Government Sponsored Student Loan Forgiveness

Tom_R

I believe that this is going to be a significant issue in the run-up to the next presidential election; so...

What are your thoughts on the subject, and your reason(s) therefor?

TomR

P.s.; I'd rather that this not devolve into a discussion of the efficacy of the extant Public Service Loan Program.

Also, before somebody asks; I am presently indisposed to support loan forgiveness outside the much criticized public service thing.


Formerlyjerseyjack

I believe the prohibition of bankruptcy should be removed.


shoshannah

No, I think it's ridiculous.  You can't just forgive all those loans in their entirety.    That said, modifications can be made. Lower interest (say, a token 1%), incentives for faster pay-off, incentives for paying more than monthly minimum, etc.  Also, more people need to take advantage of income-based repayment, an Obama-initiated program in which the monthly payment is a small percentage of income, and after 20 years any remaining funds owed are forgiven.  Of course the current admin is not promoting the income-based repayment program. (Surprise, surprise).  I think that people should be enrolled in it automatically, and if they want to pay more they can.


yahooyahoo

Why not make Federal student loans interest-free?


yahooyahoo

shoshannah said:

No, I think it's ridiculous.  You can't just forgive all those loans in their entirety.    That said, modifications can be made. Lower interest (say, a token 1%), incentives for faster pay-off, incentives for paying more than monthly minimum, etc. 

My interpretation of these suggestions is that you believe everyone is choosing not to pay back their loans or choosing to only pay the minimum due.  I think there are many people that simply can't afford their payment plans, even at the minimum payment.  1% decrease on the interest rate is not going to help.  What kind of incentives do you propose? 


RobB

There’s no chance of getting any kind of forgiveness through the Senate. You could maybe get interest rate modification done. Outside of that, I think we need to concentrate on the future. Invest in public colleges and universities. Make them very affordable without sacrificing quality. Like it was for boomers.

Who am I kidding, that’s not happening either. 


cramer

States, such as New Jersey, have issued student loan bonds. The issuing authority in NJ is the New Jersey Higher Education Student Assistance Authority. I don't know the total of all of the bonds but it probably is in the hundreds of millions. Would the bondholders receive zilch if student debt is extinguished?  

eta - The total debt as of 3/31/19 was $1.6 billion. 

https://www.hesaa.org/Documents/Financial/InvestorReports/2019/03/Total%20All%20Indentures%2003.31.19.pdf

I think I found the answer to my question. Although an individual's student debt would be forgiven, Warren's plan is to pay off the loans with her proposed wealth tax,  so bondholders are not left holding the bag. 

I think. 



DaveSchmidt

yahooyahoo said:

shoshannah said:

No, I think it's ridiculous.  You can't just forgive all those loans in their entirety.    That said, modifications can be made. Lower interest (say, a token 1%), incentives for faster pay-off, incentives for paying more than monthly minimum, etc. 

1% decrease on the interest rate is not going to help.  

Shoshannah, I took you to mean: Lower interest to a token 1%. Is that correct?


FilmCarp

I would be willing to somehow subsidize loans for people who provide a public service, but only within reason.  Teachers,   lawyers who work for the public, VA doctors and nurses, sure, but not a complete payoff.  You have to choose schools that are reasonably within your anticipated budget.    Financial industry, no way.  The hard part is deciding who merits what.


shoshannah

DaveSchmidt said:

yahooyahoo said:

shoshannah said:

No, I think it's ridiculous.  You can't just forgive all those loans in their entirety.    That said, modifications can be made. Lower interest (say, a token 1%), incentives for faster pay-off, incentives for paying more than monthly minimum, etc. 

1% decrease on the interest rate is not going to help.  

Shoshannah, I took you to mean: Lower interest to a token 1%. Is that correct?

 Yes, that's correct. Not BY 1%. TO 1%.


shoshannah

yahooyahoo said:

shoshannah said:

No, I think it's ridiculous.  You can't just forgive all those loans in their entirety.    That said, modifications can be made. Lower interest (say, a token 1%), incentives for faster pay-off, incentives for paying more than monthly minimum, etc. 

My interpretation of these suggestions is that you believe everyone is choosing not to pay back their loans or choosing to only pay the minimum due.  I think there are many people that simply can't afford their payment plans, even at the minimum payment.  

Not what I think at all.  Of course many people can't pay.  That's why there's an income-driven repayment plan.  You have to apply for it. As I said above, one of the changes I propose is automatic enrollment in income-driven repayment.  If you make tons o' money, then you pay the difference between standard repayment and income-driven when you pay your taxes (because that's when they'll know how much you make).  Something like that.  Don't flame me on the details.

https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven


krnl

I tend to agree with Shoshana on repayment schedules based on income.  IMO, more attention needs to be focused on lending policies for the different kinds of learning institutions (ie, private trade schools vs. 4 year colleges and everything between). So many of the saddest stories are about students who may never be able to repay loans are those who borrowed money to learn a trade where the potential earnings are too low to support repayment. Many of these schools are essentially scams and should be responsible for the loans.


Runner_Guy

FilmCarp said:

I would be willing to somehow subsidize loans for people who provide a public service, but only within reason.  Teachers,   lawyers who work for the public, VA doctors and nurses, sure, but not a complete payoff.  You have to choose schools that are reasonably within your anticipated budget.    Financial industry, no way.  The hard part is deciding who merits what.

 I think it's really hard to define what public service is. Under Obama's Income Based "Repayment" program, "public service" is defined as working in any capacity for any 501c, and would include a lot of non-profits that are so elite that their public benefit claim is dubious, like working for an an elite art museum, elite university, elite prep school etc.  Non-profit hospitals, which are just as bad with price-gouging as for-profits, can also be 501cs.  Also, someone's work for a 501c can be quite remunerative depending on what you do or else the job can come with a lot of perks and high status.

I don't see all non-profits as genuinely working in the public interest and nor all non-profit jobs being ones that demand personal sacrifice from their employees, I don't think the special treatment is justified.

I think teachers do a true public service, but they should just be paid more. 

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service#qualifying-employment



Tom_R

shoshannah said:

...

Not what I think at all.  Of course many people can't pay.  That's why there's an income-driven repayment plan.  You have to apply for it. As I said above, one of the changes I propose is automatic enrollment in income-driven repayment.  If you make tons o' money, then you pay the difference between standard repayment and income-driven when you pay your taxes (because that's when they'll know how much you make).  Something like that.  Don't flame me on the details.

https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven

 I'm not sure that I understand your position.

But, if you're suggesting that a student who agrees to an interest rate of x% and scores the high-paying job should pay more than their obligation, I'd be curious as to your reasons for that position.

On the other hand, if you intended us to appreciate a different position, please elaborate.

TomR

Edit: Keyboard error, even though the s and the t aren't close enough to call it understandable error.


Tom_R

Runner_Guy said:

FilmCarp said:

I would be willing to somehow subsidize loans for people who provide a public service, but only within reason.  Teachers,   lawyers who work for the public, VA doctors and nurses, sure, but not a complete payoff.  You have to choose schools that are reasonably within your anticipated budget.    Financial industry, no way.  The hard part is deciding who merits what.

 I think it's really hard to define what public service is. Under Obama's Income Based "Repayment" program, "public service" is defined as working in any capacity for any 501c, and would include a lot of non-profits that are so elite that their public benefit claim is dubious, like working for an an elite art museum, elite university, elite prep school etc.  Non-profit hospitals, which are just as bad with price-gouging as for-profits, can also be 501cs.  Also, someone's work for a 501c can be quite remunerative depending on what you do or else the job can come with a lot of perks and high status.

I don't see all non-profits as genuinely working in the public interest and nor all non-profit jobs being ones that demand personal sacrifice from their employees, I don't think the special treatment is justified.

I think teachers do a true public service, but they should just be paid more. 

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service#qualifying-employment

 How would you you write the loan forgiveness laws/regulations to exclude the institutions to which you object?

TomR


Tom_R

Formerlyjerseyjack said:

I believe the prohibition of bankruptcy should be removed.

 Why?

TomR


shoshannah

Tom_R said:

shoshannah said:

...

Not what I think at all.  Of course many people can't pay.  That's why there's an income-driven repayment plan.  You have to apply for it. As I said above, one of the changes I propose is automatic enrollment in income-driven repayment.  If you make tons o' money, then you pay the difference between standard repayment and income-driven when you pay your taxes (because that's when they'll know how much you make).  Something like that.  Don't flame me on the details.

https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven

 I'm not sure that I understand your position.

But, if you're suggesting that a student who agrees to an interest rate of x% and scores the high-paying job should pay more than their obligation, I'd be curious as to your reasons for that position.

On the other hand, if you intended us to appreciate a different position, please elaborate.

TomR

Edit: Keyboard error, even though the s and the t aren't close enough to call it understandable error.

 No, you don't understand. Nobody should pay more than their obligation.  Here's my suggestion:

Right now there are two ways to pay your federal loans. 1) income-driven repayment, and 2) standard repayment.  People who don't make a lot of money are drawn to #1 because the monthly payment is less than what the standard monthly payment would be.  As the program works now, you have to APPLY to participate in the income-drive repayment program. Obviously, the current administration is not promoting the program. Here's what I am proposing: Everyone is automatically entered into the income-driven repayment program. However, the people who a) WANT to pay the standard payment, or b) have a high enough income such that the percentage owned via the income-driven plan is actually more than standard payment can opt out of income-driven repayment or have it reconciled at tax time.


mtierney

As the grandmother of seven in-or newly graduated college kids, this topic hits close to home.

Going forward, I would like to see tuitions lowered to a sustainable level. Universities sit on millions and millions of endowment dollars. Let’s put more pressure on the schools and less on the students. Yearly tuition bills of $50-75K are not sustainable. Instead of constructing buildings of bricks and mortar named in honor of a rich philanthropist, the schools should spend these funds cover more operating  costs themselves, rather than passing costs on the students.

 The  present system creates a two-level, debt burdened society going forward: Seniors who spent their retirement savings, and young adults broke, as well as disillusioned.

The rich and famous folks found slots for their kids by cheating the testing and application process. They could afford ridiculous tuition rates, but needed to cheat to get the kids accepted. Proof that the present application process creates overwhelming pressure on families and students. 

Wouldn’t it be grand if America concentrated on fixing the higher education system right here at home. It is truly broken.


shoshannah

Tom_R said

I'm not sure that I understand your position.

But, if you're suggesting that a student who agrees to an interest rate of x% and scores the high-paying job should pay more than their obligation, I'd be curious as to your reasons for that position.

On the other hand, if you intended us to appreciate a different position, please elaborate.

TomR

Edit: Keyboard error, even though the s and the t aren't close enough to call it understandable error.

 NO.  I already said I am not suggesting that anyone pay more than their obligation.  

As I said, my only suggestion is that people be enrolled AUTOMATICALLY in the income-driven repayment plan as it exists now.  That's all.  That's my suggestion.  Income-driven repayment, which is based on your income, has a different amortization schedule from the standard 10-year amortization schedule. 


shoshannah

mtierney said:

As the grandmother of seven in-or newly graduated college kids, this topic hits close to home.

Going forward, I would like to see tuitions lowered to a sustainable level. Universities sit on millions and millions of endowment dollars. Let’s put more pressure on the schools and less on the students. Yearly tuition bills of $50-75K are not sustainable. Instead of constructing buildings of bricks and mortar named in honor of a rich philanthropist, the schools should spend these funds cover more operating  costs themselves, rather than passing costs on the students.

 The  present system creates a two-level, debt burdened society going forward: Seniors who spent their retirement savings, and young adults broke, as well as disillusioned.

The rich and famous folks found slots for their kids by cheating the testing and application process. They could afford ridiculous tuition rates, but needed to cheat to get the kids accepted. Proof that the present application process creates overwhelming pressure on families and students. 

Wouldn’t it be grand if America concentrated on fixing the higher education system right here at home. It is truly broken.

 1. There is no college in the country that has tuition of more than about $56k. That's obviously a lot, but just didn't want to leave the impression that there are actually colleges that charge $75k for tuition.

2. Donors usually designate how they want their money used.  It's rarely unrestricted.

3. Nobody has to go to an expensive college.  There are dozens of ways to go to college for free or very low cost.


mtierney

If you factor in room and board, the costs mount.

Don’t forget transportation.

$57K X 4 is insane any way you look at it


FilmCarp

mtierney said:

If you factor in room and board, the costs mount.

Don’t forget transportation.

$57K X 4 is insane any way you look at it

 But no one really needs to go this route.  There are quite a few excellent state schools that are much more affordable.  And I don't like your idea that universities  should forego long term infrastructure investments in order to reduce costs now.  At the local level we are paying the price for that kind of short sighted behavior in the past by having to spend more now on upgrades and repairs.    I am for targeted debt forgiveness, but I also like common sense when it is time to choose a school.


shoshannah

In-state tuition and fees to attend Rutgers this year totals $15,407. It's commutable from here.

What we, in the close-in, high-achieving suburbs of NYC, think of as the "typical" U.S. college experience is not at all typical.  Only 13 percent of all first-year students in the U.S. live in campus housing. This includes students at public and private 4-year colleges, community colleges, part-time, and full-time students. 

If you just want to look at private 4-year colleges, 49% of first-year students live on campus.  The figure for public 4-year colleges is 36%.

https://robertkelchen.com/2018/05/28/a-look-at-college-students-living-arrangements/


Tom_R

shoshannah said:...

 No, you don't understand. Nobody should pay more than their obligation.  Here's my suggestion:

Right now there are two ways to pay your federal loans. 1) income-driven repayment, and 2) standard repayment.  People who don't make a lot of money are drawn to #1 because the monthly payment is less than what the standard monthly payment would be.  As the program works now, you have to APPLY to participate in the income-drive repayment program. Obviously, the current administration is not promoting the program. Here's what I am proposing: Everyone is automatically entered into the income-driven repayment program. However, the people who a) WANT to pay the standard payment, or b) have a high enough income such that the percentage owned via the income-driven plan is actually more than standard payment can opt out of income-driven repayment or have it reconciled at tax time.

 Sorry about that.

My misapprehension of your post I quoted, was my error. Likely a result of my reading too fast. 

Or, more likely, my half fast reading.

Again, the error was mine. Thank you for correcting me.

However, will lenders be willing to lend at x%, not knowing what prevailing rates will be in 15-20-25 years? (Of course, lenders might be securtizing these loans; like they did with mortgages, because that worked out so well).  

I presume we're writing about federally guaranteed loans, but that just shifts the burden to us. A burden that should have been considered by the student, when they signed on the dotted line.

As for your suggestion that graduating students be automatically enrolled in the "income-driven repayment plan", I gotta wonder whether graduates are so inept that they can't decide where their lives are heading. A depressing thought.

You made me think; and for that I thank you.

As I wrote in my initial post, I think this is going to be an issue in the upcoming Presidential election, and would appreciate all points of view for consideration.

TomR




In order to add a comment – you must Join this community – Click here to do so.