what do you think about the way college tuitions keep increasing out of control

[zolace]

The corporation has to schedule the debt, and in 99.9% of cases they do. If they knowingly fail to schedule the debt, there are criminal and civil penalties and the officers of the corporation are on the hook. Plus, the officers and directors are on the hook for priority taxes related to employee wages ("trust fund" taxes), so they want it all paid. If the corporation dissolves, then it does not get a discharge, so we are talking about a completely different set of circumstances.

[umair127]

Yep and again, if no one advocates for a debt, it doesn't get paid. You're saying companies are compelled to cover certain debts, yet that implies every situation is one in which the company in question has enough in assets to take care of some if not all their debts. This is not always the case.

[zolace]

Yep and again, if no one advocates for a debt, it doesn't get paid. You're saying companies are compelled to cover certain debts, yet that implies every situation is one in which the company in question has enough in assets to take care of some if not all their debts. This is not always the case.

You're misunderstanding the issue. Companies are eligible for only two types of bankruptcy: chapter 7 and chapter 11. Chapter 7 is a complete liquidation of the company and its assets, and the company never gets a discharge. But whatever assets are sold and whatever money is left or is raised goes to pay priority creditors first. And employees wages and benefits are essentially first in line to be paid. The upshot is that if anyone is getting paid anything, it is the former employees.

Chapter 11, on the other hand, is a reorganization. Chapter 11 is the only way for a company to get a discharge of its debts. But in order to be eligible for the discharge and exit chapter 11, a company must pay--in full--the claims of its employees, former and current. To be clear, a company cannot go through a chapter 11 without paying these claims.

Companies are required by law to file schedules of all of their debts. The schedules are verified under penalty of perjury by an officer of the company. Lying on the schedules, or failing to schedule known debts, is a bankruptcy crime. Even "honest" mistakes are often harshly punished.

[umair127]

Yep and again, if no one advocates for a debt, it doesn't get paid. You're saying companies are compelled to cover certain debts, yet that implies every situation is one in which the company in question has enough in assets to take care of some if not all their debts. This is not always the case.

You're misunderstanding the issue. Companies are eligible for only two types of bankruptcy: chapter 7 and chapter 11. Chapter 7 is a complete liquidation of the company and its assets, and the company never gets a discharge. But whatever assets are sold and whatever money is left or is raised goes to pay priority creditors first. And employees wages and benefits are essentially first in line to be paid. The upshot is that if anyone is getting paid anything, it is the former employees.

Chapter 11, on the other hand, is a reorganization. Chapter 11 is the only way for a company to get a discharge of its debts. But in order to be eligible for the discharge and exit chapter 11, a company must pay--in full--the claims of its employees, former and current. To be clear, a company cannot go through a chapter 11 without paying these claims.

Companies are required by law to file schedules of all of their debts. The schedules are verified under penalty of perjury by an officer of the company. Lying on the schedules, or failing to schedule known debts, is a bankruptcy crime. Even "honest" mistakes are often harshly punished.

Can individuals do the same thing with their debts? That was the original question or point of contention. Individuals, it appears, do not have the ability to dissolve. Individuals can go to jail, but companies can't--you were told they are liability shelters, which is funny because that's exactly what they are in this context.

[zolace]

Yep and again, if no one advocates for a debt, it doesn't get paid. You're saying companies are compelled to cover certain debts, yet that implies every situation is one in which the company in question has enough in assets to take care of some if not all their debts. This is not always the case.

You're misunderstanding the issue. Companies are eligible for only two types of bankruptcy: chapter 7 and chapter 11. Chapter 7 is a complete liquidation of the company and its assets, and the company never gets a discharge. But whatever assets are sold and whatever money is left or is raised goes to pay priority creditors first. And employees wages and benefits are essentially first in line to be paid. The upshot is that if anyone is getting paid anything, it is the former employees.

Chapter 11, on the other hand, is a reorganization. Chapter 11 is the only way for a company to get a discharge of its debts. But in order to be eligible for the discharge and exit chapter 11, a company must pay--in full--the claims of its employees, former and current. To be clear, a company cannot go through a chapter 11 without paying these claims.

Companies are required by law to file schedules of all of their debts. The schedules are verified under penalty of perjury by an officer of the company. Lying on the schedules, or failing to schedule known debts, is a bankruptcy crime. Even "honest" mistakes are often harshly punished.

Can individuals do the same thing with their debts? That was the original question or point of contention. Individuals, it appears, do not have the ability to dissolve. Individuals can go to jail, but companies can't--you were told they are liability shelters, which is funny because that's exactly what they are in this context.

Individuals can do better than corporations. They can go through a chapter 7 bankruptcy and get a nearly complete discharge. And it's very immediate and thorough. Plus, individuals have exempt property that they keep (corporations don't). For example, you can keep a car, your retirement accounts, furniture, personal effects, and more. In many states, you can keep your house if you don't have mortgage on it.

Individuals can also go through a chapter 13 where you can keep paying your mortgage and keep your house and you get a "super discharge" which gets rid of even tax debts (except trust fund taxes).

Chapter 11 is also open to individuals, but it's very expensive so most don't use it. If they do, they have to contribute all of their disposable income for 5 years to paying their creditors. When 5 years are done, anything they couldn't pay is discharged forever.

[umair127]

Yep and again, if no one advocates for a debt, it doesn't get paid. You're saying companies are compelled to cover certain debts, yet that implies every situation is one in which the company in question has enough in assets to take care of some if not all their debts. This is not always the case.

You're misunderstanding the issue. Companies are eligible for only two types of bankruptcy: chapter 7 and chapter 11. Chapter 7 is a complete liquidation of the company and its assets, and the company never gets a discharge. But whatever assets are sold and whatever money is left or is raised goes to pay priority creditors first. And employees wages and benefits are essentially first in line to be paid. The upshot is that if anyone is getting paid anything, it is the former employees.

Chapter 11, on the other hand, is a reorganization. Chapter 11 is the only way for a company to get a discharge of its debts. But in order to be eligible for the discharge and exit chapter 11, a company must pay--in full--the claims of its employees, former and current. To be clear, a company cannot go through a chapter 11 without paying these claims.

Companies are required by law to file schedules of all of their debts. The schedules are verified under penalty of perjury by an officer of the company. Lying on the schedules, or failing to schedule known debts, is a bankruptcy crime. Even "honest" mistakes are often harshly punished.

Can individuals do the same thing with their debts? That was the original question or point of contention. Individuals, it appears, do not have the ability to dissolve. Individuals can go to jail, but companies can't--you were told they are liability shelters, which is funny because that's exactly what they are in this context.

Individuals can do better than corporations. They can go through a chapter 7 bankruptcy and get a nearly complete discharge. And it's very immediate and thorough. Plus, individuals have exempt property that they keep (corporations don't). For example, you can keep a car, your retirement accounts, furniture, personal effects, and more. In many states, you can keep your house if you don't have mortgage on it.

Individuals can also go through a chapter 13 where you can keep paying your mortgage and keep your house and you get a "super discharge" which gets rid of even tax debts (except trust fund taxes).

Chapter 11 is also open to individuals, but it's very expensive so most don't use it. If they do, they have to contribute all of their disposable income for 5 years to paying their creditors. When 5 years are done, anything they couldn't pay is discharged forever.

You've identified employee related obligations as a 'must pay' for companies, citing jail time for individuals. Aside from the apparent absurdity, when the individual that went to jail for company debt gets out, does he have to service that debt?

[zolace]

Yep and again, if no one advocates for a debt, it doesn't get paid. You're saying companies are compelled to cover certain debts, yet that implies every situation is one in which the company in question has enough in assets to take care of some if not all their debts. This is not always the case.

You're misunderstanding the issue. Companies are eligible for only two types of bankruptcy: chapter 7 and chapter 11. Chapter 7 is a complete liquidation of the company and its assets, and the company never gets a discharge. But whatever assets are sold and whatever money is left or is raised goes to pay priority creditors first. And employees wages and benefits are essentially first in line to be paid. The upshot is that if anyone is getting paid anything, it is the former employees.

Chapter 11, on the other hand, is a reorganization. Chapter 11 is the only way for a company to get a discharge of its debts. But in order to be eligible for the discharge and exit chapter 11, a company must pay--in full--the claims of its employees, former and current. To be clear, a company cannot go through a chapter 11 without paying these claims.

Companies are required by law to file schedules of all of their debts. The schedules are verified under penalty of perjury by an officer of the company. Lying on the schedules, or failing to schedule known debts, is a bankruptcy crime. Even "honest" mistakes are often harshly punished.

Can individuals do the same thing with their debts? That was the original question or point of contention. Individuals, it appears, do not have the ability to dissolve. Individuals can go to jail, but companies can't--you were told they are liability shelters, which is funny because that's exactly what they are in this context.

Individuals can do better than corporations. They can go through a chapter 7 bankruptcy and get a nearly complete discharge. And it's very immediate and thorough. Plus, individuals have exempt property that they keep (corporations don't). For example, you can keep a car, your retirement accounts, furniture, personal effects, and more. In many states, you can keep your house if you don't have mortgage on it.

Individuals can also go through a chapter 13 where you can keep paying your mortgage and keep your house and you get a "super discharge" which gets rid of even tax debts (except trust fund taxes).

Chapter 11 is also open to individuals, but it's very expensive so most don't use it. If they do, they have to contribute all of their disposable income for 5 years to paying their creditors. When 5 years are done, anything they couldn't pay is discharged forever.

You've identified employee related obligations as a 'must pay' for companies, citing jail time for individuals. Aside from the apparent absurdity, when the individual that went to jail for company debt gets out, does he have to service that debt?

It's not jail time for not paying debts; it's jail time for lying about the debts or failing to disclose them. Remember, the schedules are required to list all known debts and be signed under penalty of perjury. This is a separate issue from wether the debt gets paid. But assuming that the debt is one that moves from the company to the officer, like trust fund taxes do, then the answer is yes, he would have to service the debt. Trust fund taxes are never dischargeable, not even in bankruptcy. The only way to get rid of them is to pay them or settle with the taxing authority.

[umair127]

Yep and again, if no one advocates for a debt, it doesn't get paid. You're saying companies are compelled to cover certain debts, yet that implies every situation is one in which the company in question has enough in assets to take care of some if not all their debts. This is not always the case.

You're misunderstanding the issue. Companies are eligible for only two types of bankruptcy: chapter 7 and chapter 11. Chapter 7 is a complete liquidation of the company and its assets, and the company never gets a discharge. But whatever assets are sold and whatever money is left or is raised goes to pay priority creditors first. And employees wages and benefits are essentially first in line to be paid. The upshot is that if anyone is getting paid anything, it is the former employees.

Chapter 11, on the other hand, is a reorganization. Chapter 11 is the only way for a company to get a discharge of its debts. But in order to be eligible for the discharge and exit chapter 11, a company must pay--in full--the claims of its employees, former and current. To be clear, a company cannot go through a chapter 11 without paying these claims.

Companies are required by law to file schedules of all of their debts. The schedules are verified under penalty of perjury by an officer of the company. Lying on the schedules, or failing to schedule known debts, is a bankruptcy crime. Even "honest" mistakes are often harshly punished.

Can individuals do the same thing with their debts? That was the original question or point of contention. Individuals, it appears, do not have the ability to dissolve. Individuals can go to jail, but companies can't--you were told they are liability shelters, which is funny because that's exactly what they are in this context.

Individuals can do better than corporations. They can go through a chapter 7 bankruptcy and get a nearly complete discharge. And it's very immediate and thorough. Plus, individuals have exempt property that they keep (corporations don't). For example, you can keep a car, your retirement accounts, furniture, personal effects, and more. In many states, you can keep your house if you don't have mortgage on it.

Individuals can also go through a chapter 13 where you can keep paying your mortgage and keep your house and you get a "super discharge" which gets rid of even tax debts (except trust fund taxes).

Chapter 11 is also open to individuals, but it's very expensive so most don't use it. If they do, they have to contribute all of their disposable income for 5 years to paying their creditors. When 5 years are done, anything they couldn't pay is discharged forever.

You've identified employee related obligations as a 'must pay' for companies, citing jail time for individuals. Aside from the apparent absurdity, when the individual that went to jail for company debt gets out, does he have to service that debt?

It's not jail time for not paying debts; it's jail time for lying about the debts or failing to disclose them. Remember, the schedules are required to list all known debts and be signed under penalty of perjury. This is a separate issue from wether the debt gets paid. But assuming that the debt is one that moves from the company to the officer, like trust fund taxes do, then the answer is yes, he would have to service the debt. Trust fund taxes are never dischargeable, not even in bankruptcy. The only way to get rid of them is to pay them or settle with the taxing authority.

Does the company? Not unless it's Phoenix Inc.. And all those other debts, the ones that didn't get priority over employee related obligations...who pays for them? It's not Flo from Progressive.

[zolace]

It depends on the relative solvency of the company. Some bankruptcies are just financial restructurings using the bankruptcy law for certain very specific reasons. In a lot of those cases, everyone gets paid in full. Or everyone agrees to take a certain haircut on the amount they are owed. Well, not everyone, usually just the big, sophisticated banks and hedge funds. The "rank and file" creditors--employees, trade creditors, suppliers, etc.--all get paid in full, often with interest.

If the company is in really bad shape, then only priority and secured debts will get paid in full. Other creditors will get some percentage on the dollar--sometimes a penny or two, sometimes closer to the full amount they are owed.

Some creditors have risk insurance or other relationships (like factoring) that step in if they do not get paid in full. Other creditors sell their claims early in the case to claims traders. Some creditors wait it out and get what they get.

[umair127]

It depends on the relative solvency of the company. Some bankruptcies are just financial restructurings using the bankruptcy law for certain very specific reasons. In a lot of those cases, everyone gets paid in full. Or everyone agrees to take a certain haircut on the amount they are owed. Well, not everyone, usually just the big, sophisticated banks and hedge funds. The "rank and file" creditors--employees, trade creditors, suppliers, etc.--all get paid in full, often with interest.

If the company is in really bad shape, then only priority and secured debts will get paid in full. Other creditors will get some percentage on the dollar--sometimes a penny or two, sometimes closer to the full amount they are owed.

Some creditors have risk insurance or other relationships (like factoring) that step in if they do not get paid in full. Other creditors sell their claims early in the case to claims traders. Some creditors wait it out and get what they get.

Again...can an individual, short of lead poisoning, do the same thing as a company with their debts?

[zolace]

It depends on the relative solvency of the company. Some bankruptcies are just financial restructurings using the bankruptcy law for certain very specific reasons. In a lot of those cases, everyone gets paid in full. Or everyone agrees to take a certain haircut on the amount they are owed. Well, not everyone, usually just the big, sophisticated banks and hedge funds. The "rank and file" creditors--employees, trade creditors, suppliers, etc.--all get paid in full, often with interest.

If the company is in really bad shape, then only priority and secured debts will get paid in full. Other creditors will get some percentage on the dollar--sometimes a penny or two, sometimes closer to the full amount they are owed.

Some creditors have risk insurance or other relationships (like factoring) that step in if they do not get paid in full. Other creditors sell their claims early in the case to claims traders. Some creditors wait it out and get what they get.

Again...can an individual, short of lead poisoning, do the same thing as a company with their debts?

The short answer is yes: they can both get discharges, and it's easier for a individual to get a discharge than a corporation.

[Mobius]

The problem with college costs is that anyone is able to get a student loan, with virtually no requirements. Even if the student is pursuing a degree with no earnings potential they will still qualify. The result of this is that students do not take price into consideration when choosing a school as they can certainly borrow money in order to attend. Another issue is the fact that colleges are pressured to be "diverse" so they offer scholarships to students who are part of a "minority" even though they are not deserving of them. This also increases the pressure of the price of tuition. 

[Spendulus]

The problem with college costs is that anyone is able to get a student loan, with virtually no requirements. Even if the student is pursuing a degree with no earnings potential they will still qualify. The result of this is that students do not take price into consideration when choosing a school as they can certainly borrow money in order to attend. Another issue is the fact that colleges are pressured to be "diverse" so they offer scholarships to students who are part of a "minority" even though they are not deserving of them. This also increases the pressure of the price of tuition.  

The problem with student loan costs is that the sole provider of student loans is the US Government.  They print money, then "loan it" out.  This is a great deal for them, compared to printing money and getting almost no return on it as Treasury bills.

They would like more and more and more student loans.  And more house loans, since they are basically the only people doing that too.

They like debt slaves.

[Mobius]

The problem with college costs is that anyone is able to get a student loan, with virtually no requirements. Even if the student is pursuing a degree with no earnings potential they will still qualify. The result of this is that students do not take price into consideration when choosing a school as they can certainly borrow money in order to attend. Another issue is the fact that colleges are pressured to be "diverse" so they offer scholarships to students who are part of a "minority" even though they are not deserving of them. This also increases the pressure of the price of tuition. 

The problem with student loan costs is that the sole provider of student loans is the US Government.  They print money, then "loan it" out.  This is a great deal for them, compared to printing money and getting almost no return on it as Treasury bills.

They would like more and more and more student loans.  And more house loans, since they are basically the only people doing that too.

They like debt slaves.

The US government is likely to actually lose money on student loans due to defaults and debt forgiveness after a certain number of on-time payments. It is an illusion that they are making money (as is reported in the current budget).

[ProfMac]

For example, when I left, which is about 10 years ago, my school was about 27k/year. Now it's close to 37k. And my school is nowhere near the top schools. Employment compensation (at least in my field) hardly increased.
No wonder students are running into trouble with student loans everywhere.

The annual increase of the OP numbers.
(37 / 27) ^ (1/10) --> 1.03201, or 3.2% annual increase.

Cost of a certain house in Austin, TX
(265 / 154) ^ (1/10) --> 1.05578, or 5.6% annual increase.


In addition, tuition is only a portion of the cost that a student pays.  Tuition itself is not rising as fast as tuition. 
Pay to a certain faculty, past 8 years.
(44.5 / 40.5) ^ (1/8) --> 1.01184, or 1.1% annual increase.

[Spendulus]

The problem with college costs is that anyone is able to get a student loan, with virtually no requirements. Even if the student is pursuing a degree with no earnings potential they will still qualify. The result of this is that students do not take price into consideration when choosing a school as they can certainly borrow money in order to attend. Another issue is the fact that colleges are pressured to be "diverse" so they offer scholarships to students who are part of a "minority" even though they are not deserving of them. This also increases the pressure of the price of tuition. 

The problem with student loan costs is that the sole provider of student loans is the US Government.  They print money, then "loan it" out.  This is a great deal for them, compared to printing money and getting almost no return on it as Treasury bills.

They would like more and more and more student loans.  And more house loans, since they are basically the only people doing that too.

They like debt slaves.

The US government is likely to actually lose money on student loans due to defaults and debt forgiveness after a certain number of on-time payments. It is an illusion that they are making money (as is reported in the current budget).

No.  When you print money and then make loans, you always make money. 

[ProfMac]

As for bankruptcy, student loan debt is not immune (child support is though), it is just subject to a higher standard for discharge.

What are some instances where a student loan can be discharged?

[TaunSew]

if costs were putting ppl off going to uni i would say there was a problem but as things stand more ppl are getting degrees than there are graduate jobs for

A lot of people who go to university in western countries wouldn't be accepted in Switzerland, which caps out graduate student positions relative to the job openings in those fields.

Switzerland must be doing something right as it has one of the world's lowest unemployment rates due to an apprenticeship model which pairs students with available positions (although it's less democratic as you might get assigned a career you might not particularly like).

[ProfMac]

Corporations can get a discharge through chapter 11, but they have to effectively liquidate all of their property to do it. Whereas an individual in a chapter 11 just has to devote disposable income to a plan in order to get a discharge.

An individual can only shield so much wealth.  I think the amount is $28,000.  Beyond that, individuals also must liquidate.

[ProfMac]

The problem with college costs is that anyone is able to get a student loan, with virtually no requirements. Even if the student is pursuing a degree with no earnings potential they will still qualify. The result of this is that students do not take price into consideration when choosing a school as they can certainly borrow money in order to attend. Another issue is the fact that colleges are pressured to be "diverse" so they offer scholarships to students who are part of a "minority" even though they are not deserving of them. This also increases the pressure of the price of tuition. 

There actually are more safeguards than that.  The default rate of the institution is considered.  Institutions with high default rates lose their ability to receive funds.