Another SL payment is coming

[haapai]

Sept 16, 2022 6:09:48 GMT -5 Ava said:

Sept 13, 2022 13:26:19 GMT -5 geenamercile said:

My guess, is that Ava will still be paying the same amount each month under her IBR plan for the graduate loans, as she was already.  So it won't really change her monthly payment at all.  It will just be split among less loans.  If it still doesn't cover the interest for the loans, then really her loans would just grow again so does the forgiveness really make a difference. If the forgiveness brings the balance down to a point where the IBR covers interest and some principle then it at least provides a light at the end of the tunnel, even if it doesn't make a difference currently with monthly out lay.           

Bingo.
This doesn't change things for me because IDR doesn't cover the interest.
And my highest interest is on undergraduate loans, which would qualify for the new IDR program where they cap your contributions at 5% of disposable income.
I'm still stuck with the graduate loans with high interest rate and the IDR doesn't cover them.
So this doesn't change things for me. It doesn't help. I'm grateful it will help many people, but I'm not one of them.

Have you checked out how this can help you down the road?  What I am talking about is the taxes on the amount forgiven when you complete IDR.  Having ten grand of debt cancelled and no longer accruing interest has got to have an effect. 

Have you actually calculated what your monthly payment would be in the new IDR program that defines discretionary income as the extent to which your AGI exceeds 225% of the poverty line instead of the 150% that they use now?  Would you even have a payment? 

If you put your remaining undergraduate loan into the new IDR program, it would stop growing.  It would stop growing even if you had a monthly payment that did not cover interest or had a monthly payment of $0. 

If you did not have undergraduate debt, would the amount that you are currently paying in your current IDR program cover the interest on the graduate loans? 

Even if transferring your remaining undergraduate debt into the new IDR program resets the cancellation clock, you might come out ahead or benefit from getting taxable debt forgiveness in different tax years.  ETA: When I wrote this, I was thinking about the undergraduate debt re-starting a 20-25 year clock, but if the amount is small enough, it may be eligible for cancellation after 10-12 years of qualifying payments.

FWIW, I do not have children or a spouse, so I have not considered how changes in the size of your family can change IDR payments. 

[Ava]

I think my undergraduate payments would be zero under the new program.
My graduate payments will be $250 to avoid interest from continuing to accrue.
So yes, my payment would go down from $350 to $250.
It's $100 less per month. If I were to only pay what IDR indicates, it would probably be less.
Much less. But then my balance would grow and I don't want the tax bomb that would come to me in the future.

[haapai]

I'm sorry Ava.  I hadn't been following the "what are you doing right now?" thread and I had not realized that you had decided to leave the US.  I would not have asked such badgering questions if I had read that post. 

On the other hand, you have probably done a few people a favor by posting the details of your loans.  It may help folks warm up to the scary idea of being in two different IDR programs. 

[haapai]

Hmm...I hadn't thought of this earlier.  In my prior posts regarding being in two different IDR programs, I was thinking only of having graduate loans in one of the existing IDR programs and undergraduate loans in the new IDR program. 

Is there any rule that forces someone to put all of their undergraduate loans into the new IDR program?  It occurs to me that splitting up undergraduate loans in two different IDR programs might be a strategy that some could benefit from.  The higher interest loans could be put into the new IDR program where the interest may be highly subsidized and the loans are eligible for forgiveness in 10 years or so.  The cheaper loans could be put in one of the existing IDR programs. 

[TheOtherMe]

6 GOP led states sued yesterday to stop the student loan forgiveness program


www.nbcnews.com/politics/politics-news/six-gop-led-states-sue-biden-administration-student-loan-forgiveness-p-rcna50024

Attorneys  general or solicitors general from the six states argued in the suit that the president's plan violates the separation of powers and a law that dictates how federal agencies can craft regulations. They also predicted that it will financially harm them, saying, for example, that the mass debt cancellation would cost Nebraska, Iowa, Kansas and South Carolina tax revenue.

[teen persuasion]

Sept 30, 2022 8:26:46 GMT -5 TheOtherMe said:

6 GOP led states sued yesterday to stop the student loan forgiveness program


www.nbcnews.com/politics/politics-news/six-gop-led-states-sue-biden-administration-student-loan-forgiveness-p-rcna50024

Attorneys  general or solicitors general from the six states argued in the suit that the president's plan violates the separation of powers and a law that dictates how federal agencies can craft regulations. They also predicted that it will financially harm them, saying, for example, that the mass debt cancellation would cost Nebraska, Iowa, Kansas and South Carolina tax revenue.

How does debt cancelation cost those states tax revenue?  If there was no debt cancelation, they wouldn't have tax revenue on those amounts (that residents would still be carrying as debt).  They are not taxing citizens on their debt repayment, right?

I don't get it.

[pulmonarymd]

They no longer want to make sense. They are basically toddlers who say no to something they don’t like. Logic has nothing to do with it

[haapai]

Sept 30, 2022 9:18:18 GMT -5 teen persuasion said:

Sept 30, 2022 8:26:46 GMT -5 TheOtherMe said:

6 GOP led states sued yesterday to stop the student loan forgiveness program


www.nbcnews.com/politics/politics-news/six-gop-led-states-sue-biden-administration-student-loan-forgiveness-p-rcna50024

How does debt cancelation cost those states tax revenue?  If there was no debt cancelation, they wouldn't have tax revenue on those amounts (that residents would still be carrying as debt).  They are not taxing citizens on their debt repayment, right?

I don't get it.

People with burdensome student loans frequently cannot contribute anything to traditional IRAs or traditional 401(k)s.  That is, they are forced take their earnings as current income in order to make their debt payments and if they do make retirement contributions, they are more likely to use a Roth IRA because contributions can be withdrawn at any time.  Most states use the AGI number on a taxpayer's federal return as a starting point for state taxes.  Anything that allows taxpayers to reduce their AGI and state taxes hurts those states. 

One of the first things that I did when I consolidated my loans in 2003 (halving the monthly payment) was to sign up for the 401(k) at work. 

[NomoreDramaQ1015]

Nebraska and Iowa are losing tax revenue because they are rapidly becoming shit hole states.   They've been losing young people for decades now and it is only going to keep getting worse.  

Not going to be too many old fart Republican rural folk to milk for much longer.

[haapai]

Sept 30, 2022 12:11:35 GMT -5 pulmonarymd said:

They no longer want to make sense. They are basically toddlers who say no to something they don’t like. Logic has nothing to do with it

Also true.  They throw tantrums whenever anyone else gets something nice.  Heck, they throw tantrums when they get something nice and everyone else does too. 

[haapai]

I find it interesting that the linked article does not mention the new IDR program at all.  IMO, the estimates of its cost are wild-ass guesses and probably on the low side.  We simply do not have the data on borrowers and their incomes or details regarding how the program will work to estimate how much it will cost. 

It may turn out to be much more expensive than the blanket forgiveness, at least once people figure out how generous it is.  The amount eventually forgiven may not be that large, but giving many borrowers an extra year (or many) of interest-free or highly subsidized interest and no principal payments is gonna be huge. 

[teen persuasion]

Sept 30, 2022 12:19:54 GMT -5 haapai said:

Sept 30, 2022 9:18:18 GMT -5 teen persuasion said:

How does debt cancelation cost those states tax revenue?  If there was no debt cancelation, they wouldn't have tax revenue on those amounts (that residents would still be carrying as debt).  They are not taxing citizens on their debt repayment, right?

I don't get it.

People with burdensome student loans frequently cannot contribute anything to traditional IRAs or traditional 401(k)s.  That is, they are forced take their earnings as current income in order to make their debt payments and if they do make retirement contributions, they are more likely to use a Roth IRA because contributions can be withdrawn at any time.  Most states use the AGI number on a taxpayer's federal return as a starting point for state taxes.  Anything that allows taxpayers to reduce their AGI and state taxes hurts those states. 

One of the first things that I did when I consolidated my loans in 2003 (halving the monthly payment) was to sign up for the 401(k) at work. 

Ok, at least logically plausible reasoning - it's what we did when we paid off the mortgage, too.  But it may be giving many people too much credit for doing the right thing, financially.

Flip side - don't many already use pre-tax retirement contributions to drive down their AGI to shrink their IBR/etc payments, too?  Especially if they expect to eventually get loans forgiven under PSFL.

[haapai]

Sept 30, 2022 12:33:38 GMT -5 teen persuasion said:

Sept 30, 2022 12:19:54 GMT -5 haapai said:

People with burdensome student loans frequently cannot contribute anything to traditional IRAs or traditional 401(k)s.  That is, they are forced take their earnings as current income in order to make their debt payments and if they do make retirement contributions, they are more likely to use a Roth IRA because contributions can be withdrawn at any time.  Most states use the AGI number on a taxpayer's federal return as a starting point for state taxes.  Anything that allows taxpayers to reduce their AGI and state taxes hurts those states. 

One of the first things that I did when I consolidated my loans in 2003 (halving the monthly payment) was to sign up for the 401(k) at work. 

Ok, at least logically plausible reasoning - it's what we did when we paid off the mortgage, too.  But it may be giving many people too much credit for doing the right thing, financially.

Flip side - don't many already use pre-tax retirement contributions to drive down their AGI to shrink their IBR/etc payments, too?  Especially if they expect to eventually get loans forgiven under PSFL.

I think that the not-particularly burdened ones do a fair amount of this but it is hard to do when you are broke and have no emergency fund.  It's hard for a person with no savings to push money into an account that they can't tap without penalties for decades. 

Social security and medicaid withholding/taxes also make it difficult to just shove current income into the future.  That 7.65% that social security and medicaid take out of your paycheck becomes a problem when you are really shoveling money into tax deferred accounts. 

[haapai]

Sept 30, 2022 12:33:38 GMT -5 teen persuasion said:

Sept 30, 2022 12:19:54 GMT -5 haapai said:

People with burdensome student loans frequently cannot contribute anything to traditional IRAs or traditional 401(k)s.  That is, they are forced take their earnings as current income in order to make their debt payments and if they do make retirement contributions, they are more likely to use a Roth IRA because contributions can be withdrawn at any time.  Most states use the AGI number on a taxpayer's federal return as a starting point for state taxes.  Anything that allows taxpayers to reduce their AGI and state taxes hurts those states. 

One of the first things that I did when I consolidated my loans in 2003 (halving the monthly payment) was to sign up for the 401(k) at work. 

Ok, at least logically plausible reasoning - it's what we did when we paid off the mortgage, too.  But it may be giving many people too much credit for doing the right thing, financially.

Flip side - don't many already use pre-tax retirement contributions to drive down their AGI to shrink their IBR/etc payments, too?  Especially if they expect to eventually get loans forgiven under PSFL.

Yeah, I thought that it was plausible.  Unfortunately, what I have described bears little resemblance to the actual claims of harm that are being presented. 

You really should check out this NPR story (no paywall, I read it instead of listening to it).  Please keep reading until you get to Arizona's argument.  They are basically arguing that giving relief to their PSLF-eligible debt-slaves hurts them.  They have absolutely no shame. 

[TheOtherMe]

Sept 30, 2022 12:20:12 GMT -5 NomoreDramaQ1015 said:

Nebraska and Iowa are losing tax revenue because they are rapidly becoming shit hole states.   They've been losing young people for decades now and it is only going to keep getting worse.  

Not going to be too many old fart Republican rural folk to milk for much longer.

Somehow the convoluted argument is something about it hurts the lenders and loan servicing companies from making money.  

We would rather do what makes big banks money than help people in this red state.  

In Iowa, the Democratic AG refused to sign off on the suit, so the governor herself signed off.  Thus her argument that she needs "her" AG and State Auditor.

I have also read comments that it's socialism to forgive student loan debt.

[minnesotapaintlady]

Sept 30, 2022 8:26:46 GMT -5 TheOtherMe said:

6 GOP led states sued yesterday to stop the student loan forgiveness program


www.nbcnews.com/politics/politics-news/six-gop-led-states-sue-biden-administration-student-loan-forgiveness-p-rcna50024

Attorneys  general or solicitors general from the six states argued in the suit that the president's plan violates the separation of powers and a law that dictates how federal agencies can craft regulations. They also predicted that it will financially harm them, saying, for example, that the mass debt cancellation would cost Nebraska, Iowa, Kansas and South Carolina tax revenue.

I heard that this is why they decided to make the FFEL loans no longer eligible this week.  It supposedly takes away any basis for a lawsuit.  We'll see I guess.

[teen persuasion]

Sept 30, 2022 13:38:46 GMT -5 haapai said:

Sept 30, 2022 12:33:38 GMT -5 teen persuasion said:

Ok, at least logically plausible reasoning - it's what we did when we paid off the mortgage, too.  But it may be giving many people too much credit for doing the right thing, financially.

Flip side - don't many already use pre-tax retirement contributions to drive down their AGI to shrink their IBR/etc payments, too?  Especially if they expect to eventually get loans forgiven under PSFL.

Yeah, I thought that it was plausible.  Unfortunately, what I have described bears little resemblance to the actual claims of harm that are being presented. 

You really should check out this NPR story (no paywall, I read it instead of listening to it).  Please keep reading until you get to Arizona's argument.  They are basically arguing that giving relief to their PSLF-eligible debt-slaves hurts them.  They have absolutely no shame. 

Thanks for the link.

They REALLY have no problem with promoting the notion that we must have an underclass kept in debt-thrall, for the sake of the ruling moneyed class, don't they?  The lenders deserve their interest income keep flowing, and we can't recruit w/o loan forgiveness to entice debt-slaves to work for us.  How dare you forgive their debts without making them work it off AND enrich us in the process?

[haapai]

Yeah, it really is an amazing claim and it is being made by the state of Arizona. 

I don't want to ding any state or institution or individual for accurately describing how they benefit from their PSLF-eligible employees being willing to accept lower wages in order to qualify for loan cancellation or merely survive.  Hell no.  We need to be able to describe labor markets accurately, no matter how squicky they are. 

But for the state to argue that they are being harmed by their debt-burdened employees getting some relief, that's just something that makes me want to spout profanity.  The state does not appear to be interested in the liberty of such employees.  They actually seem to be claiming arguing for the opposite. 

[Ava]

The application for forgiveness was supposed to be available in early October. We're almost at mid October now.
Why do I have the feeling it's going to be a mess and anything but "simple" as they promised?

[minnesotapaintlady]

Oct 8, 2022 12:07:52 GMT -5 Ava said:

The application for forgiveness was supposed to be available in early October. We're almost at mid October now.
Why do I have the feeling it's going to be a mess and anything but "simple" as they promised?

I've always just read "in October".

This is the email we got on Wednesday.

content.govdelivery.com/accounts/USED/bulletins/330b698

[Ava]

Everything I've read online said early October.
I'm checking daily, because I want to do it right away once it's available.

[minnesotapaintlady]

With FAFSA opening on Oct. 1st and notoriously crashing the system constantly for the first week or two due to everyone filling it out at once, I can't imagine they'd want to put a student loan forgiveness application on the site at the same time.

[teen persuasion]

Just saw on Twitter:

Studentaid.gov/debt-relief/application
It's a beta launch...

[haapai]

It's a really simple form.  You'll need to attest your income eligibility but you do not have to submit documentation of income at this time.  It also asks no questions regarding how much you owe or who owns the loans. 

If I still owed anything, I'd probably jump on it or spend the weekend hitting "refresh".  I do not understand how they will possibly be able to process these applications for relief before the restart of payments.  Are they going to throw people into administrative forbearance?  Are they going to recommend still making payments as if the relief has not been granted?  How are they going to handle over-payments that people make while awaiting relief? 

[minnesotapaintlady]

I filled the form out for DS this morning even though he's supposedly not supposed to have to.  He got the confirmation email it was received, so we'll see.  He was eligible for 20K, but only has 8 so far.  Hopefully it goes through, but we're fine either way.

[nidena]

I decided to go ahead and ask for the refund and forgiveness.  Once the refund is processed, I figure it's best to hang on to it until the forgiveness is processed.  $350 in State and County tax really is very little to pay to get $6160 taken care of.

[haapai]

Here's another interesting detail regarding the beta application for relief.  It does not ask for a mailing address. 

It asks for a phone number and an email address and asks for a confirmation of the e-mail address and it appears that those last three fields are required, but it does not ask for a mailing address. 

I'm kinda scratching my head over this choice.  Maybe this omission is comforting to folks who were in default and living under the fear of garnishment, or is somehow intended to flummox the scammers who are already targeting anyone who might be eligible for cancellation.  On the other hand, it just seems weird to not ask for something so basic to communicating with someone or useful for verification. 

I'm getting some bad vibes regarding how organized this forgiveness/cancellation process is.  I nearly choked when I read the boilerplate accompanying the beta launch which stated that there was no advantage to applying early.  (Of course there is an advantage to applying early before the web site crashes repeatedly.) 

I'm getting a nasty sense that a lot of the announcements regarding this program are being timed by the election.  No promises and no details are being provided prior to the election and what comes after the election might be a mess too.  A die-hard democrat like myself isn't supposed to say things like this where they can be quoted or misconstrued, but I'm doing it anyways.  At the very least, I expect some slip-shoddery to emerge after the election. 

[minnesotapaintlady]

Oct 16, 2022 12:40:15 GMT -5 haapai said:

Here's another interesting detail regarding the beta application for relief.  It does not ask for a mailing address. 

It asks for a phone number and an email address and asks for a confirmation of the e-mail address and it appears that those last three fields are required, but it does not ask for a mailing address. 

I'm kinda scratching my head over this choice.  Maybe this omission is comforting to folks who were in default and living under the fear of garnishment, or is somehow intended to flummox the scammers who are already targeting anyone who might be eligible for cancellation.  On the other hand, it just seems weird to not ask for something so basic to communicating with someone or useful for verification. 

I'm getting some bad vibes regarding how organized this forgiveness/cancellation process is.  I nearly choked when I read the boilerplate accompanying the beta launch which stated that there was no advantage to applying early.  (Of course there is an advantage to applying early before the web site crashes repeatedly.) 

I'm getting a nasty sense that a lot of the announcements regarding this program are being timed by the election.  No promises and no details are being provided prior to the election and what comes after the election might be a mess too.  A die-hard democrat like myself isn't supposed to say things like this where they can be quoted or misconstrued, but I'm doing it anyways.  At the very least, I expect some slip-shoddery to emerge after the election. 

There's not a whole lot they can do right now.  The most recent lawsuit required they agreed that there would be no action taken before 10/23.  As far as address, I would think the loan servicers all have that already.

[haapai]

Refresh my memory or just fill me in on the news.  This most recent agreement that there would be no action taken until 10/23, was that regarding the cancellation or the new IBR program?   I honestly do not know what you are referring to.  It's not on my radar but maybe it should be. 

I'm finding it very difficult to just confess that I am out of the loop and beg for links.  But yeah, some links or explanation would be appreciated. 

[minnesotapaintlady]

The forgiveness.  Six states filed a lawsuit last month and the US District judge heard the case on Wednesday but has not ruled yet.  The DOE agreed to not discharge any debts before 10/23 to give the courts time to come up with a decision.