because there are lot more people applying to college hence why if you don't have the degree you won't be considered for jobs. The example you gave of Harold Hamm is an exception not the general trend.

 

[mimelim]

it's funny how our society makes it look like going to college is the only way to get a good job in life. Harold Hamm is one of many billionaires with only a high school diploma. Now I wish I were his wife , I would have been a good one , I wouldn't have been greedy like his ex-wife who is appealing a one billion dollar divorce decree

I don't think you know anything about Harold Hamm or his divorce based on this.

Also, the sense of entitlement in your posts is slightly sickening.

 

[TooMuchResearch]

Yeah. And if I buy a car in credit, then I crash the car and don't get to enjoy the benefits of reliable transportation, why do I still need to pay off the loan?

 

[NickNaylor]

I didn't read the rest of the thread, but a major impetus for this particular part of federal loans is because students in the past - most notably our medical colleagues (thanks!) - would declare bankruptcy and have their debt discharged. For physicians in particular this wasn't much of a problem, especially those going into fields with many years of training. The scheme would essentially look something like this:

-graduate from medical school
-declare bankruptcy, get most/all education loans discharged
-complete residency; at this point, you likely aren't going to be buying a house, buying a fancy new car, etc. which would require a decent credit history. During this time, you're counting down the 7-year limit on having that bankruptcy on your credit report.
-depending on the field, you finish residency/fellowship and have either surpassed that 7-year limit or only have a couple of years left before that limit is met
-congratulations, you're now making an attending salary - in the "golden age" of medicine no less - with no education debt

We have our predecessors to thank largely for this provision.

 

[Just kiss me]

Yeah. And if I buy a car in credit, then I crash the car and don't get to enjoy the benefits of reliable transportation, why do I still need to pay off the loan?

Insurance would replace the car.

 

[Just kiss me]

I didn't read the rest of the thread, but a major impetus for this particular part of federal loans is because students in the past - most notably our medical colleagues (thanks!) - would declare bankruptcy and have their debt discharged. For physicians in particular this wasn't much of a problem, especially those going into fields with many years of training. The scheme would essentially look something like this:

-graduate from medical school
-declare bankruptcy, get most/all education loans discharged
-complete residency; at this point, you likely aren't going to be buying a house, buying a fancy new car, etc. which would require a decent credit history. During this time, you're counting down the 7-year limit on having that bankruptcy on your credit report.
-depending on the field, you finish residency/fellowship and have either surpassed that 7-year limit or only have a couple of years left before that limit is met
-congratulations, you're now making an attending salary - in the "golden age" of medicine no less - with no education debt

We have our predecessors to thank largely for this provision.

I was referencing to a case where you didn't get to finish your education due to extenuating circumstances to qualify for a good paying job to reimburse the loans. There should be some sort of way for people in such circumstances to have the loans excused and discharged.

 

[NickNaylor]

I was referencing to a case where you didn't get to finish your education due to extenuating circumstances to qualify for a good paying job to reimburse the loans. There should be some sort of way for people in such circumstances to have the loans excused and discharged.

That's not how it works, as others have said. It's not the lender's business whether or not you graduated. That money still had to be used.