Quote from: CoinCube on November 02, 2014, 02:16:15 AM

Quote from: Argwai96 on November 02, 2014, 01:50:19 AM

Why would a good student at a good college pose a lower credit risk if student loans could be discharged in bankruptcy? I would say it would be the opposite, as the better informed student would be more likely to declare bankruptcy, as they know the consequences and affects of bankruptcy, and a good student is more likely going to be well informed.

You previously mentioned that bankruptcy will take away a debitor's assets, however students do not have any assets and do not use student loans to purchase additional assets; student loans are used to pay for an education and for living expenses while a student is in school.

If student debt could be discharged in bankruptcy then any rational student would declare bankruptcy as soon as they are sure they are finished with school (they do not want to get any additional advanced degrees). Since the student would have no assets, and would have a lot of debt, the student would lose nothing because there would be nothing to lose, but would gain the fact that s/he no longer needs to repay the amount s/he promised to pay their lender

The situation you are describing a good student deliberately defaulting on loans can be handled in much better ways then the government enforced debt slavery we have now.

If this became genuine problem, and that is a big if as we seemed to do just fine before 1976 a much better solution is name and shame. If people who have the ability to repay start defaulting on student loans just extend the period of time such a default stays on your credit report for as long as it takes to minimize the problem.

If you had a good job and good income prospects would you default on your student loans if it meant being cut off from the credit markets for 15, 20 or even 30 years. Most of these individuals would see the wisdom of maintaining access to the credit markets.
Poor suckers who go to fly by night diploma mills and have no hope of paying off their loans would have an out.

It was until recently that declaring bankruptcy would be a big social stigma. Prior to recently declaring bankruptcy is something that many people would be ashamed of. Now, today, people tend to be proud of declaring bankruptcy. People are no longer ashamed of not following through with their promise to pay their debts as agreed.

The thing is that as of the day a student graduates college they will almost never have a job (they may have one lined up, but will have not started work yet). This would mean that students would likely not qualify for your "penalty". Also to say that someone has a "good job" or "good income prospects" is very subjective and would likely be found to be unconstitutionally vague and unenforceable.