Brian Tamanaha's New York Times editorial Forum

[flem]

You're trying to make a simple problem more complicated than it is.

No, you're really oversimplifying it

Making loans dischargeable through bankruptcy is only a piece of the puzzle

[CanadianWolf]

Care to explain ?

[flem]

Care to explain ?

As long as the government is still in the business of lending money under some vague notion of equal access to education, there's still an unlimited supply of money not based on credit. You keep saying "lenders", but there's only one lender in this scenario that enables this, and it's the government.

There's still no risk evaluation. This just allows people to get making the same stupid choices and then declare bankruptcy when shit goes sour. If you let private lenders evaluate the risk, they won't lend to retards going to TTTs in the first place, and there will be less people that are abjectly fucked.

Edit: and it's also ridiculously insulting to patronize Tiago on this topic, as he's one of the most informed people I've seen in these discussions.

[Tiago Splitter]

Again: The Federal Government guarantees student loans. Any idiot who gets through college and takes the LSAT can borrow the full cost of attendance through government guaranteed loans. To the extent that a private bank makes that loan (does that even happen anymore?) there is no risk to the lender.

Is anybody else failing to understand this?

[CanadianWolf]

I'm addressing the source of the problem: Easy money.

Government loan programs can be adjusted to help just the truly needy.

Government loans will diminish if law school tuition is lower. Unlimited, easy money enables law schools to charge beyond what is needed to simply be profitable. This encourages more to enter the law school business.

Returning to the pre-2006 bankruptcy code which permitted discharge in bankruptcy of student loans will affect all lenders public & private.

No need for band-aids when the source of the problem can be curtailed.

[minnbills]

Dude, the only problem your solution actually addresses is to help out people who can't pay off their debt. This will do nothing to bring down the costs of the education or stem the flow of new JDs. It may actually exacerbate it as people going in who are the most susceptible to failure can count on discharging their debt and act more recklessly.

[CanadianWolf]

If it helps, look at what happened recently in the housing market when the easy money was cut-off. Dischargeable debt will stem the tide of seemingly unlimites easy money whether or not guaranteed or supplied by the government.

Tamanhana's editorial tries to stem the flow by placing artificial limits on the supply of money to law schools & law students. This doesn't go far enough to rectify the real problem of an oversupply of lawyers & law schools.

[flem]

If it helps, look at what happened recently in the housing market when the easy money was cut-off.

lol these two situations are not analagous

this quote

You're beginning to understand.

keeps getting better and better in terms of irony

[DaftAndDirect]

If it helps, look at what happened recently in the housing market when the easy money was cut-off.

How does turning previously non-dischargeable debt in to dischargeable debt cut off easy money?

Like minnibills said, this pretty much makes the money easier becaues it softens the effects of the worst case scenario (default) and would likely encourage more reckless risk taking.

[CanadianWolf]

@tfleming: Care to explain ?

[CanadianWolf]

Even the US Government is vulnerable to discharge in bankruptcy. If you believe that the US Government will continue to guarantee bad debt without reacting to the situation, then we disagree on a very fundamental point.

[Tiago Splitter]

If it helps, look at what happened recently in the housing market when the easy money was cut-off. Dischargeable debt will stem the tide of seemingly unlimites easy money whether or not guaranteed or supplied by the government.

You aren't cutting off the supply of easy money though. Borrowers can still borrow as much as they need from the government.

Even the US Government is vulnerable to discharge in bankruptcy.

They might get sick of having to pay off loans when people go into bankruptcy, but that's it. Assuming no other policy changes they would still be loaning tens of thousands of dollars to kids to attend TTTs.

[briviere]

If it helps, look at what happened recently in the housing market when the easy money was cut-off.

How does turning previously non-dischargeable debt in to dischargeable debt cut off easy money?

Like minnibills said, this pretty much makes the money easier becaues it softens the effects of the worst case scenario (default) and would likely encourage more reckless risk taking.

I think his assertion was that if law school debt was dischargeable, then lenders would cease to lend to prospective students without properly vetting their chances for professional success and, thus, likelihood of being able to pay back the loans.

The reason this doesn't work is because those private lenders have their profits guaranteed by the government since student loans are gov't backed. This is the reason government would have to get out of the loan game in order to reintroduce some semblance of market pressure and sanity.

[CanadianWolf]

But there will be other policy changes.

Again, my approach attacks the source which should cause others to react---even the US Government. Why deal in band-aid type solutions when there is a more comprehensive & effective solution readily available ?

[briviere]

If it helps, look at what happened recently in the housing market when the easy money was cut-off. Dischargeable debt will stem the tide of seemingly unlimites easy money whether or not guaranteed or supplied by the government.

You aren't cutting off the supply of easy money though. Borrowers can still borrow as much as they need from the government.

Even the US Government is vulnerable to discharge in bankruptcy.

They might get sick of having to pay off loans when people go into bankruptcy, but that's it. Assuming no other policy changes they would still be loaning tens of thousands of dollars to kids to attend TTTs.

This.

[flem]

But there will be other policy changes.

Again, my approach attacks the source which should cause others to react---even the US Government. Why deal in band-aid type solutions when there is a more comprehensive & effective solution readily available ?

1) It doesn't and I seriously can't believe you're not getting that
2) How is pulling the government completely out of student loans a "band aid solution"

[CanadianWolf]

To me, it's unrealistic to assume that the US Government will not react in any meaningful manner with respect to student loan bankruptcy discharges. Even now many Republicans want to do away with US Government backed student loans.

[CanadianWolf]

@tfleming: When did you propose getting the government out of the student loan business ?

I agree that this would be effective, but unlikely to happen so long as Democrats have any say.

Bankruptcy dischargeability should force the US Government to severely limit government's participation in this market to the truly needy.

[flem]

@tfleming: When did you propose getting the government out of the student loan business ?

I agree that this would be effective, but unlikely to happen so long as Democrats have any say.

As long as the government is still in the business of lending money under some vague notion of equal access to education, there's still an unlimited supply of money not based on credit. You keep saying "lenders", but there's only one lender in this scenario that enables this, and it's the government.

There's still no risk evaluation. This just allows people to get making the same stupid choices and then declare bankruptcy when shit goes sour. If you let private lenders evaluate the risk, they won't lend to retards going to TTTs in the first place, and there will be less people that are abjectly fucked.

[Tiago Splitter]

To me, it's unrealistic to assume that the US Government will not react in any meaningful manner with respect to student loan bankruptcy discharges. Even now many Republicans want to do away with US Government backed student loans.

1) The only realistic expectation of the Federal government is to expect changes to happen very slowly. Letting people discharge loans in bankruptcy while the government foots the bill doesn't guarantee any kind of positive solution.

2) Many Republicans have held that stance for decades. Obviously, nothing has happened as a result.

[CanadianWolf]

Government participation in the market is necessary if the goal is to help the truly needed & underrepresented. Bankruptcy dischargeability should force the necessary changes. Government participation in the student loan market needs to severely curtailed, not eliminated, in my opinion.

@tiago splitter: Agree that government change comes slowly. Changing one provision in the bankruptcy law should be much more efficient.

[briviere]

I'm sure many Democrats who've taken time to look into the student debt issue share the opinions of those Republicans.

But, the real question is this: with student debt surpassing credit card debt, how many in the financial services industry do you think hold this view? We can't even get rid the mortgage interest tax deduction, and congress has known that thing was a dud for decades.

[flem]

Government participation in the market is necessary if the goal is to help the truly needed & underrepresented.

Except it doesn't, and it's shameful that no one meaningfully discusses this.

Bankruptcy dischargeability should force the necessary changes.

This only really addresses the effect, and you're hoping it will, in turn, address the cause

Government participation in the student loan market needs to severely curtailed, not eliminated, in my opinion.

Meh

[DaftAndDirect]

@tfleming: When did you propose getting the government out of the student loan business ?

I agree that this would be effective, but unlikely to happen so long as Democrats have any say.

Bankruptcy dischargeability should force the US Government to severely limit government's participation in this market to the truly needy.

You're basically asking the US government to make itself more vulnerable to losses due to student loan defaults as some sort of method to "wake the government up" so that it reacts by solving the real problem. It is unrealistic to expect the government to step out of the student loan business, but I think it's even less realistic for the government to volunteer to deliberately lose money.

[Tiago Splitter]

Bankruptcy dischargeability should force the US Government to severely limit government's participation in this market to the truly needy.

Well now we agree on the solution just not how to get there. Just allowing discharge in bankruptcy might eventually fix the problem but it will take years if not decades for the government to make it happen. In the meantime we have way more JDs than necessary but most of them will just dump the debt after a few years looking for work.