Student Loan Forgiveness (MERGED) (1 Viewer)

[el caliente]

Rumors floating around is that today President Biden will be canceling a portion of student loans. That’s fine and all, but what’s your take on it? If it truly is only $10k in forgiveness, is that enough to make much of an impact? Is student loan forgiveness just tax payer funded student loan bribery?

Should be interesting to see how this plays out.

 

[brandon]

I'm happy to send you a cookie for your benevolence. But honestly, you shouldn't be okay with it.

Plot twist: I'm not being benevolent at all. Long term, this will be an economic stimulus that boosts my investment portfolio.

We don't need the help and we completely understood what we were signing and what the ramifications of it were.

Do 18-year-olds REALLY understand their contract terms? Compounding interest? Balloon payments?

We're the last people a program like this should be for, which only supports how foolishly it's being implemented.

Who's we? People that took on student loans to better themselves and become productive members of society? Those are the last people we should help?

 

[LonghornSaint]

Another thing to point out is that loan forgiveness is not always free for the loanee - in this case the amount paid by the govt will be designated as taxable income, and the loanee will probably end up cutting a check to the IRS come March. So, some $ will go back into the govt.

I think forgiveness in the case of death is completely free, but I could be wrong.

 

[B4YOU]

I think that is literally one of the provisions in this plan. IIRC.

It is. So is means tested repayment. I support those components. I don’t have a problem with loan forgiveness after a period of repayment even if that exceeds 20k.

A one-time payout for a small group of people without demonstrated financial need is not a plan but winning a political lottery. It’s not PPP loan bad, but it’s still garbage.

 

[Intensesaint]

I think forgiveness in the case of death is completely free, but I could be wrong.

Most likely will come after the estate if the person who dies has any assets or excess cash.

 

[brandon]

What about all of our spending power when our runaway debt drives that $10,000 in "savings" to only be worth a couple grand down the line?

You're already saddled with the debt. It's just individualized rather than federalized. If the government agrees to hold onto it while you get to be more productive, the government will be better off for it. The federal government is better able to handle the debt than you are.

And in dings those of us who paid our student debts off as well as keep paying off the ones now moving forward?

Yes. I went to school on scholarships. I paid cash for my master's. I helped pay my wife's $40k in student loans. So I have just as much right to complain, but the reality is, student loans are a crisis in this country. At some point, tuition will be free. And at some point, we will have people who get the benefit of free tuition and some people who missed out. But society has to move forward, and it won't be completely fair at first, but long-term, it will be better for the productivity and economy of our nation.

 

[wardorican]

From a person that could not go to college due to not having the money to go where is this money coming from to forgive these student loans?

It's ok if you don't wish to answer, but I'm curious about how old you are. Just so I can peg the approximate tuition ball park of the era.

And I totally understand that feeling. If it wasn't for my scholarships, I was about to have that same discussion with myself about possibly not going.

 

[samiam5211]

No there's not. Unless I'm being forced to pay for it.

If you don't want to pay for things you don't like, you need to go find a cave to live in. That is the only way you're going to avoid it.

If you don't want to invest in the country, you are never going to be happy living in a country that has a functioning government.

 

[wardorican]

From a person that could not go to college due to not having the money to go where is this money coming from to forgive these student loans?

An option could just be allowing to file bankruptcy for these loans.

Then, it just goes away.

I guess the question is if they're government backed, to what level are they backed? I'd have to dig into that, as I'm not aware.

 

[coldseat]

An option could just be allowing to file bankruptcy for these loans.

Then, it just goes away.

I guess the question is if they're government backed, to what level are they backed? I'd have to dig into that, as I'm not aware.

They're not just government backed, they're mostly government owned. Which in a way mute JE's overriding concern that he felt was and impediment to any kind of loan cancellation, since most of the loans aren't financed by private lenders. It also creates a different type of impediment to loan forgiveness, because the government can't just cancel out 36.8% of assets, since it would go completely broke. But given that the loans aren't exactly paying for themselves, it also creates and incentive to do something about it.

Just seems like a huge mess, to be honest.

The Federal Government as Creditor
As of July 8, 2016, the federal government owned approximately $1 trillion in outstanding consumer debt, per data compiled by the Federal Reserve Bank of St. Louis. That figure was up from less than $150 billion in January 2009, representing a nearly 600% increase over that time span. The main culprit is student loans, which the federal government effectively monopolized in a little-known provision of the Affordable Care Act, signed into law in 2010.

Prior to the Affordable Care Act, a majority of student loans originated with a private lender but were guaranteed by the government, meaning taxpayers foot the bill if student borrowers default. In 2010, the Congressional Budget Office (CBO) estimated 55% of loans fell into this category. Between 2011 and 2016, the share of privately originated student loans fell by nearly 90%.

Prior to the administration of Bill Clinton, the federal government owned zero student loans, although it had been in the business of guaranteeing loans since at least 1965. Between the first year of the Clinton presidency and the last year of George W. Bush's administration, the government slowly accumulated about $140 billion in student debt. Those figures have exploded since 2009. In September 2018, the U.S. Treasury Department revealed in its annual report that student loans account for 36.8% of all U.S. government assets.

The cost of federal student loan programs is widely debated. The CBO provides two different estimates based on low discount rates and "fair value" discount rates. If you rely on the fair value estimate, the government loses approximately $100 billion to $250 billion per year, including $40+ billion in administrative costs. In other words, the government does not recoup the value of the loans, putting present and future taxpayers in the position of guarantor.

Who Actually Owns Student Loan Debt?

The federal government owns a significant amount of student loans but private companies also own these loans. Learn how to determine who owns your student loan debt.

www.investopedia.com

 

[brandon]

I don’t have a problem with loan forgiveness after a period of repayment even if that exceeds 20k.

Why should forgiveness be after a period of repayment? Simply as punishment for taking out a loan? If we're going to forgive, what is the benefit of making people wait for it? What if, fundamentally, post-secondary education being a requirement to be a productive member of society means that tuition should just be free?

And if that's the case, then shouldn't we cancel debt entirely for everyone who spent it on tuition, and going forward not charge it for anyone any more?

And why should we have to wait a period of time to do this? The banks still get their money.

 

[FullMonte]

Most likely will come after the estate if the person who dies has any assets or excess cash.

Unless I'm mistaken, Federally Guaranteed Student Loans are discharged upon the death of the borrower.

 

[B4YOU]

Uh, yea. This one is means tested, too. As in, if you make over a certain amount, you don't get the money. Does it matter if you get a grant before school begins or a forgiven loan after school ends? Functionally, and fiscally, they're identical.

I'm advocating for the reality that public universities, colleges, and trade schools should be free, because you can't get a good job in 2022 without a post-secondary education.

When that happens, you can bet that a full cancellation of all outstanding student debt will be part of the package.

And people will birch about that too, but it will pay off in the decades to come when we have a more educated and productive populace.

Pell grant and Stafford loans are based on the family you are born into. It is a balancing of opportunity. It can be the deciding factor to attend undergraduate school or not.

About 10% of Americas make more than $125k. This payout is based on a decision already made and has nothing to do with the circumstances one’s born to. You could have screwed around in school, ran up a bunch of debt, and failed to maximize your potential, but graduated in the last year few years and just won the 10k lottery despite coming from a well off family.

The HR trend to require post-secondary education for every job is part of the problem driving school debt. Online masters programs of little value are a racket. Good Executive policy would be a review of federal hiring standards and a removal of unnecessary post-secondary education requirements for jobs that can’t demonstrate a need. States should do the same.

Edit: changed “less than” to “more than”, small grammar changes

 

[FullMonte]

They're not just government backed, they're mostly government owned. Which in a way mute JE's overriding concern that he felt was and impediment to any kind of loan cancellation, since most of the loans aren't financed by private lenders. It also creates a different type of impediment to loan forgiveness, because the government can't just cancel out 36.8% of assets, since it would go completely broke. But given that the loans aren't exactly paying for themselves, it also creates and incentive to do something about it.

Just seems like a huge mess, to be honest.

Who Actually Owns Student Loan Debt?

The federal government owns a significant amount of student loans but private companies also own these loans. Learn how to determine who owns your student loan debt.

www.investopedia.com

I think the whole "government guaranteed student loan" is the problem. The federal government should stop guaranteeing loans, and let banks decide whether or not to loan money to borrowers.

 

[samiam5211]

Pell grant and Stafford loans are based on the family you are born into. It is a balancing of opportunity. It can be the deciding factor on to attend undergraduate school or not.

About 10% of Americas make less than $125k. This payout is based on a decision already made and has nothing to do with the circumstances one’s born to. You could have screwed around in school, ran up a bunch of debt, and failed to maximize your potential, but graduated in the last year few years and just won the 10k lottery despite come from a well off family.

The HR trend to require post-secondary education for every job is part of the problem driving school debt. Online masters programs of little value are a racket. Good Executive policy would be a review of federal hiring standards and a removal of unnecessary post-secondary education requirements for jobs that can’t demonstrate a need. States should do the same.

People with at least some college are less likely to buy into crap like Qanon.

That is something that can't be put on a spreadsheet to calculate the value.

I would also point out that if we send everyone to get a degree in the highest paying jobs, those jobs won't be high paying much longer.

It's the same with vocational training. People saying that plumbers make good money, we should train more kids to do that, well we will just end up with a high number of low paid plumbers.

 

[V Chip]

From a person that could not go to college due to not having the money to go where is this money coming from to forgive these student loans?

The same place that tax cuts for the 1% and corporations come from -- it's a revenue source for the government (or government backed) so just take a cut in revenue, and debt be damned, right? Or we can get rid of those ridiculous and economic dud tax cuts and that'll cover almost all of the cost.

 

[B4YOU]

Why should forgiveness be after a period of repayment? Simply as punishment for taking out a loan? If we're going to forgive, what is the benefit of making people wait for it? What if, fundamentally, post-secondary education being a requirement to be a productive member of society means that tuition should just be free?

And if that's the case, then shouldn't we cancel debt entirely for everyone who spent it on tuition, and going forward not charge it for anyone any more?

And why should we have to wait a period of time to do this? The banks still get their money.

If the plan was to make undergraduate education free nation-wide for accredited public schools, I’d support that. If it was to wipe all accrued interest on existing undergrad loans and apply already paid interest towards principle, I’d support that.

It’s not punishment to payoff a loan. Is paying off your house or car a punishment? However, I view the government charging interest on loans for undergrad education as bad policy and somewhat predatory.

Federal loan funds are not limited to cost of tuition. They can be used for books, housing, and food. They can also be used to pay for a night out drinking or spring break.

 

[wardorican]

They're not just government backed, they're mostly government owned. Which in a way mute JE's overriding concern that he felt was and impediment to any kind of loan cancellation, since most of the loans aren't financed by private lenders. It also creates a different type of impediment to loan forgiveness, because the government can't just cancel out 36.8% of assets, since it would go completely broke. But given that the loans aren't exactly paying for themselves, it also creates and incentive to do something about it.

Just seems like a huge mess, to be honest.

Who Actually Owns Student Loan Debt?

The federal government owns a significant amount of student loans but private companies also own these loans. Learn how to determine who owns your student loan debt.

www.investopedia.com

This is why it is better for the federal government to be a funder vs creditor. Just fund public higher education and put tuition growth caps. I wonder if all that money just went to the universities, how much of this problem wouldnt have existed.

Granted, there isnt a direct pay back. What you hope for is a higher tax base in the future.

 

[brandon]

Pell grant and Stafford loans are based on the family you are born into. It is a balancing of opportunity. It can be the deciding factor on to attend undergraduate school or not.

What if I think Pell grants and Stafford loans are a handout? Your opportunity was already balanced at public school. I got academic scholarships directly from the university because I worked hard in high school and they paid for my undergrad.

Your grades and ACT scores weren't good enough to get academic scholarships? Tough shirt.

See, I can play the government handout game, too. Your government handout is no better than this one.

About 10% of Americas make less than $125k.

Well, I'm sure that's wrong.

This payout is based on a decision already made and has nothing to do with the circumstances one’s born to.

So? If it's a net benefit for the economy, does it matter?

ou could have screwed around in school, ran up a bunch of debt, and failed to maximize your potential, but graduated in the last year few years and just won the 10k lottery despite come from a well off family.

So it IS about punishing people for taking out a loan at 18 years old to better themselves.

The HR trend to require post-secondary education for every job is part of the problem driving school debt.

Not an HR trend. It's a societal need as technology advances. There's simply not enough time to learn in K-12 to learn how to be a structural engineer or a cardiologist.

Online masters programs of little value are a racket.

My masters program was through one of my local universities, and it was fully online (except for my final project, where I had to present on campus). I learned quite a bit, it led to a promotion and a pay increase of almost $20k over the next two years. The entire program cost just over $11k, which I paid cash for, and took 20 months to complete. The degree has already paid for itself and everything thereafter is profit.

Good Executive policy would be a review of federal hiring standards and a removal of unnecessary post-secondary education requirements for jobs that can’t demonstrate a need. States should do the same.

No arguments there, but I don't think any of this is mutually exclusive with the current loan forgiveness plan.