Student loan repayment to be ‘paused’ again until Aug 31.
I have two happy kids!
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My family is making payments anyway. They figure the payments are going to resume at some point…May as well pay off some principal…so they are.
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My kids only have direct loans (at this point; one had a Perkins loan we paid off). We still have hope that some of those will be forgiven. One is in grad school so she would have put the loan into deferment, but this way there is no interest accruing.
Neither had been contacted by a servicer to resume payments. If borrowers are required to begin repayment in the fall, the servicers HAVE to have a procedure to start the repayments and communicate that to the former students. Some grads never made any payments, others like my DD#1 have moved and had a change of circumstances., and others were with a servicer that has now closed and they don’t even know where to make payments. I had just told her on Monday to contact the FA office to figure out what she needed to do to get the deferment processed and then this was announce on Tues. A guy I’m working with tried to get a deferment processed because of his Americorps status and they told him no because the pause (last fall). Now he’ll be back in school by Sept 1, so his status will not be correct either.
Keep hearing how the economy is hot, unemployment is at 3.6%, 11 million unfilled jobs, wages up over 5%, employers are begging for workers, there’s been so much money injected into the economy that we have record inflation but the economy hasn’t recovered enough for student loan payments? Mortgage payments, rent, car payments, credit card payments aren’t a burden just student loans. I’m predicting a pause until at least Dec 1. The crisis should be resolved by then.
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“Keep hearing how economy is hot, unemployment is at 3.6%, 11 million unfilled jobs, wages up over 5%, employers are begging for workers,”
It’s crap quite frankly (another extension for reasons you pointed out - but it’s an election year.
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None of the points support a pause unless it’s going to extend to all debt repayments. And it is 2022. Guess some transparency is better than none.
Honestly - nothing supports a pause. You borrow. You should pay.
Can’t pay - then don’t borrow.
Inflation biting you in the a$$ - get a job at Dunkin on the weekends - paying $16 an your.
It’s all a bailout and it stinks but i digress.
Forgiveness is even worse.
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Many of those interest rates have dropped a lot in the last 5 years while student loan rates are what they were when you took out the loans (4-7%, higher for grad loans). If you refinance, you can lose any benefits that were part of the government issued loans you signed up for.
Well, my daughter’s job is at Starucks, not Dunkin’. She likes to sleep indoors and eat occasionally so needs more than just a weekend of ‘extra’ money -it’s her income, not extra. Not every college grad makes $40k at their ‘main’ job and can just work a second job to pay for the extras.
The government doesn’t control all debt, but it does own and control SOME student loans. It can’t forgive auto loans or mortgages or credit card debt (or private student debt) because it didn’t issue those loans and doesn’t hold those notes.
If the loans are not forgiven, my kids will pay them, but they were promised (some) forgiveness in the last election. They believed those campaign promises and would happily accept the forgiveness if it arrives, no hard feelings for the delay. They would then pour that money back into the economy by buying food, paying utility bills, putting gas in their tanks. Until then, they appreciate the pause, giving one a chance to fix up her new house (and put money, lots and lots of money) into the economy and for the other one to get half way through grad school so she can someday get a job that isn’t at Starbucks.
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I was being tongue in cheek. But in general, one shouldn’t borrow what they can’t pay and they shouldn’t get a handout to escape.
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And thus the continued pauses as we head into the next one.
Those things are happening right now. They happened before the pause, they’ll happen with or without loan forgiveness. Why should student loans be forgiven just because the government is in the student loan business? The government is also in the mortgage business, the commercial real estate leasing business, the business of all sorts of loans and leases. Why is student lending singled out for special treatment?
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“ Pros and Cons of Debt Cancellation
Moody’s Investor Service predicts wiping out student debt would yield a stimulus to economic activity that is comparable to tax cuts in the near term, according to reporting by CNBC.16 Over the longer term, it could increase homeownership and boost the creation of small businesses. Outright debt cancellation would boost real gross domestic product (GDP) by $86 billion to $108 billion per year, according to one study from Bard College’s Levy Economics Institute.17
However, analysts warn of the risk of moral hazard caused by implying that the cost of your decisions will be borne by someone else. This could lead to even higher student debt burdens, as borrowers assume forgiveness will be ongoing.18Another argument suggests that forgiving student loan balances will provide, at best, a weak stimulus to the economy, because the savings are realized in small amounts over a long period of time, depending on how much a borrower pays back monthly with full or partial forgiveness.19”
Let’s not move into political discussion, please.
The government is in the business of making all kinds of economic concessions to stimulate the economy. Child credit, child care credits, credits for putting in solar or new windows, electric cars, even getting to deduct mortgage interest was begun as an economic stimulus after WWII. Pell grants stimulate the economy.
The stimulus checks went to many people to whom they were windfalls to stimulate the economy. Most did spend them on things like groceries, gas, eating out, but some did just save the money. Student loan forgiveness would be similar as most would use that extra $300/mo to buy houses and cars and clothing, but some would save and that doesn’t do much for the GDP.
Sometimes a group of taxpayers gets a reward others don’t. Years ago I got a $5k adoption credit. I was pretty happy with that credit – until the next year when it jumped to $10k. And the year after that when it became fully refundable! Yup, some people were luckier than me, but I was still grateful for the amount I did get. I wouldn’t change when I did my adoption but for the tax credit my timing was a little off. That’s life.
Frankly, the student loan system is undergoing some real challenges right now that make properly servicing the loans almost impossible until things get sorted out. I think that’s a big part of the reason for the latest pause … the system isn’t in place right now to resume repayment properly.
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You can check student loan debt of graduates by state and specific colleges within each state here: Interactive Map - The Institute for College Access & Success . PA, DE, NH are among the usual high debt suspects.
NH has no income or sales tax. In state costs are ~$35K. I am not surprised.
Until inflation gets out of hand. And then…they’re not
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