Another SL payment is coming

[saveinla]

I know a lot of young people who graduated last year that have taken SL payment into account for their budget and decide accordingly what they will do and when. Some have gone on to do their Masters and Phd in smaller schools where they don't need as much money and since they get their tuition for free and their expenses paid via teaching are able to send money to SLs. Some have started working jobs which is helping them pay down their SL. Not everyone has forgotten how to pay SLs. There are as many good examples as there are the opposite. 

[haapai]

  That's exactly what I told my mother.  I also believed it.  I was wrong. 

If I had set up a transfer from checking to savings to simulate the effect of student loan payments, I probably would have figured this out before payments began. 

[susana1954]

Mar 27, 2022 10:08:27 GMT -5 wvugurl26 said:

I'm guessing at one point maybe loan interest was tax deductible for all. And then income limits were put in which rendered the interest not deductible for many.

No, I think he is talking about the tax reforms in the 1980s during Reagan's tenure.  ALL interest, including credit card interest, was tax deductible.  As part of a tax cut, this was all eliminated. 

It fits the time frame, anyway.

[pulmonarymd]

Mar 27, 2022 12:17:35 GMT -5 susana1954 said:

Mar 27, 2022 10:08:27 GMT -5 wvugurl26 said:

I'm guessing at one point maybe loan interest was tax deductible for all. And then income limits were put in which rendered the interest not deductible for many.

No, I think he is talking about the tax reforms in the 1980s during Reagan's tenure.  ALL interest, including credit card interest, was tax deductible.  As part of a tax cut, this was all eliminated. 

It fits the time frame, anyway.

That sounds about right. I graduated in 1986. Couldn't remember all the details. Much of that time is a little foggy for me.

[Ava]

I think there's no way interest will be tax deductible again.

I agree the system needs to be changed not just for current debt holders, but also for current students and future generations.

Setting interest at 0%, forgiving capitalized interest, and putting all SL debt holders on IDR for a percentage of discretionary income, with the balance forgiven after 10 years would be great.

As for future students, that's even more complicated. We don't want to face the same situation in a few years. 
The student loan system needs to change, but also school costs need to come down to reality.

[TheOtherMe]

Mar 27, 2022 7:56:10 GMT -5 susana1954 said:

Mar 26, 2022 12:00:08 GMT -5 pulmonarymd said:

Not the first time they changed the rules on us. When I took my loans for Undergrad and Medical School, the interest was tax deductible. Shortly after I began to repay them, that went away. I did not get any consideration for what had been the rules previously, and I doubt anyone feels sorry for me. You just take the risk they will change the rules before you pay them off.

Was this specific to student loan interest being tax deductible?  All interest was tax deductible, and then that went away.  Was this separate or part of that?

Way back when, all interest was tax deductible as long as you itemized.  That included credit card interest, student loans, etc.  I don't think there were phaseouts in those times.  Back about the mid 70's in to the early 80's.

I think Reagan's trickle down theories changed all of that.

[formerroomate99]

Mar 16, 2022 8:23:47 GMT -5 grumpyhermit said:

Mar 15, 2022 23:51:34 GMT -5 stillmovingforward said:

My DD1 estimates that the interest pause has saved her about $30,000. She'd be thrilled if it was extended.

While I'm not personally in favor of a blanket forgiveness for student loan debt, as I don't think it does anything to address the actual problem, slashing or eliminating the interest on these loans would seem the obvious place to start. 

The rates for Unsub (~5%) and Plus (~6%) are ridiculous. 

I agree with you 110% on that.

As someone who has worked on the backend of web applications, I can tell you it would not be that hard to get and present good data that would show people exactly what a degree in X from university Y is worth, Instead of sitting back and letting students be lied to.

There’s also something to be said for encouraging high schools to develop programs that get their graduates skills that employers actually want instead of pushing everybody into college prep. In my area, the high schools actually work with local businesses to develop certification programs that lead to good jobs right out of high school. These programs flow seamlessly into associates degrees and then bachelors degrees. It isn’t that uncommon in my area for high school kids to graduate walk into jobs starting at 50 K with plenty of room to grow.

[formerroomate99]

Mar 27, 2022 13:39:02 GMT -5 Ava said:

I think there's no way interest will be tax deductible again.

I agree the system needs to be changed not just for current debt holders, but also for current students and future generations.

Setting interest at 0%, forgiving capitalized interest, and putting all SL debt holders on IDR for a percentage of discretionary income, with the balance forgiven after 10 years would be great.

As for future students, that's even more complicated. We don't want to face the same situation in a few years. 
The student loan system needs to change, but also school costs need to come down to reality.

I went to school before private loans were really a big thing. One of the main reasons why the tuition back then was more reasonable was because there were limits to how much kids could borrow. Those limits are what kept tuition from getting out of hand. If the school wanted to charge more, they needed to either pony up scholarships to students who are likely to be successful enough to donate later on, or they were limited to only catering to rich kids. That’s a lot better than giving colleges and incentive to try to entice mediocre students from disadvantaged families to rack up enormous debts for useless degrees.

The other advantage of the limits is that kids had to live on what they could earn working minimum wage jobs. That means they learned how to live cheaply, and they had a very good idea of what the price of failure was.

[Ava]

This is so confusing.
If we're going back to payments, why haven't I received any communications from my loan servicer?

If the pause will be extended, where's the announcement? What are they waiting for?

I'm in pins and needles over this. 
It would be so helpful if they would let us know, so we can plan ahead.

[daisylu]

Why not plan as if payments will resume? If they don't you will be pleasantly surprised.

[Ava]

Yes, that's what I'm doing.
I would like to know for sure, though.

[Ava]

It means reducing my retirement contributions, that's why I'm so nervous and why I want to know in advance.

I don't understand why the administration doesn't make an announcement.
What exactly are they waiting for?

[haapai]

  I get how infuriating this communication silence is.  This is really not normal.  I am pretty ashamed of my country at this point.  Our government should not be going silent on federal student loan borrowers at the exact moment that it should be frenetically communicating with them.  This will not go well. 

But ... c'mon girl, you're an accountant (and an immigrant from a place that has had a few debt crises and bouts of hyperinflation in your lifetime)  start calculating!   You can protect yourself no matter what decision gets made and guessing wrong will not cost you much. 

Please put a number on what this uncertainty is costing you and realize just how low that number is.  You are a numbers geek, you have been training for years to handle just such a situation with aplomb.  Put your financial knowledge to work for yourself!

[Ava]

Apr 1, 2022 13:09:04 GMT -5 haapai said:

  I get how infuriating this communication silence is.  This is really not normal.  I am pretty ashamed of my country at this point.  Our government should not be going silent on federal student loan borrowers at the exact moment that it should be frenetically communicating with them.  This will not go well. 

But ... c'mon girl, you're an accountant (and an immigrant from a place that has had a few debt crises and bouts of hyperinflation in your lifetime)  start calculating!   You can protect yourself no matter what decision gets made and guessing wrong will not cost you much. 

Please put a number on what this uncertainty is costing you and realize just how low that number is.  You are a numbers geek, you have been training for years to handle just such a situation with aplomb.  Put your financial knowledge to work for yourself!

All I can say is that I will pay when payments resume.
But like you said, this is not normal. I would like to receive information, so I can prepare better.
I could play with the numbers and figure out what I would do for each scenario. I just don't see the point. I want to plan for what's going to happen, instead of spending hours preparing for what ifs.
The government has to know what's next at this point in time, unless they are mired in chaos. Why not just let us know?

[Deleted]

Mar 31, 2022 18:26:57 GMT -5 formerroomate99 said:

I went to school before private loans were really a big thing. One of the main reasons why the tuition back then was more reasonable was because there were limits to how much kids could borrow. Those limits are what kept tuition from getting out of hand. If the school wanted to charge more, they needed to either pony up scholarships to students who are likely to be successful enough to donate later on, or they were limited to only catering to rich kids. That’s a lot better than giving colleges an incentive to try to entice mediocre students from disadvantaged families to rack up enormous debts for useless degrees.

The other advantage of the limits is that kids had to live on what they could earn working minimum wage jobs. That means they learned how to live cheaply, and they had a very good idea of what the price of failure was.

To be fair, states have cut way back on what they used to spend on higher education since I went to college (class of 1975). That explains part of the increase over the years. I agree, though- when more loans became available, universities raised their fees and just offered more "financial aid". To me, "financial aid' means you don't have to pay it back.

I checked out my alma mater, U. of Cincinnati, and it would run about $23K/year for room and board at the dorm I was in plus tuition for a state resident. No way you could pay for that working PT at minimum-wage jobs.

[TheOtherMe]

I attended a small private college.  For Iowa residents, they attend at the same rate as students pay to attend the state universities.

I know when I attended college, most of my tuition was covered by grants and scholarships.  I had also worked full time for a few years before going to working part time and going to school full time.  I had enough savings to pay for my off campus room.

I don't see that many college kids who work jobs today.  Around here, my great nephew is making $16 an hour as a burger flipper and he works all the hours he can get.  He is a junior in high school.
l.

[nidena]

Apr 1, 2022 17:03:32 GMT -5 TheOtherMe said:

I attended a small private college.  For Iowa residents, they attend at the same rate as students pay to attend the state universities.

I know when I attended college, most of my tuition was covered by grants and scholarships.  I had also worked full time for a few years before going to working part time and going to school full time.  I had enough savings to pay for my off campus room.

I don't see that many college kids who work jobs today.  Around here, my great nephew is making $16 an hour as a burger flipper and he works all the hours he can get.  He is a junior in high school.
l.

I attended college just three years ago and it was the Juniors and Seniors (and Senior + for those on the six-year plan) who had jobs.  The Underclassmen really didn't.  

[geenamercile]

I am guessing from the email I just got today, there isn't going to be another pause.  

[haapai]

Apr 3, 2022 13:06:08 GMT -5 geenamercile said:

I am guessing from the email I just got today, there isn't going to be another pause.  

Could you share some details?  What did it say?  Who was it from?  What was the date on it?  (I'm a tad surprised by the email showing up on a weekend.  Which isn't to say that I check my email nearly often enough but I've heard that some folks check their email constantly.) 

This is a bit off-topic.  I've heard estimates that 37 million Americans have federal student loans and that the vast majority of those are paused.  That's more than one in ten of us.  That makes the silence that borrowers have been experiencing and the sparse coverage of the issue quite astounding to me. 

[geenamercile]

It was from my loan servicer  and stated the details of the automatic payments restarting in May.  The email itself just told me that I had a new document to review in their portal-- This is the copy and paste from the document with my name and stuff removed.  The date on the PDF letter thing is today's date.    


Name, your Auto Pay amount has changed.
Beginning on 05/01/22, a new Auto Pay amount of $***** will be debited from your designated
bank account for the student loans listed below.
What you need to know
· Your designated bank account will continue to be debited on your scheduled
extraction dates, even if your student loans are paid ahead.
· If the scheduled payment date falls on a weekend or holiday, the Auto Pay will
extract on the next banking day but will reflect as of the day it was due.
· If the Auto Pay amount changes, we'll provide you with at least 10-days’
notice before your next extraction.
· To avoid payment delays please make sure that sufficient funds are available in
your bank account.
We’re here to help
If you have any questions about this change to your account, visit us online or give us a call.

[Ava]

geenamercile

I haven't received any emails from my loan servicer.
Why don't you call your loan servicer tomorrow and make sure it's not a scam?
It doesn't sound like a scam, but it doesn't hurt to verify.
Even if it's legit, you shouldn't be receiving it as per the last we know, that the Department of Education directed the loan servicers not to email people.
So it can be a mistake on their part, or a program not functioning properly.

[Ava]

And the radio silence continues.
I find this unacceptable. 

[haapai]

Okay, that's interesting. 

Does the amount by which your payment changed jibe well with what would happen if 12 or 13 days of interest were capitalized? 

The accountant in me would be peeved if she got such an email.  I'd want more detail as to why my amount changed and I'd be quite irritated if I'd been paying ahead and learned that a payment would be extracted anyways.  On the other hand, there's a lot in that email that will vastly reduce the number of calls to servicers.  That's a monumental good thing!  The language of the letter also indicates that there is a possibility that a more favorable treatment of payments received during the pause, or payments made in advance prior to the pause, may be done retroactively. 

[geenamercile]

Apr 3, 2022 15:15:55 GMT -5 Ava said:

geenamercile

I haven't received any emails from my loan servicer.
Why don't you call your loan servicer tomorrow and make sure it's not a scam?
It doesn't sound like a scam, but it doesn't hurt to verify.
Even if it's legit, you shouldn't be receiving it as per the last we know, that the Department of Education directed the loan servicers not to email people.
So it can be a mistake on their part, or a program not functioning properly.

Because I didn't just click on the email.  I went to my loan servicer directly and brought up my account.  

[geenamercile]

Apr 3, 2022 15:22:17 GMT -5 haapai said:

Okay, that's interesting. 

Does the amount by which your payment changed jibe well with what would happen if 12 or 13 days of interest were capitalized? 

The accountant in me would be peeved if she got such an email.  I'd want more detail as to why my amount changed and I'd be quite irritated if I'd been paying ahead and learned that a payment would be extracted anyways.  On the other hand, there's a lot in that email that will vastly reduce the number of calls to servicers.  That's a monumental good thing!  The language of the letter also indicates that there is a possibility that a more favorable treatment of payments received during the pause, or payments made in advance prior to the pause, may be done retroactively. 

I am on an IBR plan, the payment didn't actually change from what it was calculated at before, the changed seems to be that there is a payment scheduled for May at this point in time.  

[geenamercile]

Apr 3, 2022 15:16:15 GMT -5 Ava said:

And the radio silence continues.
I find this unacceptable. 

I am taking radio silence as things are go ahead as planned.  I think they will only announce something if they decide at the last second to pause the repayments for longer.  Having the pause extended is more speculation, and I think a lot of hype by those who would like it to be so, maybe to try and force the hand.   

I am guessing if they do pause it, I will get a notification about another document.  

And it might have been an automatic email set up in the system to go out a month ahead as well.  

[haapai]

Is there a date attached to this message?  I'm not sure what knowing the date would mean, but I still want to know it.  That may be a tad too honest and you are totally free to ignore me, but a whole lot of people are searching for clues, breadcrumbs, and portents right now.  In an information-poor environment, anything that you can tell folks (without sacrificing your privacy) is quite enlightening. 

[geenamercile]

Apr 3, 2022 16:07:30 GMT -5 haapai said:

Is there a date attached to this message?  I'm not sure what knowing the date would mean, but I still want to know it.  That may be a tad too honest and you are totally free to ignore me, but a whole lot of people are searching for clues, breadcrumbs, and portents right now.  In an information-poor environment, anything that you can tell folks (without sacrificing your privacy) is quite enlightening. 

The date on the document in the portal is today's date.  04/03/2022.

[Ava]

Yes, I'm operating under the assumption that repayments will resume on May 1.
But the loan servicers have to inform borrowers about payments resuming six times before it actually happens.
So what's with the wait?
Wouldn't it be better to let borrowers know ahead of time, instead of waiting to the last minute?

I don't understand what game the administration is playing.

I'm also disappointed with Biden. He promised $10,000 cancellation per borrower and reform to the system. I don't see that anywhere.

I just checked my email again and still no email from my loan servicer.

[geenamercile]

My servicer is aidvantage, if that helps any.  Ava can you check your portal with yours?