$234 Billion In Student Loans Are Now In Default, And Things Are About To Get Worse : usa@lemmy.ml

$234 Billion In Student Loans Are Now In Default, And Things Are About To Get Worse (www.forbes.com)

submitted 10 hours ago by return2ozma@lemmy.world to c/usa@lemmy.ml

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Nearly 20 percent of student loan borrowers are now delinquent.

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[–] Microtonal_Banana@lemmy.zip 3 points 3 hours ago*

Maybe that trillion dollars in tax cuts for billionaires was a bad idea....

[–] cardboardboxfort@lemmy.world 7 points 7 hours ago (16 children)

Not only will they continue to allow this to continue, offering no relief to borrowers, they will also eventually have to raise taxes on us borrowers in order to cover the massive social security obligations that are due to the single largest, consistent voter block-old people.

The irony is the turnout rate for younger voters is usually above 75% in presidential elections but the overall voter rate for those age groups tends to hover below 30%. There is a massive amount of young people who don't bother registering and even 25% of those who are registered don't seem to care to cast their ballot.

Yes, expect things to get worse. Rent and food will only get more expensive. Wages will remain flat. Jobs will disappear (AI, outsourcing to cheaper labor or because the company goes bankrupt) and all the while there is one form of debt that can't be forgiven. In many ways it's better to have a business loan go into default since you can actually clear that debt from your record. Student loans will just continue to incur interest so the government can take more of your paycheck when you do actually manage to make some money.

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[–] eldavi@lemmy.ml -1 points 6 hours ago (15 children)

biden made those debts non-dischargeable for life and there's something to be said about advocating to vote for his administration in the last 2 elections to address it.

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[–] cardboardboxfort@lemmy.world 3 points 5 hours ago* (last edited 4 hours ago) (14 children)

Biden was one of many legislatures who passed the bill that made those debts non-dischargeable. Bush Jr signed the bill, which he alone could have vetoed, so we can just as easily blame Bush Jr for passing the legislation.

You can not pin it on one legislature in the body of Congress who voted for it since it was a team effort.

The push to make student loans "unforgivable" (non-dischargeable in bankruptcy) was not the result of a single person, but rather a multi-decade legislative effort driven by a federal advisory commission, congressional lawmakers, and intense lobbying by the financial and student loan industries.

1. The 1970s Commission and the 1976 Law

• The Commission on the Bankruptcy Laws of the United States: Formed by Congress in 1970 to review the bankruptcy system, the commission heard claims—often unproven—that recent college and professional graduates were taking out federal loans and immediately filing for bankruptcy to wipe them out before starting high-earning careers.

• The Higher Education Act Amendments of 1976: Influenced by these concerns, Congress amended the law to make government-backed student loans non-dischargeable for the first five years of repayment unless the borrower could prove "undue hardship".

• The 1978 Bankruptcy Code: Congress cemented and expanded this treatment into the U.S. Bankruptcy Code (Section 523(a)(8)), with strong backing from congressional committees and legislative compromise.

2. Tightening in the 1980s and 1990s

• The Bankruptcy Amendments of 1984: Congress broadened the restriction to include loans that were privately funded or guaranteed by non-profit entities.

• The 1990 Crime Bill / Budget Amendments: Congress extended the waiting period before a federal loan could potentially be discharged from five years to seven years.

• The Higher Education Amendments of 1998: Backed by industry interests and signed into law by President Bill Clinton, Congress eliminated the waiting period entirely. This meant student loans could no longer be discharged after waiting a set number of years; "undue hardship" became the sole, near-impossible standard.

3. Closing the Door on Private Loans in 2005

• The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA): Pushed heavily by credit card companies, banks, and the broader consumer lending/student loan industry (including major lenders like Sallie Mae), Congress extended the bankruptcy exception to private student loans as well.

• The Result: Private and federal student loans became virtually impossible to discharge in bankruptcy except under the strict, high-bar legal standard known as the Brunner test, making student debt uniquely permanent compared to almost every other form of consumer debt.

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[–] queermunist@lemmy.ml 3 points 5 hours ago (9 children)

You absolutely can blame legislators for the legislation they vote for lol

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[–] cardboardboxfort@lemmy.world 2 points 5 hours ago (8 children)

Why not blame the Executive (Bush Jr) who could've not signed the bill which would've pretty much killed it since they probably wouldn't have been able to get the 2/3 majority to override the veto?

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[–] queermunist@lemmy.ml 1 point 5 hours ago (7 children)

Why not blame both of them? They worked together to pass this abomination, they can share the blame.

You seem to be trying to absolve legislators of blame for the legislation they vote for, which is bizarre.

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[–] cardboardboxfort@lemmy.world 1 point 4 hours ago (6 children)

Nah, it was the result of decades of various groups pushing for it.

The push to make student loans "unforgivable" (non-dischargeable in bankruptcy) was not the result of a single person, but rather a multi-decade legislative effort driven by a federal advisory commission, congressional lawmakers, and intense lobbying by the financial and student loan industries.

1. The 1970s Commission and the 1976 Law

• The Commission on the Bankruptcy Laws of the United States: Formed by Congress in 1970 to review the bankruptcy system, the commission heard claims—often unproven—that recent college and professional graduates were taking out federal loans and immediately filing for bankruptcy to wipe them out before starting high-earning careers.

• The Higher Education Act Amendments of 1976: Influenced by these concerns, Congress amended the law to make government-backed student loans non-dischargeable for the first five years of repayment unless the borrower could prove "undue hardship".

• The 1978 Bankruptcy Code: Congress cemented and expanded this treatment into the U.S. Bankruptcy Code (Section 523(a)(8)), with strong backing from congressional committees and legislative compromise.

2. Tightening in the 1980s and 1990s

• The Bankruptcy Amendments of 1984: Congress broadened the restriction to include loans that were privately funded or guaranteed by non-profit entities.

• The 1990 Crime Bill / Budget Amendments: Congress extended the waiting period before a federal loan could potentially be discharged from five years to seven years.

• The Higher Education Amendments of 1998: Backed by industry interests and signed into law by President Bill Clinton, Congress eliminated the waiting period entirely. This meant student loans could no longer be discharged after waiting a set number of years; "undue hardship" became the sole, near-impossible standard.

3. Closing the Door on Private Loans in 2005

• The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA): Pushed heavily by credit card companies, banks, and the broader consumer lending/student loan industry (including major lenders like Sallie Mae), Congress extended the bankruptcy exception to private student loans as well.

• The Result: Private and federal student loans became virtually impossible to discharge in bankruptcy except under the strict, high-bar legal standard known as the Brunner test, making student debt uniquely permanent compared to almost every other form of consumer debt.

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[–] queermunist@lemmy.ml 1 point 4 hours ago (5 children)

Me: Biden should share the blame for bills that he helped pass.

You: Biden is a blameless innocent angel that can't be blamed for anything.

Why are you like this? Obviously he isn't the godking that personally made this happen by himself but he shares the blame. Biden was in office throughout the entirety of that timeline, you think he wasn't involved every step of the way? He's a Senator from Deleware, which is actually just banks and corporations in a trench coat.

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[–] cardboardboxfort@lemmy.world 1 point 4 hours ago (4 children)

I never said Biden didn't share some of the blame, rather that it's a more complex and nuanced situation than what you suggested (its all Bidens fault and if he didn't exist it wouldn't have happened.)

The push to make student loans "unforgivable" (non-dischargeable in bankruptcy) was not the result of a single person, but rather a multi-decade legislative effort driven by a federal advisory commission, congressional lawmakers, and intense lobbying by the financial and student loan industries.

1. The 1970s Commission and the 1976 Law

• The Commission on the Bankruptcy Laws of the United States: Formed by Congress in 1970 to review the bankruptcy system, the commission heard claims—often unproven—that recent college and professional graduates were taking out federal loans and immediately filing for bankruptcy to wipe them out before starting high-earning careers.

• The Higher Education Act Amendments of 1976: Influenced by these concerns, Congress amended the law to make government-backed student loans non-dischargeable for the first five years of repayment unless the borrower could prove "undue hardship".

• The 1978 Bankruptcy Code: Congress cemented and expanded this treatment into the U.S. Bankruptcy Code (Section 523(a)(8)), with strong backing from congressional committees and legislative compromise.

2. Tightening in the 1980s and 1990s

• The Bankruptcy Amendments of 1984: Congress broadened the restriction to include loans that were privately funded or guaranteed by non-profit entities.

• The 1990 Crime Bill / Budget Amendments: Congress extended the waiting period before a federal loan could potentially be discharged from five years to seven years.

• The Higher Education Amendments of 1998: Backed by industry interests and signed into law by President Bill Clinton, Congress eliminated the waiting period entirely. This meant student loans could no longer be discharged after waiting a set number of years; "undue hardship" became the sole, near-impossible standard.

3. Closing the Door on Private Loans in 2005

• The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA): Pushed heavily by credit card companies, banks, and the broader consumer lending/student loan industry (including major lenders like Sallie Mae), Congress extended the bankruptcy exception to private student loans as well.

• The Result: Private and federal student loans became virtually impossible to discharge in bankruptcy except under the strict, high-bar legal standard known as the Brunner test, making student debt uniquely permanent compared to almost every other form of consumer debt.

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[–] queermunist@lemmy.ml 1 point 4 hours ago* (3 children)

You are confusing me with a different user. I merely said that we can blame legislators for the legislation they pass. I literally asked "why can't we blame both" and then you said "nah", which implies that we can't blame both.

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[–] cardboardboxfort@lemmy.world 1 point 4 hours ago (2 children)

Ah, sorry. Point still stands. It's a bit more complicated than either of us suggested. They've been chipping away at student loan forgiveness for decades.

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[–] queermunist@lemmy.ml 0 points 4 hours ago (1 child)

Biden was in office every one of those decades. Just sayin.

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[–] cardboardboxfort@lemmy.world 1 point 4 hours ago

So were numerous other legislatures who helped pass it. It isn't an issue that can be pinned on one person. Had Biden not been there it would've still been passed. Stop obsessing on Biden, it makes you sound like a malfunctioning Trump-bot.

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[–] eldavi@lemmy.ml 0 points 5 hours ago* (3 children)

biden spearheaded it and took all the credit for it afterwards until it became politically unpopular to do so -- we wouldn't have non discharge debt for life if biden had retired when he should have

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[–] cardboardboxfort@lemmy.world 1 point 5 hours ago (2 children)

Why not blame Bush Jr for not vetoing it?

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[–] eldavi@lemmy.ml 0 points 5 hours ago (1 child)

it would still exist if it were someone else the white house -- it would not exist if biden wasn't in congress.

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[–] cardboardboxfort@lemmy.world 1 point 4 hours ago

Or someone else would've made the bill. Its not like only Biden wanted to leverage younger generations future.

The push to make student loans "unforgivable" (non-dischargeable in bankruptcy) was not the result of a single person, but rather a multi-decade legislative effort driven by a federal advisory commission, congressional lawmakers, and intense lobbying by the financial and student loan industries.

1. The 1970s Commission and the 1976 Law

• The Commission on the Bankruptcy Laws of the United States: Formed by Congress in 1970 to review the bankruptcy system, the commission heard claims—often unproven—that recent college and professional graduates were taking out federal loans and immediately filing for bankruptcy to wipe them out before starting high-earning careers.

• The Higher Education Act Amendments of 1976: Influenced by these concerns, Congress amended the law to make government-backed student loans non-dischargeable for the first five years of repayment unless the borrower could prove "undue hardship".

• The 1978 Bankruptcy Code: Congress cemented and expanded this treatment into the U.S. Bankruptcy Code (Section 523(a)(8)), with strong backing from congressional committees and legislative compromise.

2. Tightening in the 1980s and 1990s

• The Bankruptcy Amendments of 1984: Congress broadened the restriction to include loans that were privately funded or guaranteed by non-profit entities.

• The 1990 Crime Bill / Budget Amendments: Congress extended the waiting period before a federal loan could potentially be discharged from five years to seven years.

• The Higher Education Amendments of 1998: Backed by industry interests and signed into law by President Bill Clinton, Congress eliminated the waiting period entirely. This meant student loans could no longer be discharged after waiting a set number of years; "undue hardship" became the sole, near-impossible standard.

3. Closing the Door on Private Loans in 2005

• The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA): Pushed heavily by credit card companies, banks, and the broader consumer lending/student loan industry (including major lenders like Sallie Mae), Congress extended the bankruptcy exception to private student loans as well.

• The Result: Private and federal student loans became virtually impossible to discharge in bankruptcy except under the strict, high-bar legal standard known as the Brunner test, making student debt uniquely permanent compared to almost every other form of consumer debt.

parent