Haven’t seen a thread on this particular issue that Biden announced today. Did I miss something?
What affect is it going to have? This is only the loans held by the government right? Not those held by the private sector whether guaranteed by the government or not?
Haven’t had a chance to read much on it yet, I expected more commentary from you all. TIA.
I still think it’s a bad policy. If I were to consider all the people in the country and how much assistance they might need right now, people with student loans don’t seem like the most needy. However, it’s better than tax breaks for wealthy people like weve seen for decades.
I haven’t seen much detail but I don’t think he can forgive private loans. would assume this will include any federally backed subsidized or unsubsidized loans. It is also unlcear if this includes ParentPLUS loans which are unsubsidized, but federally backed, and have been participating in the interest/payment moratorium that was extended “for the final time” until the end of the year.
I’m guessing this is more important for people who took out student loans and never graduated. Assuming they don’t have great incomes, that $10,000 could be meaningful.
Not a big deal for MDs, even if they are currently under the $250,000 cap.
Given the huge number of people that didn’t go to college and started working early, I can see why this seems like unfair subsidization.
Furthermore, we really shouldn’t further the idea that college is worth anything. Just make it so that student loans can be erased through bankruptcy imo, seems like a better solution.
This. Especially the ones who finished college and got good jobs. The ones who put in 2.5 years and are now Starbucks baristas with $100K in student loans because their parents & guidance counselors convinced a bunch of C-plus high school students that studying communications at the local no-name private college was a better plan than cosmetology or welding school… those folks I feel worse for than the ones with $40K in debt and a $70K (or more) per year job.
That said, I’m not sure of the exact specifics of this plan and who it’s targeting.
It targets people making less than $125k.
110% agree. Make lenders underwrite the loans. Let’s see, you got 1500 on your SAT and have a 3.9 GPA and you’re studying pre-med at University of Michigan? Here’s your loan.
You had a 700 on your SAT and a C-minus average and you want to study philosophy at Private East Podunk Party U? Eh, that would be a “no”, but if you’re interested in truck driving school we’ve got you covered.
It sure would help my kids.
I realize that may seem cold & harsh and I know people who didn’t thrive in high school who did well in college and went on to be wildly successful. But I also know people who borrowed way more than they could ever hope to repay and never even finished college and are trying to pay back student loans on microscopic incomes.
While I like the idea in theory, biggest downside I see here is bias coming into play. We already know that poorer areas typically have suppressed test scores/GPA, so would this double down on those individuals being able to get funding to attend school?
In other words: Introduce more systemic bias.
For risk of payments in the future for low income earners, this seems like it will help:
Part 3. Make the student loan system more manageable for current and future borrowers
Income-based repayment plans have long existed within the U.S. Department of Education. However, the Biden-Harris Administration is proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers.
The rule would:
Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan.
Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
Cover the borrower’s unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.
Yeah, but the current system sucks. It allows people to dig themselves into holes they can’t ever climb out of.
I read a story about a gal maki g $18,000 a year with over $200,000 of non-dischargeable debt. It has mushroomed to way more than that because she was paying less than the interest. ($200,000 at 6% is $12,000 a year just for the interest, which is way unaffordable on an $18,000 a year income.)
It doesn’t help people to loan them money they have no chance of repaying.
That will help, but I’m not sure it’s right to put taxpayers on the hook for whatever’s not repaid.
Thought I just had, and haven’t really thought through the implications, what if universities are taxed based on $$$ of loans that end up being forgiven, or something like that. Basically, if you as a university aren’t producing success in the careers of your students in the future, then you have to pay more of your share.
That’s all fine from the borrower’s perspective, what about the taxpayers?
I will add two more bullets:
- Forgiveness occurs annually. In any year when your “affordable” is less than the scheduled, the difference is forgiven.
- When any amount is forgiven, the college picks up half the cost, i.e. pays that half to the gov’t.
I don’t think we can deal with student loans without the colleges having skin in the game.
Those people (with $200k in debt) aren’t getting the federal loans that are being forgiven though. The maximums on the federal loans are pretty low.
The people that will be helped the most by the president’s program are those who went to less expensive public schools. I believe this will wipe out the debt for my disabled kid. I’m not sure if/how it affects my kid who is currently in school, but she is doing all she can to keep her costs down as she is paying for this on her own. She’s probably going to end up a teacher, but still deciding.
I don’t think so though bc it’s the affordable schools whose students are able to pay for school with the federal loans. The expensive schools will have a much higher % of private loans, which aren’t being forgiven.
My husband has a little more than $10k left. We don’t need the forgiveness, to be sure, but we do qualify for it and it will be nice to not have that monthly payment.
My oldest hasn’t finished their degree, has three classes to go. They have tried twice to finish the last semester of college and had a breakdown with hospitalization both times. Thankfully, we were able to help them enough with tuition that their outstanding student loan balances for their unfinished degree are just over $9900.
Hoping that the loan forgiveness will allow them to a) breathe easier, b) make a decision on whether they want to finish, and c) if yes to b, help them not feel stressed about needing to pay for the same three classes a third time or, if no to b, help them finally get rid of the internalized blame game associated with the repeated breakdowns.
My youngest just started their junior year (it’s crazy to think about their last 3 months of high school and the entirety of their college experience being during covid), and they haven’t yet reached 10k in loans, but it will be nice for them to have that amount go to zero before they run up med school debt.