Why can't student loans be dismissed through bankrupcy
Started by Just kiss me
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Compassion is a tricky thing. While each individual SHOULD seek to become as compassionate as they can, at the same time they have no right (or ability) to dictate how compassionate others should be. If we EXPECT others to show compassion to us, that's where we enter a state of entitlement. So we have to just focus on how much compassion WE can provide. And one of the hard parts of compassion is to look at the big picture and realize we need to help as many people as possible, especially beyond ourselves. A prime example is in our future line of work. We may want to do everything to save a single patient including ordering hundreds of thousands of dollars of tests and procedures is order to be 'compassionate'. But if those same resources and money could have saved ten, twenty, or even a hundred other patients instead, are we truly being compassionate? Is saving that one patient versus a hundred compassion or ego? In reality, money and resources are finite. When we use it on one end, we inevitably take it from the other. In the world of money, if banks operated with 'compassion' as you define it, with the high probability that a portion of society would take advantage of the system, the banking and loan system would undeniably fail. Then nobody would be able to take out loans and buy a house or car or afford an advanced education unless they already had that much money stashed away. So by acting 'compassionately' in order to help out a few, the system would most likely crash at the expense of the many.
If I don't graduate then I didn't benefit from the education right?
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If you really believe that, I genuinely weep for you.
This thread is borderline crazy. OP what kind of world do you think we live in? The only reason you even have a chance to get that education is because the government gave you those loans. Now you say that they should just forget about it, even when they gave you the benefit of the doubt and signed your tuition checks? Just because you have not figured out a way to pay them back? That is not how anything works in the world. If you think that car and mortgage default is better because its "forgiven," then idk what to say. It appears you see becoming bankrupt and losing your house/car and becoming homeless is equivalent to just wiping out student loans and forgetting they existed. Who is supposed to pay those loans back? The tax payers? Money just doesn't dissapear like it was never there. I understand having fear but looking for loopholes already as if you have already failed is really somthing else. It's a tough world out there and there are 370 million other people in this country living in it, the rules are the same.
Rant over.
Rant over.
Ok I will be positive and pray nothing happens to me that will me me reconsider wi
Ok fine I understand. I pray everything goes well and I never have to consider withdrawal again.
No. Your insurance policy will give you the value of your vehicle, which may only cover the loan you have on the vehicle.
Student loans CAN be discharged through bankruptcy; however, it is hard to do so and you must prove that repayment of the debt would constitute an "undue hardship" on you and your dependents. Since the Bankruptcy Code does not define this term, courts have done so through case law. Most rely on the Brunner test. Google it. This is a hard standard to meet. So if you go through medical school and can never pass the USMLE or find residency, bankruptcy might be an option. Case law exists granting discharges of student loan debt to law school graduates who fail the bar exam 3-5 times. Medical school wouldn't be treated any differently.
Oh and PS - federal student loans are guaranteed by the government, so naturally, they are going to make it harder to avoid paying, much like income tax debt.
I meant in case I fail my exams in medical school and have to withdraw because of poor academic performance.
I was on academic probation in undergrad and had to withdraw because I was failing almost all my exams. But I was lucky I was able to go back and remediate those grades a couple of years later, if I have to withdraw from medical school because of academic performance no other medical school will ever take me back and i will be stuck with all these loans.
If it was beyond your control and you were straddled with 6 figures of debt and only working at McDonald's, then it is possible that you would at least get a partial discharge. Keep in mind that the Brunner test requires good faith attempts to repay the debt, which would mean IBR and other relief programs first.
Edited: My advice is to make sure you can handle medical school before committing large sums of money/debt.
How is that anyone's fault but your own?
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No, it's not my fault if I lose a significant other to death or if I have to have surgery for a bad medical condition or if I get burnt out or if I get depressed or if life just happens I don't know.
I'd just work my butt off for the 4 years and get a well paying job as an MD instead of being excessively broke due to loans if at all possible. Don't just call it quits.
Okay, have to chime in in favor of bankruptcy.
Most of the arguments here are arguments against bankruptcy IN GENERAL. Fine, okay, but bankruptcy performs a necessary public policy function, and economists agree, if regulated, it is a net plus for everyone. We do not want to live in a society where mistakes, acts of god, and failure are punished by a lifetime of servitude. It is better for everyone, if people can unburden themselves from debt.
Also, to put it into perspective, the reason many many people are defaulting on their student loans is due to the job market after the financial crisis caused by . . . you guessed it, financial lenders!
These financial lenders got bailed out, remember, because it was allegedly necessary to keep the economy running.
Well, same goes for student loans. When the entire workforce is completely saddled with student loans, without being able to secure employment to pay them off, it is a huge drag on the economy, and a bail out might be in order.
Personally, I'm for relaxing the rules on discharging debt instead of taking a huge blanket action. As it stands now, you pretty much have to be permanently disabled to get student loans discharged, even though people who irresponsibly rack up credit card debt, home owner debt, etc. can get them discharged just by showing an inability to pay.
So the real question is, why are we incentivizing credit for some things, but not for education, when arguably education is far more important than access to credit card funds.
Most of the arguments here are arguments against bankruptcy IN GENERAL. Fine, okay, but bankruptcy performs a necessary public policy function, and economists agree, if regulated, it is a net plus for everyone. We do not want to live in a society where mistakes, acts of god, and failure are punished by a lifetime of servitude. It is better for everyone, if people can unburden themselves from debt.
Also, to put it into perspective, the reason many many people are defaulting on their student loans is due to the job market after the financial crisis caused by . . . you guessed it, financial lenders!
These financial lenders got bailed out, remember, because it was allegedly necessary to keep the economy running.
Well, same goes for student loans. When the entire workforce is completely saddled with student loans, without being able to secure employment to pay them off, it is a huge drag on the economy, and a bail out might be in order.
Personally, I'm for relaxing the rules on discharging debt instead of taking a huge blanket action. As it stands now, you pretty much have to be permanently disabled to get student loans discharged, even though people who irresponsibly rack up credit card debt, home owner debt, etc. can get them discharged just by showing an inability to pay.
So the real question is, why are we incentivizing credit for some things, but not for education, when arguably education is far more important than access to credit card funds.
Yeah, but that's your own damn fault. The school wasn't fraudulent: you're just an idiot.
This thread is fun gaiz!
You are the idiot, I never said the school was fraudulent, and just because it's not the school's fault doesn't mean it is automatically my fault, not everyone has it all together in life and people go through things that sometimes make them unable to function, you are the idiot for not getting it.
As you're clearly still missing the point: certain choices come with consequences and you are expected to bare those should you fail. You can opt not to go to med school as well. That sounds like it would solve all your problems. You act as if you have no choice in the matter, but you do. Schools go through great pains to ensure that their students have support and can pass and get through the Steps.
This is without getting into the politics of the cost of our education etc. I think education in the US is grossly overpriced and there are plenty of amazing doctors in other western countries that pay nothing for medical training in comparison.
Lol, at this point?
So whose fault is it that they have to pay for it?
Honestly think you don't have anymore useful comments to make and it's ok to move to a different thread, we obviously don't have to share the same opinions.
Well you shouldn't lend money if it really matters whether you get paid back.
No one should pay for it, it should just be excused. But in any case, I'm not planning to fail again, if I do get in medical school I will give it my best even and hopefully will not withdraw like I did in undergrad.
Okay now this is trolling.
Well it's associated risk or the cost of doing business that a professional lender should take into account but it's not ideal and obviously shouldn't happen with any consistency.
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If you say so, you can move to a different thread then and leave the room for others that have more useful thoughts to impart.
The OP reeks of entitlement, much worse than some Wash U students.
An earlier post said "once you have student loans, you're stuck with them until you either pay them or die."
OP, there you go. Would you rather die than pay back the money you borrowed?
Why hasn't this thread been killed yet?
An earlier post said "once you have student loans, you're stuck with them until you either pay them or die."
OP, there you go. Would you rather die than pay back the money you borrowed?
Why hasn't this thread been killed yet?
I halfway agree with the OP. I understand it wouldn't make economic sense for any lender to disperse so much money ($100-200k+) in completely unsecured private loans (student loans) to the average individual if we allow them to be dismissed with bankruptcy. But maybe that wouldn't be such a bad thing.
It's well documented that a large factor in the catastrophic cost of higher education in the US is the availability of huge student loans. In other developed/rich countries where this isn't available- no school would expect an average guy to pay $50k a year in tuition, for e.g.
OP in 100% right that this is a system designed to increase profits for the lenders (e.g. banks) and sellers (schools). It's so very American.
It's well documented that a large factor in the catastrophic cost of higher education in the US is the availability of huge student loans. In other developed/rich countries where this isn't available- no school would expect an average guy to pay $50k a year in tuition, for e.g.
OP in 100% right that this is a system designed to increase profits for the lenders (e.g. banks) and sellers (schools). It's so very American.
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Maybe because it is important to discuss how to deal with extenuating circumstances and student loans in medical school, has that occurred to you? would you rather have students commit suicide? Oh yes, I forgot many medical students committed suicide...
Do you really think the debt just vanishes?
You wish, but you wouldn't be giving me all your attention by posting on my thread if you really thought I wasn't deserving of it to be banned, ever thought about that?
It could vanish, the interest on these loans are around 7%, they will not be in deficiency if few people didn't pay back.
They paid out the principle on your tuition. Why should they take that loss?
We are just going around in circles, i assume you have never had an unforeseen extenuating circumstance in your life have you? some people are lucky enough not to face such circumstances in college, but if you ever face such a circumstance in your life that makes you unable to function, you will understand what am saying. There should be provisions for such circumstances, this life is tough yes, but some people have it tougher than others, and sometimes, it is ok to let go of certain things under certain circumstances. The dept of Ed lends money to thousands of people with a very high interest rate, so they get back sometimes twice as much as they lent, if very few people as a result of unforeseen circumstances failed to repay their debt, it WILL NOT be a burden on the dept of education.
Where does the DOE get their money?
I don't know.
@Just kiss me has only been a member of SDN since Friday, people.
It all boils down to this:
In the Game of Student Loans, you pay or you die.
That's pretty much it. You can argue about whether nondischargeability is fair, but if I'm applying to med school now and looking at incurring a huge amount of student loans, that's the way it is. By the way, federal income tax debt is nondischargeable, too. One way or another, Uncle Sam always gets paid.
This is pretty much everything if you add an 'anything' to the end of your statement.
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Does it matter where they get their money if they get paid back double? they are making a lot of profit already and if one person fails to repay they will not be in bad shape.
Do you really not know who funds the federal Department of Education?
This is why I was hoping you don't vote.
You guys are still responding as if student loans are nondischargeable, I used to think so before i created the thread, many people have already posted above that they are dischargeable under special circumstances. I thank the people above that imparted such knowledge to me.
Okay but the issue is that you seem to have no concept of where money comes from or where it goes.
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