Student-loan-debt-forgiveness plans by --biden-administration

The question is will my UHEAA fed. loans count (thx to FWF I’m only paying 2.5% since 2005) ? I found out the hard way that they don’t for the 20-year forgiveness unless on the IBR planthe whole time :frowning:

If not is consolidation the only way to get it to US DOE?

I was thinking about doing it regardless since UHEAA seems to be run like a private org., eg. I didn’t get the payment pause even though they’re fed. loans. I don’t care about pause since it’s short term, 10K forgiveness is different

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If our indigenous senator gets her way, there will be a new quicker easier bankruptcy process for unsecured debts and all student loans will be unsecured. Guess who won’t be paying back that $1.5T to taxpayers?

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This would be a bad move. There is much abuse with water down online schools fooling the most desperate folks into believing a university degree is the solution to their problems. This mechanism to erase student debt will incentivize such substandard educational businesses, all at the expense of the taxpayer.

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Don’t think of it as a regressive government handout, a violation of the sanctity of contracts, or a strong disincentive for the public sector to fund any future education loans. Think of it as payback to people who voted for them, and then it makes sense.

Afterwards if it makes an even bigger mess, well, we’ll just need an even bigger government to solve it - make college free for everyone or similar, and print enough money to pay for it at the expense of anyone with net USD assets.

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just diversify to BTC, problem solved :wink: I’m not talking about full forgiveness/BK, more about the 10K Biden proposal.

If it makes all the taxpayers feel better I’ve paid over 55K in interest over 18 years so far and was working toward the IBR forgiveness only to find out, sorry wrong program!

Also most boomers had cheap college compared to the following generations. They just decided to do loans for us and that just raised tuition prices

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By “this” are you referring to forgiveness or to making student loans dismissible in bankruptcy?

The latter would do the opposite of what you described – nobody will be issuing loans for crappy degrees or crappy schools. The fact that student loans are pretty much guaranteed to be paid back as they can’t be included in bankruptcy played a big role in the rapidly rising costs of higher education.

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When a bank forgives your credit card debt, did they violate the sanctity of your contract with them?

Also, just for the record, the DOE wins the breach of contract count for the vast majority of people who have been up for PSLF.

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Maybe we could take back 25% of the handout to MNCs under the TCJA, and that would pay for all of it.

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Wow! That must have been an expensive education. Ivy league?

That is a reason why credit card interest rates are exorbitant.

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I had a similar rate (2.675 %) after graduating in 2005, then I ended up going into public service. After 10 years, I applied for the Public Service Loan Forgiveness program and was one of those 95% of people denied forgiveness when it finally hit the 10 year mark. Always nice to be penalized because I did the right thing and consolidated into a low interest loan. But it would have only saved me like $4,000 because I had a 15 year repayment, so no big deal. 15 years is up now. I’m student loan debt free!

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Which would prompt the government to provide the funds to guarantee the loans, or become to lender itself. You know… because everybody has a right to a higher education.

BTW, that is precisely where the model of a “free” higher education like some European countries wouldn’t work here. In Europe there are limited seats available and students compete for those seats. If you’re not good enough, then you’re out of luck. In the USA, people who aren’t good enough and shouldn’t be pursuing a college education, can still get admission, and receive grants/financial aid at certain online institutions.

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I disagree with that. Credit card interest rates are set with profit in mind, not based on costs. Interest rates are set at a level where banks can still get new cardholders and keep existing cardholders.

If default rates are cut in half, the only reason a bank would cut its interest rate in half is due to competition, not the fact that the bank’s costs are now lower so they can give back some benefit to consumers.

Additionally, credit cards are different because the people paying interest are subsidizing the people who pay their bill off in full. When you pay your bill off in full you are costing the bank some amount in interest because the bank has to front the money.

Who exactly are you talking about here?

Any form of student loan forgiveness without a solution to what caused the problem is just kicking the can down the road and will create many unintended consequences.

  • If everyone with current loans gets 10k forgiven, what about new loans that are continually added every year after that ? Are you essentially increasing the federal grant amount by 10k for future students or are they just SOL and this is a one-time handout?
  • If loans are included in bankruptcy, you can bet that a divide will form where some elite private college will start to not allow those loans, since they don’t have to ( not depend on state funding ). A have and have-not of college could form where the public institutions become a grade 13-16 extension of high school ( since everyone can go and just discharge their loans if it doesn’t work out ). The public institutions will become the cattle cars of education and the job market will recognize that difference.
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Any one, anybody who doesn’t have the necessary academic ability to pursue higher education. Don’t put me in the bucket of rayzist. In case you don’t know it, I’m a minority too, and have endured plenty of rayzism in my life.

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I wasn’t referring to race at all (or discrimination at all). I apologize if that’s the way it came off.

My point is that the group you are referring to (individuals without the necessary academic ability to pursue higher education), is, with the exception of a VERY small percentage of the population, essentially a null set.

No that’s a settlement both sides agreed to. I’m talking about where law gets rewritten so the terms everyone agreed to previously are no longer in force, rather than implemented prospectively for new contracts. Think “taxing your Roth IRA because your rich” or similar.

Here the proposal is that BK law is changed so student debt, which is well protected under the current laws from being discharged, suddenly becomes super easy to wipe out. This is similar to when Obama screwed GM bondholders and gave lots of the value of the new company to the UAW pension plan instead of those with a superior credit claim, or how NYC threw out personally guaranteed commercial mortgages because “covid” so landlords who had taken personal security from really rich owners were left holding the bag.

Capricious and politically motivated changes in the law are what characterize banana republics with inefficient capital markets and poor property rights, and the Western levels of prosperity we’ve been able to achieve through a stable system of government, enforcement of the rule of law, and encouraging long term planning and capital investment which is only possible under relatively secure business environments.

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But in this case, and I’m referring to the forgiveness, not the BK changes, the other side is the US Government (at least that’s my understanding). So, the US Government, being the party to the contract, is settling with the debtors. The fact that the forgiveness is implemented by statute, in my opinion, doesn’t impact the conclusion.

ETA: I’m not that familiar with the proposals, but if we’re talking about private student loan debt, I completely agree that it’s wildly unfair, and should be illegal if it isn’t already, for the federal government to force 10k in loan forgiveness to borrowers unless the fedearl government is reimbursing the private lenders.

With respect to the BK, I do agree with you as it applies to private loans, though not as strongly as the above because, by it’s nature, bankruptcy is a creature of statute. Any lender, as with any other business owner, needs to consider the risks associated with changes to laws and/or the regulatory regime. I would say that applies even more-so to a student loan lender.

I do believe that any changes to the BK code applicable to private student loans should apply to student loans entered into after x date (that was anywhere from a couple months ago to some time in the future). But that’s what I believe. As opposed to the 10k forgiveness, I don’t think it should be illegal for the federal government to make changes to BK laws that can apply to future BK filings, but related to debt that was contracted before the change.