raeoflyte
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Post by raeoflyte on Aug 24, 2022 7:34:29 GMT -5
Student loans have become predatory. The private loans always were. Government ones have good intentions, but need a complete overhaul. We can blame the borrowers. That's the easiest path and there is always personal responsibility / a poor choice in play when something goes wrong. But who has the most responsibility? The singular borrower who is playing the game the way society encourages? Or the corporate entity making money off of thousands of singular borrowers? Interest rates on student loans are way too high. Servicing of them has been a shit show. If you can only get out of a loan by dying, there better be some clear options for what options are available when plan a flounders. Indemnifying education lenders (not discharging education loans during bankruptcy) made it possible for lenders to make loans without regard to whether or not the education received will generate enough income to pay off the loan. The result is inexperienced young people who borrow $125,000 or $150,000 for a degree that that qualifies them for a $12,000 a year job. Hell, the lenders know that degrees in Fine Arts, Education, Social Work or the like can’t support massive student loan payments. But they still make the loans. Because they can make lots of money from interest, fees, and penalties on delinquent loans. And the borrowers can never get out from under the loans. The fees and penalties go on until the borrower dies. Borrowers with oversized loans are literally fee’d and penalty’d to death. If education lenders were accountable for being sure that borrowers will be able to repay student loans, like lenders are responsible to ensure that borrowers can repay car loans or mortgages, education lenders would not lend hundreds of thousands of dollars to students pursuing degrees in Interdisciplinary Studies or Buggy Whip Making. We'll lose a lot of education for the sake of education, or at least push that only to the realm of the elite with harsh requirements like that. We still need teachers, librarians, and plenty of jobs that do require an education that don't make sense financially. We need to limit fees and interest rates. Allow deferment that actually let borrowers get back on their feet, not set them back years. Prorated forgiveness options if someone works a few years in a qualifying position but not the 10+ time to get the forgiveness. If someone is disabled, student loans need to be forgiven. Get the cost of college under control. Maybe corporate funding of education based on education required. That would make businesses really think if their entry level employees needed a degree or not.
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wvugurl26
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Post by wvugurl26 on Aug 24, 2022 7:50:36 GMT -5
The state of Maryland was basically forced to remove the college degree requirement from a bunch of lower level positions because they were going unfilled. The positions didn't need a degree but it was in the requirements.
The industry badly needs reform. I don't want education to just be for the rich but people need to really understand how badly 6 figures of loans are going to impact you based on your expected earnings.
We need teachers, social workers, etc. Maybe there needs to be grants for those areas?
I know someone who chose to go out of state to basically follow her boyfriend to college. There were many quality options in her state. She racked up 6 figures in loans for out of state tuition and living expenses and got a masters in education. She may have taught one year before deciding that wasn't for her despite all her proclamations that our university did student teaching early on to help get that experience prior to your last semester. Back to school with more loans to go into counseling.
Her DH has his own loans I'm sure probably in the 6 figure amount as well but he's a physician. He went into family practice so no big earnings there. They'll have loans forever.
I personally know some who could have made much better decisions. Were those 5 years worth tanking financial stability for the rest of your life? I heard to limit your loans to what you could reasonably expect to earn in your first year out of college. I halved that for myself down to $20k. And it was still a struggle for me after I had to move out of state to a HCOL area to get my second professional job.
In no other industry do we allow lenders to give tens of thousands of dollars to 18 year olds with no job and no credit. It's a huge mess and forgiveness helps but doesn't address the cause of the problem.
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Tiny
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Post by Tiny on Aug 24, 2022 12:02:46 GMT -5
Student loans have become predatory. The private loans always were. Government ones have good intentions, but need a complete overhaul. We can blame the borrowers. That's the easiest path and there is always personal responsibility / a poor choice in play when something goes wrong. But who has the most responsibility? The singular borrower who is playing the game the way society encourages? Or the corporate entity making money off of thousands of singular borrowers? Interest rates on student loans are way too high. Servicing of them has been a shit show. If you can only get out of a loan by dying, there better be some clear options for what options are available when plan a flounders. Indemnifying education lenders (not discharging education loans during bankruptcy) made it possible for lenders to make loans without regard to whether or not the education received will generate enough income to pay off the loan. The result is inexperienced young people who borrow $125,000 or $150,000 for a degree that that qualifies them for a $12,000 a year job. Hell, the lenders know that degrees in Fine Arts, Education, Social Work or the like can’t support massive student loan payments. But they still make the loans. Because they can make lots of money from interest, fees, and penalties on delinquent loans. And the borrowers can never get out from under the loans. The fees and penalties go on until the borrower dies. Borrowers with oversized loans are literally fee’d and penalty’d to death. If education lenders were accountable for being sure that borrowers will be able to repay student loans, like lenders are responsible to ensure that borrowers can repay car loans or mortgages, education lenders would not lend hundreds of thousands of dollars to students pursuing degrees in Interdisciplinary Studies or Buggy Whip Making.I'm gonna take issue with that last part. Most of the for profit schools that had lawsuits against them or used predatory lending (and for which the loans were forgiven in full) weren't giving loans for "fluff" degrees. They were pedaling degrees in law enforcement, nursing, IT, culinary, hospitality, and who knows what else with little regard for actually placing graduates in positions. (There's a for profit IT school that isn't churning out "top of the line" newly minted IT people. I heard a rumor that most graduates from it - often pad their resumes with all the other certificates they've acquired or indicate that they are in a degree program from another better college/university to compensate for having that school listed on their resume. so sure they paid a lot of money for a degree that may have helped them get their foot in the door - but they probably would have been better off financially doing what they needed to do to get into one of the other schools offering that type of degree. The for profit school wasn't any less expensive than the others.) That said: I wonder what the % of graduates for degrees that would fall into the ??category?? of useless degrees and who truly never found a job where the skills learned weren't applicable or maybe who only qualified for minimum wage jobs that did NOT lead to higher paying job at some point in a career path. And why were those specific people encouraged to follow that career path? to complete that degree? and to take out large loans to do it?
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Tiny
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Post by Tiny on Aug 24, 2022 12:33:32 GMT -5
I know someone who chose to go out of state to basically follow her boyfriend to college. There were many quality options in her state. She racked up 6 figures in loans for out of state tuition and living expenses and got a masters in education. She may have taught one year before deciding that wasn't for her despite all her proclamations that our university did student teaching early on to help get that experience prior to your last semester. Back to school with more loans to go into counseling. I'm guessing she's following a career path that would result in "loan forgiveness" anyway. I have a relative who started out on a "I want to be social worker" path - she had some other better description of what she wanted to do I just can't find the right words. "social worker" is a blanket term, here. She took on a lot of student debt to finance her college lifestyle. She graduated and then floundered finding a job. She also managed to outgrow some of the preconceptions about how life actually works - or maybe once she was out of the "college student bubble" her misconceptions/expectations got a kick in the gut. She found a significant other that also threw a wrench in her plans (who's career is more important??). She moved towards education/teaching and got a degree/certificates so she could teach. She's actually a very good teacher. I'm sure she has a shit ton of student loans - but is following a career/income path that should result in loan forgiveness at some point. In the mean time she IS making payments as required - there's just no way she will ever be able to actually pay off the full amount (the majority of which seems to be accrued interest.) I am ok with this... especially since the 10 years that she's been paying on the loans - interest rates on houses and cars were DRAMATICALLY lower than rates on most student loans. What kind of whacked out world is it when getting the skills to do a job (or be a more well rounded educated person) has an interest rate more than on a house or a vehicle or other sorts of CONSUMER debt?? Especially when the skills/job being done has a long history of being low paid but you want the "best and the brightest" doing that job??
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Tiny
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Post by Tiny on Aug 24, 2022 12:43:37 GMT -5
I am not saying that the current cost of education is NOT outrageous. I'm NOT saying that the current way this all happens isn't broken.
I'm just thinking it's not a good thing to blame the 'victims' of this mess (cause that's what it sounds like just a little bit)... I'm pretty sure most students don't start out down a path of higher education going "yeah baby! I'm gonna stick it to the man! take the money and run! Life is Good!!!".
OK, maybe I'm just too idealistic and my generally high expectations for my fellow humans is misplaced.
(and FWIW: how many "poor" people or minorities get railroaded into those shady for profit schools? or lower end schools with high interest loans? you know -- where when the school's name appears on your resume the reader of that resume can make some stereotypical assumptions about the applicant? )
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CCL
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Post by CCL on Aug 24, 2022 12:57:59 GMT -5
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haapai
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Post by haapai on Aug 24, 2022 15:15:01 GMT -5
Wow, he did it! I hope this changes a lot of lives. I'm a bit weak on what the changes to IDR programs will mean, specifically reducing payments to 5% of discretionary income. It may result in a lot more people in IDR programs making payments that do not cover the interest and it is unclear whether the president has the ability to change these programs to get the unpaid interest paid by the government in order to keep these debts from growing to astounding sizes.
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TheOtherMe
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Post by TheOtherMe on Aug 24, 2022 15:25:24 GMT -5
I was glad to see an income cap on the forgiveness.
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Post by minnesotapaintlady on Aug 24, 2022 15:34:40 GMT -5
I'm a little torn on this, while I won't turn down the money, I don't think it's ultimately helpful like lowering interest rates or allowing student loans to be included in bankruptcy would be, but at the same time, Biden couldn't do that without the help of Congress, so it was basically all he could do. I'm also hearing there might be legal battles just on the forgiveness, but who knows. Lots of "discussion" going on right now.
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pooks
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Post by pooks on Aug 24, 2022 15:46:45 GMT -5
Congrats to all those who will get some relief from this. I can't say I understand all the in and outs, but is sounds good, even to me who paid off my loans a decade ago. Good job Joe!
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haapai
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Post by haapai on Aug 24, 2022 15:50:57 GMT -5
I was glad to see an income cap on the forgiveness. It will be interesting to find out if the income number that determines eligibility is gross income or AGI. If it's the latter, a whole lot more people are eligible for forgiveness.
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Post by minnesotapaintlady on Aug 24, 2022 15:56:32 GMT -5
I was glad to see an income cap on the forgiveness. It will be interesting to find out if the income number that determines eligibility is gross income or AGI. If it's the latter, a whole lot more people are eligible for forgiveness. I would assume AGI since that is what is on your tax return and what they've used for all the loan repayment programs.
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haapai
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Post by haapai on Aug 24, 2022 16:13:35 GMT -5
I suspect that you are right MPL. They tend to use AGI for everything else, so they'll probably use it here too, even though they have the ability to calculate gross income if they have the W-2s.
Households who are on the cusp of eligibility for student loan debt cancellation may be able to manipulate their 2022 AGI to get under the $125K and $250K caps. Re-characterizing Roth contributions as traditional IRA or 401(k) contributions is the big tip here.
Pushing money that you had set aside to fund a January 2023 IRA contribution into a workplace 401(k) that is not already maxed will work too. $10K is a big number.
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Tiny
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Post by Tiny on Aug 24, 2022 16:24:24 GMT -5
OK, it looks like it's 10K or up to 20K in forgiveness of certain types of loans. and here's some snark not directed to anyone here == but because I'm gonna have to say something like this to some of my angry relatives who HATE helping other people. The gnashing of teeth on how underserving people will be getting off scot free seems to be VERY wrong... What's the typical student loan amount for the majority of people? I think it was under 30K?? I'm guessing that 10K (or 20K) in forgiveness may actually help a lot of people with lingering student loans. Give them a light at the end of the tunnel. Allow them to more fully participate in the American consumer economy because they may have one less bill or be closer to having one less bills And for the people upset that the people with 6 figure student loans who are working low paying jobs - no need to gnash/grind your teeth - they will still have large loans that they will still have to pay on. I'm guessing that's a "feel good" Hopefully, there will be ALOT of deserving people across America who will receive some benefit from this. I know, it hurts, your tax dollars helping other people who are not worthy of help but think about the people it WILL help.
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Post by minnesotapaintlady on Aug 24, 2022 16:30:43 GMT -5
OK, it looks like it's 10K or up to 20K in forgiveness of certain types of loans. It's 20K if you were also a Pell recipient, but I haven't seen any details on what that means since Pell is awarded annually. If you received a $200 Pell grant one year of the 4 are you eligible for the 20K? Seven of ten Federal loans are to students that also received a Pell, so it's likely many will be eligible for the 20K.
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haapai
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Post by haapai on Aug 24, 2022 16:33:44 GMT -5
I'm braced for hearing a whole lot of whining and jealousy when I go back to work. Coworkers who never went to college, or had student loan debts garnished out of their hides, will probably be saying some pretty hateful things about this forgiveness.
There are people in this world who go absolutely mad when someone else gets a cookie and they don't get one.
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Post by minnesotapaintlady on Aug 24, 2022 16:34:34 GMT -5
I suspect that you are right MPL. They tend to use AGI for everything else, so they'll probably use it here too, even though they have the ability to calculate gross income if they have the W-2s.
Households who are on the cusp of eligibility for student loan debt cancellation may be able to manipulate their 2022 AGI to get under the $125K and $250K caps. Re-characterizing Roth contributions as traditional IRA or 401(k) contributions is the big tip here.
Pushing money that you had set aside to fund a January 2023 IRA contribution into a workplace 401(k) that is not already maxed will work too. $10K is a big number.
I believe I read somewhere it's based on 2020 or 2021 tax returns. It's also only for loans that originated before July 1, 2022, so you can't go out and quick borrow more.
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haapai
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Post by haapai on Aug 24, 2022 16:53:38 GMT -5
No, you can't borrow more, but you can manipulate your AGI or at least project your 2022 AGI and figure out that you are on the good side of it and stop complaining about someone else getting something that you are not getting when you actually are likely to get it.
I'm using a generic "you" here. I'm not talking to you MPL. You've shared enough about your finances over the years that I am pretty sure that your oldest will get some relief, even if X#1's income was included in his FAFSA.
For a $10K reduction in debt, a lot of people can afford to deviate from their ideal plan. If reducing your 2022 AGI by $5K will net you $10K in debt reduction, maybe this is the time to increase your 401(k) contributions, even if it means pulling from your EF in order to pay the bills.
OTOH, even if you have four months to reduce your AGI under the limit, getting your income under an AGI limit is tricky. I've done it once in order to get a larger (50%) Savers' Tax Credit and it was tight even though I had the cash in savings to live on.
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Post by minnesotapaintlady on Aug 24, 2022 16:59:38 GMT -5
No, you can't borrow more, but you can manipulate your AGI or at least project your 2022 AGI and figure out that you are on the good side of it and stop complaining about someone else getting something that you are not getting when you actually are likely to get it.
I'm using a generic "you" here. I'm not talking to you MPL. You've shared enough about your finances over the years that I am pretty sure that your oldest will get some relief, even if X#1 claims him as a dependent.
For a $10K reduction in debt, a lot of people can afford to deviate from their ideal plan. If reducing your 2022 AGI by $5K will net you $10K in debt reduction, maybe this is the time to increase your 401(k) contributions, even if it means pulling from your EF in order to pay the bills.
OTOH, even if you have four months to reduce your AGI under the limit, getting your income under an AGI limit is tricky. I've done it once in order to get a larger (50%) Savers' Tax Credit and it was tight even though I had the cash in savings to live on.
My point is you can't manipulate 2020 or 2021 income anymore.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 24, 2022 18:18:03 GMT -5
The Aging Student Debtors of AmericaOf the forty-five million Americans who hold student debt, one in five are over fifty years old. Between 2004 and 2018, student-loan balances for borrowers over fifty increased by five hundred and twelve per cent.
For aging borrowers on declining incomes, the crisis is acute: student debtors over sixty-five default at the highest rates. In 2015, more than a third of borrowers in their age group defaulted on their educational loans. I wonder if this refers to money borrowed for their own Education, or if it is Parent Plus loan $$? the data on a sample of 1 is.... both
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 24, 2022 18:23:26 GMT -5
the problem is servicing student loans grew into a very profitable enterprise. The origination fees and interest rates were higher than mortgages, and non-dischargeable in bankrupcy. So it was win-win-win for the loaners, and lose-lose-lose for the borrowers. The cost of an education has inflated astronimically - the guy down the street is pay more for health insurance and medical care, dental care, legal services, and a lot of other stuff because of the high cost to educate those providers, who typically shoulder very high student loan balances with substantial interest rates. Unfortunately, the guy down the street is typically too stupid to realize how that all works. Unfortunately, even if all student loans were wiped out tomorrow a lot of these fees likely won't come down as they have become standard and customary. Would take some time for them to be impacted. If these loans are non-dischargeable, the terms should be nominal. If we want an educated population, with reasonably priced services, the terms should be nominal. It should not have morphed into a huge profitabe industry. No need to forgive the loans, just credit back all the fees and interest and that would be fine in my book. Going forward, terms should be nominal, just enough to fund the program and get the money back to fund the next cohort. Overall college cost should also be addressed, but that is a whole nuther ball of wax. I see this very simply. If you borrow the money on agreed upon terms in a legally binding manner, you should be obligated to repay the loan consistent with those terms. I understand people may have regretted agreeing to those terms. I understand people may be dealing with significant financial hardship because they signed these notes. It is an absolute insult to the people who met their loan commitments, and to the people who did not go to college/grad school to make them pay for these student loans. The fact that a bunch of people made bad financial decisions is not everyone's problem. It is the debtors' probelm. that is pretty simple, and apparently the founding fathers disagreed wholeheartedly as congresses capacity to make laws regarding bankrupcy was included int he constitution
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tskeeter
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Post by tskeeter on Aug 24, 2022 18:25:14 GMT -5
Indemnifying education lenders (not discharging education loans during bankruptcy) made it possible for lenders to make loans without regard to whether or not the education received will generate enough income to pay off the loan. The result is inexperienced young people who borrow $125,000 or $150,000 for a degree that that qualifies them for a $12,000 a year job. Hell, the lenders know that degrees in Fine Arts, Education, Social Work or the like can’t support massive student loan payments. But they still make the loans. Because they can make lots of money from interest, fees, and penalties on delinquent loans. And the borrowers can never get out from under the loans. The fees and penalties go on until the borrower dies. Borrowers with oversized loans are literally fee’d and penalty’d to death. If education lenders were accountable for being sure that borrowers will be able to repay student loans, like lenders are responsible to ensure that borrowers can repay car loans or mortgages, education lenders would not lend hundreds of thousands of dollars to students pursuing degrees in Interdisciplinary Studies or Buggy Whip Making.I'm gonna take issue with that last part. Most of the for profit schools that had lawsuits against them or used predatory lending (and for which the loans were forgiven in full) weren't giving loans for "fluff" degrees. They were pedaling degrees in law enforcement, nursing, IT, culinary, hospitality, and who knows what else with little regard for actually placing graduates in positions. (There's a for profit IT school that isn't churning out "top of the line" newly minted IT people. I heard a rumor that most graduates from it - often pad their resumes with all the other certificates they've acquired or indicate that they are in a degree program from another better college/university to compensate for having that school listed on their resume. so sure they paid a lot of money for a degree that may have helped them get their foot in the door - but they probably would have been better off financially doing what they needed to do to get into one of the other schools offering that type of degree. The for profit school wasn't any less expensive than the others.) That said: I wonder what the % of graduates for degrees that would fall into the ??category?? of useless degrees and who truly never found a job where the skills learned weren't applicable or maybe who only qualified for minimum wage jobs that did NOT lead to higher paying job at some point in a career path. And why were those specific people encouraged to follow that career path? to complete that degree? and to take out large loans to do it? Ya kinda missed my real point. It’s not about fluff degrees. It’s about education lenders having no risk of loss when they lend massive amounts of money for educations that will generate very modest incomes. Making loans that borrowers are unlikely to be able to repay generally isn’t good business.
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raeoflyte
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Post by raeoflyte on Aug 24, 2022 18:33:08 GMT -5
I'm gonna take issue with that last part. Most of the for profit schools that had lawsuits against them or used predatory lending (and for which the loans were forgiven in full) weren't giving loans for "fluff" degrees. They were pedaling degrees in law enforcement, nursing, IT, culinary, hospitality, and who knows what else with little regard for actually placing graduates in positions. (There's a for profit IT school that isn't churning out "top of the line" newly minted IT people. I heard a rumor that most graduates from it - often pad their resumes with all the other certificates they've acquired or indicate that they are in a degree program from another better college/university to compensate for having that school listed on their resume. so sure they paid a lot of money for a degree that may have helped them get their foot in the door - but they probably would have been better off financially doing what they needed to do to get into one of the other schools offering that type of degree. The for profit school wasn't any less expensive than the others.) That said: I wonder what the % of graduates for degrees that would fall into the ??category?? of useless degrees and who truly never found a job where the skills learned weren't applicable or maybe who only qualified for minimum wage jobs that did NOT lead to higher paying job at some point in a career path. And why were those specific people encouraged to follow that career path? to complete that degree? and to take out large loans to do it? Ya kinda missed my real point. It’s not about fluff degrees. It’s about education lenders having no risk of loss when they lend massive amounts of money for educations that will generate very modest incomes. Making loans that borrowers are unlikely to be able to repay generally isn’t good business. It is for these lenders though! That's the problem.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 24, 2022 18:44:13 GMT -5
I'm a bit surprised it isn't more nuanced, with an all or nothing at a certain income level and yes/no on pell grant.
so someone who had the pell grant and makes 120k a year with a 25k sl balance has the debt nearly whiped out, and someone who makes 40k a year with 80k sl balance who didn't have a pell grant gets only 10k of forgiveness.
I wonder if there will be more nuance as we learn more?
Just reading the bullet points, doesn't seem like it should have taken so much time to come up with!
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Post by minnesotapaintlady on Aug 24, 2022 19:50:38 GMT -5
I'm a bit surprised it isn't more nuanced, with an all or nothing at a certain income level and yes/no on pell grant. so someone who had the pell grant and makes 120k a year with a 25k sl balance has the debt nearly whiped out, and someone who makes 40k a year with 80k sl balance who didn't have a pell grant gets only 10k of forgiveness. I wonder if there will be more nuance as we learn more? Just reading the bullet points, doesn't seem like it should have taken so much time to come up with! I thought the whole Pell part was stupid, especially if it's true what they keep saying about 70% of all Federal loans are to Pell recipients. If that's really true it sure seems like it would have been a lot easier to just give 20K to all and not bother sorting through? And do you have to have received a Pell for every semester that you're looking for loan forgiveness from or does being a one time receiver of a Pell qualify you to check the box? Plus we're talking about their financial situation in college which could have been 10-15 years ago and really almost all college students were broke in college so we're really looking at their parents financial situation while they were in college.
I'm saying this as a parent of a Pell kid too, so it's not jealousy. My son's roommate freshman year was taking 15K/year in student loans because he didn't qualify for aid and his parents told him he was on the hook for anything over X. It seems odd to me that my kid would be eligible for more help when he already got a ton.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 24, 2022 20:20:22 GMT -5
I'm a bit surprised it isn't more nuanced, with an all or nothing at a certain income level and yes/no on pell grant. so someone who had the pell grant and makes 120k a year with a 25k sl balance has the debt nearly whiped out, and someone who makes 40k a year with 80k sl balance who didn't have a pell grant gets only 10k of forgiveness. I wonder if there will be more nuance as we learn more? Just reading the bullet points, doesn't seem like it should have taken so much time to come up with! I thought the whole Pell part was stupid, especially if it's true what they keep saying about 70% of all Federal loans are to Pell recipients. If that's really true it sure seems like it would have been a lot easier to just give 20K to all and not bother sorting through? And do you have to have received a Pell for every semester that you're looking for loan forgiveness from or does being a one time receiver of a Pell qualify you to check the box? Plus we're talking about their financial situation in college which could have been 10-15 years ago and really almost all college students were broke in college so we're really looking at their parents financial situation while they were in college.
I'm saying this as a parent of a Pell kid too, so it's not jealousy. My son's roommate freshman year was taking 15K/year in student loans because he didn't qualify for aid and his parents told him he was on the hook for anything over X. It seems odd to me that my kid would be eligible for more help when he already got a ton.
good point, so favoring recent grads if assuming income increases - so someone who took out 150k loans 10 years ago and worked their way up and now making 150k with still a 100k balance - no soup for you! figuring AGI likely over 125k. And then the effects of getting 20k forgiven 3-4 years after graduating is going to be much more impactful than after carrying and servicing that debt for 10-15 or more years....and then some in that situation not getting the forgiveness because income got higher - even though they scrapped along for years paying the IBR at lower salary levels. Likely impossible to do something universally fair and embraced, lol! Is it a done deal, or does it need to go through congress?
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Post by minnesotapaintlady on Aug 24, 2022 21:01:32 GMT -5
I thought the whole Pell part was stupid, especially if it's true what they keep saying about 70% of all Federal loans are to Pell recipients. If that's really true it sure seems like it would have been a lot easier to just give 20K to all and not bother sorting through? And do you have to have received a Pell for every semester that you're looking for loan forgiveness from or does being a one time receiver of a Pell qualify you to check the box? Plus we're talking about their financial situation in college which could have been 10-15 years ago and really almost all college students were broke in college so we're really looking at their parents financial situation while they were in college.
I'm saying this as a parent of a Pell kid too, so it's not jealousy. My son's roommate freshman year was taking 15K/year in student loans because he didn't qualify for aid and his parents told him he was on the hook for anything over X. It seems odd to me that my kid would be eligible for more help when he already got a ton.
good point, so favoring recent grads if assuming income increases - so someone who took out 150k loans 10 years ago and worked their way up and now making 150k with still a 100k balance - no soup for you! figuring AGI likely over 125k. And then the effects of getting 20k forgiven 3-4 years after graduating is going to be much more impactful than after carrying and servicing that debt for 10-15 or more years....and then some in that situation not getting the forgiveness because income got higher - even though they scrapped along for years paying the IBR at lower salary levels. Likely impossible to do something universally fair and embraced, lol! Is it a done deal, or does it need to go through congress?No congress. It was done on an executive order due to a law put in place during 2003 but I have heard the legality for using it for this is probably going to be challenged, so sit tight. What would really help, like changing interest rates or making student loans dischargeable in bankruptcy would require congress, this is essentially all he could do without bipartisan support in congress.
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teen persuasion
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Post by teen persuasion on Aug 24, 2022 21:11:52 GMT -5
fact sheet from the white houseThe link goes into more detail, and some of the background thought process of the parts. My kids had Pell grants, so they should be eligible for the $20k. Lord knows none of us are disqualified by the $125k single / $250k married income cutoff. Dependent borrowers would be judged on parents' income, non-dependents on their own income. There was mention that this forgiveness will NOT be taxable. I'm waiting to see how it all plays out - the devil's in the details. I'm also curious about all the new tweaks to the income based payment stuff. It sounds like the payment formula will reduce payments (5% of disposable income instead of 10%, and larger non-disposable base), and they will cover the borrower's unpaid interest so that balances can't grow, as long as borrowers are making payments. Then there's 20 years or 10 years to forgiveness for everyone (10 if original balance borrowed was <= $12k).
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 24, 2022 21:13:07 GMT -5
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 24, 2022 21:27:02 GMT -5
fact sheet from the white houseThe link goes into more detail, and some of the background thought process of the parts. My kids had Pell grants, so they should be eligible for the $20k. Lord knows none of us are disqualified by the $125k single / $250k married income cutoff. Dependent borrowers would be judged on parents' income, non-dependents on their own income. There was mention that this forgiveness will NOT be taxable. I'm waiting to see how it all plays out - the devil's in the details. I'm also curious about all the new tweaks to the income based payment stuff. It sounds like the payment formula will reduce payments (5% of disposable income instead of 10%, and larger non-disposable base), and they will cover the borrower's unpaid interest so that balances can't grow, as long as borrowers are making payments. Then there's 20 years or 10 years to forgiveness for everyone (10 if original balance borrowed was <= $12k). thanks for the info, glad your offspring will benefit so much! 2/3rds of balance is awesome! wonder if the income based payment stuff might help me on the tail end of things. If I retire in a few years, go to IBR, and then maybe? Would my years of payments counts - or would the 20 years start ticking only when I go into IBR? I'm also nearly 4 years into a job that qualifies for PSLF. I haven't signed up, thinking I'd never make it to 10 years. But maybe? Who knows what I'm doing one day to the next I seem to plan a lot of stuff, that's all rather conflictatory. Just like sometimes I have extra cash, and think of all the things I could do with it, make a few decisions, and then realize my plans spend it 3 times over and I didn't realize....
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