Asshole University Policy: Shutting students out of the LMS until they pay

[Caracal]

I think the breaking point for many such as myself was 2008. Those of us who lived in an apartment rather than getting an 800k loan we could not afford resented the idea that we should bail out some deadbeat who did do this or the corporation stupid enough to let him. The idea that some people go through their entire lives just ignoring bills until they can't and the service is cut off is a foreign concept and not a situation likely to led to sympathy.

There were never going to be "bailouts" of people for mortgages. All of the proposals that got any traction were about programs that would incentivize banks to offer deals to people who were underwater on their mortgage. Banks should have wanted to do that anyway-the reason many of them didn't was because as long as the mortgage still existed in the original amount they could pad their balance sheets. On balance, it would be a better result for everyone if you could renegotiate the mortgage at a rate someone could pay.

[Caracal]

The responses could not vary more widely and range anywhere from "None of anyone's business what someone else's finances are. These are strategic rather than moral decisions." all the way to "People who don't pay their debts are thieves and should be incarcerated just like someone who takes the actual physical item."

Do you actually teach finance? There's just something bizarre about thinking of bankruptcy as a moral failing. If we are talking about someone who took on debts without intending to pay them, that is a moral issue. If you fully intended to pay your debts, it isn't a moral failing. Depending on the circumstances, it could be a failure of judgement. Even that isn't necessarily true. A lot of personal bankruptcies in the US are a result of medical bills.

I suspect you have a very different attitude towards personal bankruptcies than you do towards business bankruptcies. If someone decides to start a restaurant, convinces a lender that they are a good bet for a loan, and then the business fails and they can't finish repaying the loan, are they a crook or a deadbeat? Maybe they got unlucky, maybe they weren't a good business person, but the bank isn't a person they stole money from.

Obviously, the issue with the financial crisis for banks, as well as individuals, is that these things can be managed in terms of personal risk and cost when they are isolated events. When they happen to millions of people at the same time, everyone can't absorb those losses without a larger societal cost.

[wareagle]

When I started out in higher ed (shortly after the Ark landed on Mount Ararat), students had two weeks to pay their tuition and fees.  That date was also the last day to add a class.  The next day, students who hadn't paid were dropped, and a notation was placed on their transcripts: Dropped for LOFP [lack of fee payment].  Even if they paid up with accompanying late fees, and had their classes reinstated, the notation remained on their transcripts.  Some students had it nearly every semester.

The end of the third week was census day.  In other words, back then, we only counted the students who'd paid their bills.

Fast-forward several decades, and lots of us count before we demand money.  If we dropped the non-payers, our enrollments would tank.

[financeguy]

Jimbogumbo, that's an interesting question regarding the business BKs. In my field there are no number of BKs that prevent you from getting licensed, but the main professional designation limits you at 2. I referred to the professional designation informally as a "license" just since so many people do this as a short hand. Here's how a business BK would affect someone:

-Your public profile with the relevant regulator would indicate a business bk as a financial disclosure if you were an owner, officer or control person. I don't have the specific phrasing at hand, but anyone in a control position who isn't just a passive investor WOULD need to disclose this. If you were just an employee, you would not need to disclose a BK, but if the firm you were at happened to go out of business while you were still there, this would be listed in your employment history.

-For the professional designation (there are a couple) both require disclosure for business or personal BK (similar inclusion for "control people" but not employees) and at least one has an "automatic no" for anyone with two BKs, of which personal or business count.

Caracal, I'm not saying I even see it as a "moral" problem, but just that I have no sympathy for someone who gets themselves into a mortgage they can't afford. Some of the students in class are another matter... I do teach finance, but usually of the personal variety rather than corporate, which obviously leads to much different discussions. I suppose if you're asking me if I view a business BK in someone's past differently, it would depend. Someone who takes over a company likely to go under and unwinds it efficiently with minimal damage might have done WELL to arrive at certain outcomes leading to a BK. Someone who takes a thriving company and runs it into the ground, not so much.

Again, no more of a moral issue for me than saying someone who continually touches a stove gets what they should expect when burned. I don't say they've done something immoral, just that it isn't my problem to fix.

[Caracal]

Again, no more of a moral issue for me than saying someone who continually touches a stove gets what they should expect when burned. I don't say they've done something immoral, just that it isn't my problem to fix.

Most of the time, that's obviously true. The point of bankruptcy laws for both people and companies is to allow a way for people to eliminate their debts in an orderly way that allows them and their creditors to move on. It actually is a system that lets people get out of what would otherwise be lifelong crippling debt. There are various unpleasant consequences for the debtor that you normally wouldn't want to mess with.

There are times, however, where moral hazard logic stops working as well. I'd argue that it is different If the debt was incurred through deceptive practices, people effectively had no choice but to take on the debt, or in various ways the debt is part of systems that were set up to be unfair to the people getting the loans. In other cases, the problem is the trickle down effect. During the financial crisis, letting every major bank just go bust was not a responsible option. Once you're bailing out banks, there's a pretty good argument for getting them write off some of the money on the crummy loans they made in order to avoid too many foreclosures.

[marshwiggle]

There's just something bizarre about thinking of bankruptcy as a moral failing. If we are talking about someone who took on debts without intending to pay them, that is a moral issue. If you fully intended to pay your debts, it isn't a moral failing. Depending on the circumstances, it could be a failure of judgement. Even that isn't necessarily true. A lot of personal bankruptcies in the US are a result of medical bills.

In criminal law, there is the crime of "criminal negligence causing death". In other words, there is a level of cluelessness and/or laziness that makes a person culpable even if they didn't intend harm. It would be reasonable to see financial matters in a similar way. Pursuing some sort of financial "dream", (such as owning a business), no matter how much informed advice to the contrary, becomes a moral issue.

[Caracal]

There's just something bizarre about thinking of bankruptcy as a moral failing. If we are talking about someone who took on debts without intending to pay them, that is a moral issue. If you fully intended to pay your debts, it isn't a moral failing. Depending on the circumstances, it could be a failure of judgement. Even that isn't necessarily true. A lot of personal bankruptcies in the US are a result of medical bills.

In criminal law, there is the crime of "criminal negligence causing death". In other words, there is a level of cluelessness and/or laziness that makes a person culpable even if they didn't intend harm. It would be reasonable to see financial matters in a similar way. Pursuing some sort of financial "dream", (such as owning a business), no matter how much informed advice to the contrary, becomes a moral issue.

Perhaps, but that's an individual judgement. In terms of really making moral judgements I'd be more likely to judge someone harshly if they didn't prioritize making sure to pay their employees or contractors. The bank evaluated the risk and took it on, the guy who fixed the store toilet can't really do that. Obviously, if someone is being foolish or selfish it might have effects on their family, but that isn't really a matter of public policy.

[financeguy]

If we're specifically addressing the home ownership issue, I'd go even farther than most: If you need a 30 year mortgage to afford something, you can't afford it. This obviously doesn't mean someone who has cash but chooses a loan for the low interest rate can't afford it, but anyone who "needs" to do so simply shouldn't be there to begin with. We are the ONLY country on the planet that has a 30 year mortgage product as our default. When politicians start touting the home ownership rate as a metric of their success, there are bound to be incentives that promote irresponsible behavior. We need to stop worrying about how to "make home ownership accessible" to everyone and admit that someone who makes 30k a year should not be a home owner.

[jimbogumbo]

If we're specifically addressing the home ownership issue, I'd go even farther than most: If you need a 30 year mortgage to afford something, you can't afford it. This obviously doesn't mean someone who has cash but chooses a loan for the low interest rate can't afford it, but anyone who "needs" to do so simply shouldn't be there to begin with. We are the ONLY country on the planet that has a 30 year mortgage product as our default. When politicians start touting the home ownership rate as a metric of their success, there are bound to be incentives that promote irresponsible behavior. We need to stop worrying about how to "make home ownership accessible" to everyone and admit that someone who makes 30k a year should not be a home owner.

I've certainly had several 30 year mortgages, and am in pretty good shape. Not saying I disagree with you, but it clearly is the norm in the US.

Interthread comment: this is clearly a factor in the truck mechanic who's is unemployed and won't move. Not the 30 yr part, but our subsidizing of home ownership. Many people with skills in downturn areas would be more mobile if they weren't tied down with home ownership and the US incentivized lower rentals.

[Aster]

My current institution automatically drops anyone who hasn't paid by the end of course Add/Drop week. I didn't think that this was unusual, as it is rare for any of my students to ever bring this up, and it also rare for any of my students to be removed from class for non-payment. The institution does a very good job sending out payment reminders like clockwork in the weeks leading up to the semester start, the start of the semester, and in the following days immediately after the semester.

But this conversation got me curious to see if some students were given extra latitude on this, so I looked up my own records. No, everyone has paid.

Maybe our financial aid office is merely more efficient or easier than others. Or maybe it's a public institution vs. private institution thing. Or maybe it varies by state.

[Caracal]

If we're specifically addressing the home ownership issue, I'd go even farther than most: If you need a 30 year mortgage to afford something, you can't afford it. This obviously doesn't mean someone who has cash but chooses a loan for the low interest rate can't afford it, but anyone who "needs" to do so simply shouldn't be there to begin with. We are the ONLY country on the planet that has a 30 year mortgage product as our default. When politicians start touting the home ownership rate as a metric of their success, there are bound to be incentives that promote irresponsible behavior. We need to stop worrying about how to "make home ownership accessible" to everyone and admit that someone who makes 30k a year should not be a home owner.

I've certainly had several 30 year mortgages, and am in pretty good shape. Not saying I disagree with you, but it clearly is the norm in the US.

Interthread comment: this is clearly a factor in the truck mechanic who's is unemployed and won't move. Not the 30 yr part, but our subsidizing of home ownership. Many people with skills in downturn areas would be more mobile if they weren't tied down with home ownership and the US incentivized lower rentals.

Yeah, I agree that it might be a bad thing to incentivize as heavily as we do. The financial crisis did highlight that investing in a home is only safe if you assume the value of the home is going to stay stable or go up over time. If it goes down, you can be in real trouble. That dynamic often results in other undesirable effects. A lot of the ugly politics around race and neighborhood integration was about the intersection of racism and people's deep concern about home values and the perception of their neighborhood.

[financeguy]

What people fail to understand about all of these subsidized mortgage programs is that while they make it easier to get a loan, they make the cost much higher since there are by definition more people who are eligible based on being able to fog a mirror. If only people who could afford a home could buy one, they would actually be more affordable for more people. A 20k handbag or wrist watch would be "more attainable" if the government were subsidizing their purchase with a low interest "luxury goods loan" but then they might be 25k or 30k instead. Anyone who's ever bought with cash just outside of the FHA limits can attest to the proportional bang per buck you can get.

[marshwiggle]

Yeah, I agree that it might be a bad thing to incentivize as heavily as we do. The financial crisis did highlight that investing in a home is only safe if you assume the value of the home is going to stay stable or go up over time.

As I understand it, all of the sub-prime loan nonsense was based, not merely on home value going "up" over time, but in the value going up faster than the capitalized interest, which is insane. (The idea being the equity would actually still be increasing. Governments doing deficit spending make this kind of "growing out of debt" fantasy all the time.)

No essential "service", (which includes housing), can increase in value above the inflation rate indefinitely. Once everyone is spending their entire income on it, there's no more room for increase.

[financeguy]

There's a specific event that I speak at a couple times a year, sometimes on housing issues. Myself and other presenters have tables in a general area where people can come and ask questions. By far the most common one I've gotten is the person who was foreclosed on who wants to know what they need to do to repair their credit so they can buy again.

[pepsi_alum]

Previous U would do this to students during the summer but not during the academic year. It was usually effective at getting the attention. I typically would work with the student on making up missed work as long as they contacted me within a reasonable timeframe (within 2-3 days). It really wasn't much extra work for me to be accommodating.

My grad school university had the policy of freezing registration 1 week before the first day of the semester for students who hadn't paid in full and cancelling registration entirely if they hadn't paid by Day 1 of the semester. This led to it being semi-common occurrence to have unenrolled students attending the first week of the semester insisting that they were trying to get their registration sorted out; in 95% of cases they never did.