Quote from: Argwai96 on November 01, 2014, 08:27:00 PM

Quote from: CoinCube on November 01, 2014, 03:25:41 PM

Before 1976 all debt could be discharged when you were bankrupt. First non profit student loans were exempt from protection in 1976. Then in 1986 private student loans were exempt from bankruptcy.

Think about this for a little bit. If you are a student and take out a student loan, what assets do you have?....Generally you will have on assets other then your future earnings potential that results from your college degree. Any person acting rationally would declare bankruptcy as soon as they received their college degree if they took out student loans as the consequences of filing bankruptcy are much less then the benefits. This would result in lenders loosing all the money lent and students getting a free education.

If your theory was correct we would expect to see a massive drop off in personal bankruptcies after 1976. All of those college students getting a free ride and bailing out on their student loans right?

If student loans could be discharged in bankruptcy as they absolutely should be then lenders would be much more careful about giving them out. Strong students at good schools would still be able to get loans. Week students at fly by night for profit diploma mills not so much. Some students would have to work a little to finish school. Schools would not be able to ramp up tuition as much as they wanted without losing enrollment. College in general would be much much cheaper then it is today. Lets look at what happened to the cost of college after this change.

The cost of college has increased by more then 12 fold since 1976 grossly exceeding inflation. What allowed this to happen? Those nonchargeable government guaranteed student loans.

Quote from: Argwai96 on November 01, 2014, 08:27:00 PM

Quote from: CoinCube on November 01, 2014, 03:25:41 PM

In 2005 chapter 7 bankruptcy protection was denied for anyone earning over the median income in their state regardless of how much debt they were in.

This is not true. There are more strict requirements to filing bankruptcy as a result of the 2005 bankruptcy reform, but you can still file chapter 7 bankruptcy under certain circumstances.

I stand corrected. If after paying your fiat overlords and buying groceries you have less then $117 dollars left
the state will generously allow you to file chapter 7 bankruptcy. Click here if you want to read exactly how this is calculated. If you have $118 dollars, however, off to the slave pens you go.

Coming soon: Lenders work with the IRS. Generously reduce loan payments! Struggling borrowers now given deferred payment options to ensure they have at least $120 dollars in disposable income each month. Adoring masses cheer.