The first thing to think about is how many of these student loans were securitized or are subject to claims of securitization and assignments. Based upon anecdotal evidence collected thus far, most of them were securitized. That means that many of the defenses suggested for mortgage foreclosures are equally applicable to student loans. AND it might, as we have previously suggested, provide an opening for avoiding the exemption from discharge in bankruptcy, where student loans ordinarily cannot be discharged.
The level of student debt has exceeded $1 Trillion, which means that either the banks or the government are going to absorb a huge loss financially. If the Banks “Securitized” the loans then they are facing a huge loss if the loans are paid off, which probably explains why the loans were artificially inflated, like the homes. With the homes it was done through fraudulent appraisals using far-out “comparables” that didn’t apply. With private student loans, the banks pushed the students to take on “extra” money for living expenses and even personal expenses that would be considered luxuries.
The reason is as simple as mortgage meltdown. The debts, the fees and the marketing of these debts were all facets in making medicine — the practice and the protocols — all about the money. Doctors or nurses and other medical people who might want to live in a peaceful small town can’t go there because they are required to keep their income up in order to pay back student debt obligations which are non dischargeable in bankruptcy.
The answer coming from economists is that if we value medicine as a society and the current system is not working because people in all places are dying or suffering as a result of money issues, then it follows that if we want a better society, we should turn the vision of medical people from money to the services we need for our society. Sure the banks will and other people who speak from prepared messages from idealogues are going to scream. But their screams are drowned out by the grief of those who lose loved ones or watch them suffer.
It doesn’t even make sense economically. If doctors and hospitals were able to turn their debt obligations into something that could be managed without turning away patients in need of medical care, our tax dollars would not be used for the extraordinary expenses of Emergency rooms or procedures that are of doubtful value to the patient but that are necessary to meet the expenses of servicing debt.
Costs would immediately be reduced and we would be on our way back from third world status in the effectiveness of our medical care. We would be able to reduce costs so much that we would be spending the same or less than those countries who provide the same level of care but whose effectiveness is extending life and limiting suffering are by all current measurements far beyond American medicine at half the cost. With costs going down, the profit motive would recede as the helping mode kicked in to remove a huge stresser that interferes with American productivity and innovation.
Our worship of money has distorted the individual values we hold dear. Our society no longer reflects those values and is literally paying for it through the nose. A great number of bankruptcies are filed by people cleaned out by medical expenses that are discharged while the providers never see the relief. The debts that are wiped out include all the debts, not just the target debts like home mortgages, credit cards, student loans etc.
So our current system is unfair, it is too expensive only because of the cost of education, which is prohibitive even with loans, and it is by most accounts declining in quality except for certain procedures on which we have still cornered the market.
The same holds true where debt gets in the way of the survival or vitality of any processes operating in our society. Obama has taken care of a portion of this for future students. But the existing ones see no way out. And this false morality based upon money rather than God or moral imperatives is now reducing the number and quality of teachers, firefighters, first responders, police and other social services that cannot attract great teachers or leaders because it offers a lifetime of slavery to debt.
At a minimum, household debt should be reduced (like Iceland did it) for those who provide essential services and largest parts of household debt are student loans and mortgage debt both of which were pushed onto unsophisticated and unsuspecting victims of a society where money and banking are the measurements of success instead of service to our society that we all need and expect if government is to mean anything.
Any person who provides these essential services should be either exempted from repayment unless their salary allows it through a means test, much like they don in Chapter 7 bankruptcies now. It doesn’t matter whether the debt is technically designated as student debt, or credit card debt, consumer finance or mortgage. The facts are that we are paying more and getting less. Instead of investing in improving the education of providers of essential services we are firing them for lack of money or making them spend time and money on trying to wrangle out of the debt.
The two best places to start are the private student loans in which the risk was non-existent thus encouraging banks to sell larger loan packages to prospective students than they needed, and Mortgage debt which was done the same way. There is no reason why such loans should be sanctimoniously regarded as off limits. Veterans of foreign wars were given their education and help in buying houses at low rates and easy payments without any “resets” that would ruin their lives as they lost their homes and lifestyles. This makes no sense in a society seeking to survive and prosper. We are practically punishing those who serve their country and creating economic barriers to those who would serve their country and who have a lot to offer.
Even as the battle rages over principal reductions to banks who never had any risk in underwriting loans thus producing ever larger loan packages that could never be read we ought to listen to economists who point out that we are spiraling down as a society even though it appears as though the stock market, for the moment is going up. It’s a good place to start.
The Debt of Medical Students
http://economix.blogs.nytimes.com/2012/09/14/the-debt-of-medical-students/
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: consumer debt, credit card, essential providers, medical students, mortgage loans, PRINCIPAL REDUCTIONS, student loans, values | 96 Comments »
NEW! 
![[Chart]](https://i0.wp.com/s.wsj.net/public/resources/images/OB-BJ505_ROI_Sa_20080501170150.gif?resize=304%2C280)