While I appreciate that people are sour about student debt, I don't think Navient, qua big business, should behave in any other way.
I personally think public universities should be free and highly selective, rather than the opposite. But I also think taking out loans with no plan to repay them is criminally stupid. If the education product being sold is fraudulent, go after the fraudulent institution (as has been done). But the bank? They're just a bank. And no, I don't think it's good that we have banks financing student debt, but I sure as hell don't blame banks for doing it.
This is a fabulous example of why privatizing what should be a public service is a terrible idea, yes, and this is the ridiculous game we get to play as a result... blaming the bank for playing hardball over money. Really?
The core of the issue is still the university tuition rates, and universities involved are usually not privatized. These public institutions have become profit centers, benefiting from the captive audience of young career seekers, and cranking up administration overhead costs in their budgets to absorb the increased amounts of loan money available to prospective students.
Loans are always hardball business, and student loans are no different (although this case is clearly false advertising). The fact that the government sought to get more university degrees into the hands of citizens by increasing loan availability and size is the short-sighted idiocy that helped bootstrap this mess.
Withholding information is not playing hardball, that position is just stupid. So you're saying banks should be able to lie and mislead people, with no consequences or regulation?
I believe that school loans should only be allowed for jobs. If you love art and are interested in "under water basket weaving" as a degree that is great, but it won't pay the bills and so you should save your money to pay for it. When you decide to become a medical doctor, it is understood your eventually worth will pay off reasonable loans.
My solution: student loans may be discharged in bankruptcy, but your school records are discharged too. Thus if you get an expensive degree that won't pay off the loan just give up the degree and credits. Doctors will not do this because their pay.
Note that loan companies now have incentive to ensure you graduate and get a job. Getting Ds in a few classes: they will cut you off now rather than try to see if you can turn it around. Maybe you can find the money to pay for your next semester one your own and improve your grade, and if you do this long enough they might change their mind and give you loans to finish.
The only angle I'm still working out is if someone finishes a degree, declares bankruptcy, and then goes back to the same degree (elsewhere) - they don't have the credits but they presumably know the material and can easily pass all the classes the second time around with a better grade.
Allow borrowers to default on student loans. Then banks can charge an appropriate interest rate for the credit risk of the borrower, based on pursued major (among other things).
Very few students would qualify. Most of them have no credit history and little to no income. If it were easy to default, the entire system would collapse.
Obviously the impossibility of defaulting and the ease of getting loans feeds the problem, but what you are proposing would destroy the system rather than fix it.
Very few students in worthless degree would qualify. Engineering and medical degrees would do much better because good students would not default as the degree is part of what drives their job.
> The only angle I'm still working out is if someone finishes a degree, declares bankruptcy, and then goes back to the same degree (elsewhere) - they don't have the credits but they presumably know the material and can easily pass all the classes the second time around with a better grade.
Is that a problem, though? Presumably they still have to pay for the degree the second time around. And if they don't (say, a free community college), then sure, they're getting something "easier", but they still have to spend the time to get it, and they're getting a degree from a low-ranked college vs. the (for example) elite university they went through the first time.
I personally think public universities should be free and highly selective, rather than the opposite. But I also think taking out loans with no plan to repay them is criminally stupid. If the education product being sold is fraudulent, go after the fraudulent institution (as has been done). But the bank? They're just a bank. And no, I don't think it's good that we have banks financing student debt, but I sure as hell don't blame banks for doing it.
This is a fabulous example of why privatizing what should be a public service is a terrible idea, yes, and this is the ridiculous game we get to play as a result... blaming the bank for playing hardball over money. Really?