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Thu Sep 29, 2022, 02:09 PM

Student Loan Relief... An Alternative View & Idea

Apologies for the long post. I'm thinking a lot today.

It seems most polling shows there isn't huge support for student loan debt relief. I think the last poll I saw was close to 50/50.. I'm torn about it. I borrowed too much for school ($52k) and years later ended up with six figure loans ($136k). I took a while to finish school so years of deferments, then forbearances. I made all my payments on time, but had them discharged last year when I became 100% disabled with the VA and started on SSDI.

I took advantage of IBR when I had loans (income based repayment). My payment was around $370 a month instead of the $920 it would've been. It was based on it being 15% of my discretionary income. This is the difference between your AGI and 150% of the poverty level.

Sure even $370 was a lot of money, but years I made lower money I paid less, or almost nothing. There were things you could do to lower your AGI too. Needless to say I was making high 401K contributions those years.

What killed me was the interest rate. I was paying 8.75% and there was no way to refinance. Why not? So even when I made monthly IBR payments, the balance still climbed. I wasn't even covering the interest so I would never have paid them off. But after 20 years with IBR the balance would've been cancelled. Of course then I'd have a giant tax bill because that would've been considered income.

I knew a lot of people who worked their way thru school. I only worked about 15 hours a week. That was my fault. I was lured into the loan trap, easy money, a big check, and no education about how it would affect me after i got out of school. My parents were upper middle class, but they didn't cover my college. But a lot of parents do save to help their kids. They sacrificed vacations and luxuries for education.

I'm torn because this seems grossly unfair. Some people worked and made their payments and struggled. People with low income got Pell grants and work study to help pay for college. I got neither due to my parents income so I had to borrow. Yet at the same time I got my loans discharged. A 100% VA rating will get that for you. Part if me says yes because I sacrificed and ended up damaged for life. I struggled for a decade (poor, homeless a while, sleeping on couches or in my car), then another six years, before finally finding my footing. Sure I made a lot of money in the end, but how much could I have made were it not for my illness?

I like the idea of them helping those who were scammed by these for profit schools. I'm OK with that. I think for everyone else the real answer is IBR with 10% of discretionary pay, and a discharge after 20 years with no tax penalty. The big thing though is I'd also like to see a restriction on interest rates. They would be recalculated yearly so your IBR payment would cover all interest and that would be 75% of the payment. The remaining IBR payment would be principal. That way youd see SOME DROP in your balance. Making payments znd seeing it climb, that's ridiculous. Finally, mandatory financial education for those who take out a student loan on the reality and obligation. Not related to loans but I'd also like to see them be included in a bankruptcy if filed. I filed about 20 years ago and honestly that would've ended it for me.

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Arrow 22 replies Author Time Post
Reply Student Loan Relief... An Alternative View & Idea (Original post)
NowISeetheLight Sep 29 OP
Thomas Hurt Sep 29 #1
MichMan Sep 29 #2
Thomas Hurt Sep 29 #4
Zeitghost Sep 29 #6
Thomas Hurt Sep 29 #7
Zeitghost Sep 29 #9
Thomas Hurt Sep 29 #10
Zeitghost Sep 29 #11
Thomas Hurt Sep 29 #12
NowISeetheLight Sep 29 #19
Johnny2X2X Sep 29 #5
NowISeetheLight Sep 29 #17
Johnny2X2X Sep 29 #3
NowISeetheLight Sep 29 #14
MichMan Sep 29 #15
NowISeetheLight Sep 29 #18
The Revolution Sep 29 #8
MichMan Sep 29 #16
Yavin4 Sep 29 #13
Zeitghost Sep 29 #20
Yavin4 Sep 29 #21
Zeitghost Sep 29 #22

Response to NowISeetheLight (Original post)

Thu Sep 29, 2022, 02:48 PM

1. It is not clear to me how someone getting welfare while I do not require it...

or student loan forgiveness when I don't need it is unfair?

Free condoms?
Free books?
Free school lunches?

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Response to Thomas Hurt (Reply #1)

Thu Sep 29, 2022, 02:52 PM

2. Are people making $125k per year eligible for welfare ?

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Response to MichMan (Reply #2)

Thu Sep 29, 2022, 02:55 PM

4. that would seem to fit into the category of not needing it...

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Response to Thomas Hurt (Reply #4)

Thu Sep 29, 2022, 03:02 PM

6. And yet they are still getting it despite not needing it

College grads are one of the most financially stable cohorts we have.

Some view forgiving tens of thousands of dollars in loans for an upper middle class household making 250K/year to be a waste of government money and would rather see those funds used to help the poor.

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Response to Zeitghost (Reply #6)

Thu Sep 29, 2022, 03:13 PM

7. So you are saying welfare receipients need it and none of the former students do?

Not sure that follows since the christofascists don't think anyone needs welfare, they just need to get a job.

Maybe the former students have less need than the folks getting welfare.

Do they deserve the forgiveness less or more than the Congress persons who got their loans forgiven?

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Response to Thomas Hurt (Reply #7)

Thu Sep 29, 2022, 03:37 PM

9. Not none

Last edited Thu Sep 29, 2022, 04:14 PM - Edit history (1)

But the vast majority of college grads are doing just fine, especially when compared to non-college grads of the same age.

I also think that loan forgiveness without significant financial aid and tuition reform will lead to more students in even more debt and even higher tuition. We need to spend the money directly subsidizing public universities with funds linked to keeping tuition down.

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Response to Zeitghost (Reply #9)

Thu Sep 29, 2022, 03:52 PM

10. I would gladly pay taxes for that or free higher education.

I will gladly pay taxes to pay off the loan forgiveness as well.

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Response to Thomas Hurt (Reply #10)

Thu Sep 29, 2022, 04:16 PM

11. For free college, As would I

But paying off loans without putting systems in place to keep future loans and tuition from skyrocketing is madness and will only make things worse in the future. Make loan forgiveness more need based and tie it in with tuition and financial aid reform and I'm all for it.

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Response to Zeitghost (Reply #11)

Thu Sep 29, 2022, 04:17 PM

12. Agreed.

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Response to Zeitghost (Reply #11)

Thu Sep 29, 2022, 05:36 PM

19. Agree 100%

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Response to MichMan (Reply #2)

Thu Sep 29, 2022, 02:59 PM

5. Yes, they are

The Child tax credit is a welfare program. In fact, it's often cited as one of the best weapons we have to fight poverty, and you're eligible for this government payment if you make up to $200K a year for individuals, and $400K a year for couples.

For the record, I think the child tax credit is great even though I don't get it, I want people to use my tax dollars to help raise their children, it's better for the society I want to live in.

If you had triplets in 2022, taxpayers are going to give you $162,000 over the next 18 years to help raise your kids.

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Response to Thomas Hurt (Reply #1)

Thu Sep 29, 2022, 05:29 PM

17. Necessities

SNAP and free school meals… Good idea.
Housing assistance… Good idea.
Free community college or vocational school… Good idea.

$400b in additional debt just handed out… Not so sure.

What’s unfair is people have a choice. They can work their way thru school or they choose not to and borrow the maximum every year. You make a choice and there are consequences. I borrowed over $40k and didn’t finish (mostly due to mental illness). Real life kicks in. I ended up driving a semi OTR a few years later. With IBR my payments were manageable. While I made a bad choice regarding college loans I made good choices too (lived within my means and no kids). Living in a sleeper berth and showering at a different truckstop everyday is lousy, it stinks. But it pays the bills. With IBR it was doable. Without it… forget it.

A big part of the problem is the cost of school. But community college is cheap. Two years there or a vocational school isn’t a lot of money. Then two more years at a lower priced public school or online school and you’re done (and not $50k in debt). If you decide to go to some out of state university that is $25k a year it’s you’re choice. If you have rich parents paying for it you’re lucky. Most of us don’t. Scholarships are great too… hope you studied in HS! Choices have consequences.

I did eventually finish my BS in Health Administration about six years ago. It took me seven years to finish it online, sometimes taking one class a semester, but I’d sign up for more so I was back in deferment several years. I went to an affordable online college that was regionally accredited. The tuition was about $3500 a semester for as many classes as you could take. I was “cash pay” for it and never took out another loan. I had learned my lesson.

Federal Loan Limits:
Independent undergraduate students
First year
$9,500 overall; $3,500 subsidized
Second year
$10,500 overall; $4,500 subsidized
Third year and up
$12,500 overall; $5,500 subsidized
Total limit
$57,500 overall; $23,000 subsidized

CRAZY!!!

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Response to NowISeetheLight (Original post)

Thu Sep 29, 2022, 02:54 PM

3. The IBR changes Biden is making are a huge deal

instead of 150% of the poverty level, it's been changed to 225%. And instead of 15% of discretionary income it will be 5%, it was already 10% for years now.

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Response to Johnny2X2X (Reply #3)

Thu Sep 29, 2022, 05:09 PM

14. Good Changes

Even better than my idea. But I didn’t see him doing anything about the interest rates. That’s the killer. When you make five years of on time payments and your balance is going up every year, something is wrong.

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Response to Johnny2X2X (Reply #3)

Thu Sep 29, 2022, 05:24 PM

15. Since students will have their payments capped regardless of how much they owe...

It only makes sense now to borrow the maximum amounts allowed.

Colleges are therfore figuring out they can raise tuition much higher than it currently is.

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Response to MichMan (Reply #15)

Thu Sep 29, 2022, 05:32 PM

18. Yes

You know they will too. It’s like “free money”.

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Response to NowISeetheLight (Original post)

Thu Sep 29, 2022, 03:33 PM

8. One way I look at it

Is that Biden's forgiving of $10K or $20K is a way to just offset the accumulated interest on these loans.

It's not that people are unwilling to pay back what they borrowed, but the interest is making them "pay back" way more than that.

We should be talking about lowering the interest rates on these loans as well. I think fewer people would have an issue with that. There's no reason for the rate to be more than 1%. And I would say 0.1% or even 0% would be fine.

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Response to The Revolution (Reply #8)

Thu Sep 29, 2022, 05:28 PM

16. Congress sets the rates.

It was part of the 2010 Affordable Health Care Act. If I recall, the intent was to use the interest payments to partially offset health care subsidies.

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Response to NowISeetheLight (Original post)

Thu Sep 29, 2022, 04:22 PM

13. Fair enough. I would add one more item. Audit these universities and colleges.

The student-borrower should know exactly why tuition is going up 2x, 3x inflation year over year. We know it's not going to the professors or the staff.

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Response to Yavin4 (Reply #13)

Thu Sep 29, 2022, 06:26 PM

20. The budget for a public school

Should be readily available.

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Response to Zeitghost (Reply #20)

Thu Sep 29, 2022, 06:51 PM

21. Should be publicly available for any school receiving federal student loans.

There should be independent audits of these schools to confirm the numbers as well.

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Response to Yavin4 (Reply #21)

Thu Sep 29, 2022, 07:03 PM

22. What would make you think

That the financial statements and financial aid systems are not audited by third parties?

Any school receiving Title IV funds must be audited. They also all go through accreditation audits, financial audits, etc. It's probably one of the most audited industries out there.

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