Biden administration cancels $1.1 billion student loan debt.

[nidena]

www.wrtv.com/news/national/biden-administration-cancels-1-1-billion-student-loan-debt-for-itt-tech-students

"ITT Technical Institute filed for bankruptcy in September 2016. It shut down 130 campuses nationwide, affecting more than 35,000 students and more than 8,000 employees, amid lawsuits and investigations over alleged aggressive recruiting tactics."

[NomoreDramaQ1015]

I remember ITT coming to my high school.   Aggressive is putting it lightly.

People will disagree with me but I think it's fair.  Why should people be on the hook for a predatory college that has declared bankruptcy and since shut down?  I know I know "personal responsibility and I made my way through college working for 5 cents a day at McDonald's so why should stupid people be rewarded".

But when you read about how much student loan debt is effecting people being able to contribute to the economy I'm fine with it.  It will even out over the term.

[Tiny]

1st. I am all for this happening. It's the right thing to do.

There's this little bit from the article:

This isn't just the ITT Tech Institute loans:

The number of loan discharges approved under President Joe Biden since January 2021 is $9.5 billion, affecting over 563,000 borrowers.

9,500,000,000/563,000 = 16,873.89 I'm guessing that is an "average" -- I don't do math.

The department said the majority of the borrowers did not complete their degree or credential and left ITT on or after March 31, 2008.

I have to wonder how much of the loan balances canceled were mostly interest and fees that ballooned the loan balance.

[Tiny]

I remember the never ending ads on daytime TV for ITT Technical Institute.  I never had cable so a sick day at home from work - meant hours on the couch watching Daytime TV (old westerns, old game shows, low end talk shows).    I remember thinking the 20 or 30 "degrees" they offered in everything from "law enforcement" to "chef" was kind of odd. And when was anything of high quality or value advertised on daytime TV??
  
It was like ITTTI didn't want to appear better or of more value  than a pitch for a Singing Bass Fish or a Slanket.   

[nidena]

Forbes had an article, too, this week: www.forbes.com/sites/zackfriedman/2021/08/26/biden-student-loan-forgiveness-has-cancelled-this-much-debt-but-heres-how-much-is-left/?sh=229739453de7

"In aggregate, including the student loan relief from the Cares Act, Biden has cancelled approximately $69.8 billion of student loans since becoming president. How does this compare to total student loan debt? The latest student loan debt statistics show that there are 45 million student loan borrowers who collectively owe $1.7 trillion of student loans."

[nidena]

And, if you love data and stats, you'll love this: educationdata.org/student-loan-debt-statistics

[azucena]

DH has a friend who was 6 months away from finishing some kind of computer certificate/degree from ITT when it shut down.  I know he had $25k in loans from them at that time.  It screwed up his finances and likely still does today.

[Deleted]

So... who's left holding the bag on these loans?  Serious question.  The banks, who will then take giant losses off on their taxes?

I agree that this is about the worst type of student loan abuse- set up schools promising training for some trade, sign them up for government-guaranteed loans, don't deliver the education,  accept people who just weren't prepared to do the work, or sign them up for debt they'll never be able to pay back on their income even if they did get the promised jobs.  I'm sure that first-generation college students would have been disproportionately affected.

But... I wish we could learn from this.  People clamor for "free college" (i.e. paid for by the taxpayers) but unless there are academic standards in place for the schools (and actual standards for acceptance of applicants ) institutions will spring up and provide substandard education to marginal students and we'll all pay for it. 

[sesfw]

I have to wonder how much of the loan balances canceled were mostly interest and fees that ballooned the loan balance.

I've wondered this myself.  I think for student loans everything should be cancelled except the original amount.  Once that is paid back, then the debt is gone.

Get rid of the interest and fee build up

[NomoreDramaQ1015]

So here is what I don't understand.  When a person racks up thousands of dollars in credit card debt we are fine with them declaring bankruptcy and the companies eating the cost.  It's not like the CC companies get anything back.  It's part of the contract.  ITT just declared bankruptcy, millions of companies do it every day.

But people lose their minds and call student loan borrowers irresponsible idiots if we consider extending them the same courtesy.  Who eats all the money when corporations declare bankruptcy?  If you were stupid enough to open a business that didn't succeed why should you be able to walk away from what you owe everyone?  Personal responsibility and all that.   

[TheOtherMe]

My dear friend's daughter borrowed a substantial sum of money supposedly to pay off their credit cards.  Immediately cashed the check and declared bankruptcy the next day.      

Parents changed their wills so that she didn't get anything until that debt was paid off and then she got 1/4 of what was left after that.  

The parents were so angry.  They were definitely not responsible adults.  

[azucena]

DH fwd'd the article to his friend C and offered to help him look into it further. Friend hadn't heard yet and was not going to get his hopes up.

Current loan balance is over $40k. C declared bankruptcy in 2018 but this still follows him. I had forgotten that he had some medical issues with limited insurance and owed over $100k.

[nidena]

I have a friend who took out loans in her 40s, in the 1990s.  I think the original loan was for $20,000 or something.  For various reasons and due to many circumstances, she rarely got statements.  Mostly, she moved often.  She's also one of those people who doesn't really think about bills unless there's a statement in front of her.  Back in 2018, she worked at the college I attended, her paychecks were getting garnished for $300 each time.  It barely made a dent in the $50,000 balance because they go towards fees, then interest, then principal.  Now, she's nearly 80 and SS is her primary income.

The whole SL structure is such a racket.

[Deleted]

Aug 28, 2021 10:31:54 GMT -5 nidena said:

I have a friend who took out loans in her 40s, in the 1990s.  I think the original loan was for $20,000 or something.  For various reasons and due to many circumstances, she rarely got statements.  Mostly, she moved often.  She's also one of those people who doesn't really think about bills unless there's a statement in front of her.  Back in 2018, she worked at the college I attended, her paychecks were getting garnished for $300 each time.  It barely made a dent in the $50,000 balance because they go towards fees, then interest, then principal.  Now, she's nearly 80 and SS is her primary income.

The whole SL structure is such a racket.

I've read that they can attach your SS to pay certain student loans as well.  

In  a long FB discussion on this, one woman complained that she'd made income-based repayments and the balance just kept growing- I assume that the income-based payments were lower than what was needed even to pay interest so the amount she owed increased every month.  It just makes the situation worse unless you suddenly get into a job with double your original pay or marry someone with the bucks to pay it off.  

I'd be in favor of holding someone responsible for paying off principal only if they could show hardship.  

We still need to make sure we don't create incentives for "educational institutions" to accept students who have little chance of being able to do the work, providing them with no real education and signing them up for loans that they'll never be able to pay off given the income potential in their career track.  Government-guaranteed loans enabled places such as ITT Tech to thrive for years.

[nidena]

studentloanhero.com/featured/social-security-payments-for-student-loans/ 

"With the Debt Collection Improvement Act of 1996, the government allowed for garnishment of Social Security benefits but set a limit on how much can be offset. Per the act, the government can’t take any more than 15% of your Social Security payments, nor can it leave you with less than $750 in monthly benefits."

"Of the $1.1 billion garnished from benefits as of 2016, more than 70% had gone to paying off fees and interest, rather than the borrower’s actual debt."

[mroped]

Aug 28, 2021 7:56:04 GMT -5 azucena said:

DH fwd'd the article to his friend C and offered to help him look into it further. Friend hadn't heard yet and was not going to get his hopes up.

Current loan balance is over $40k. C declared bankruptcy in 2018 but this still follows him. I had forgotten that he had some medical issues with limited insurance and owed over $100k.

Education loans being paid at least partially by the borrowers, I can get on that train but being in debt because you got sick, that is an absolute “Hell, NO!”
That is the worst punishment that can be rendered on anyone!

[formerroomate99]

Aug 27, 2021 21:48:26 GMT -5 sesfw said:

I have to wonder how much of the loan balances canceled were mostly interest and fees that ballooned the loan balance.

I've wondered this myself.  I think for student loans everything should be cancelled except the original amount.  Once that is paid back, then the debt is gone.

Get rid of the interest and fee build up

It also seems just plain ridiculous that banks are allowed to charge 9% interest on a loan that can’t ever be discharged in bankruptcy.

[formerroomate99]

Aug 28, 2021 10:42:24 GMT -5 @athena53 said:

Aug 28, 2021 10:31:54 GMT -5 nidena said:

I have a friend who took out loans in her 40s, in the 1990s.  I think the original loan was for $20,000 or something.  For various reasons and due to many circumstances, she rarely got statements.  Mostly, she moved often.  She's also one of those people who doesn't really think about bills unless there's a statement in front of her.  Back in 2018, she worked at the college I attended, her paychecks were getting garnished for $300 each time.  It barely made a dent in the $50,000 balance because they go towards fees, then interest, then principal.  Now, she's nearly 80 and SS is her primary income.

The whole SL structure is such a racket.

I've read that they can attach your SS to pay certain student loans as well.  

In  a long FB discussion on this, one woman complained that she'd made income-based repayments and the balance just kept growing- I assume that the income-based payments were lower than what was needed even to pay interest so the amount she owed increased every month.  It just makes the situation worse unless you suddenly get into a job with double your original pay or marry someone with the bucks to pay it off.  

I'd be in favor of holding someone responsible for paying off principal only if they could show hardship.  

We still need to make sure we don't create incentives for "educational institutions" to accept students who have little chance of being able to do the work, providing them with no real education and signing them up for loans that they'll never be able to pay off given the income potential in their career track.  Government-guaranteed loans enabled places such as ITT Tech to thrive for years.

Others have suggested making the colleges responsible for part of the defaulted loans. You would see a lot fewer colleges admitting marginal students for majors in underwater basket weaving.

The other issue is the lack of data available. The colleges have the students social security numbers and what they graduated in. The IRS has their tax records. It would not be that hard to join those two data sets so that people have a very firm idea of what a degree in X from University Y is worth. An awful lot of these people with worthless degrees from worthless universities were lied to. Making the data available and publicizing it would make these lies impossible.

One of the universities by me has a degree in gaming programming. But since they know that it’s a highly competitive field, they only allow a very small number of the very best students into that program. Meanwhile, other programs where there’s a huge demand for the skill sets can admit for more students.That’s the way it should be.

[thyme4change]

Aug 28, 2021 7:49:10 GMT -5 TheOtherMe said:

My dear friend's daughter borrowed a substantial sum of money supposedly to pay off their credit cards.  Immediately cashed the check and declared bankruptcy the next day.      

Parents changed their wills so that she didn't get anything until that debt was paid off and then she got 1/4 of what was left after that.  

The parents were so angry.  They were definitely not responsible adults.  

Doesn't bankruptcy have a look back period? I would think that money would be visible during the BK and would become a sticking point. I should ask my husband.

[TheOtherMe]

All I know is my friend talked about it until her death.  I am not an expert on bankruptcy.