<p>"... President Barack Obama is prepping new executive steps to help Americans struggling to pay off their student debt [by] ... expanding an existing program that prevents borrowers from having to pay more than 10 percent of their monthly income in student loan payments ... directing the government to renegotiate contracts with federal student loan servicers ... to make it easier for borrowers to avoid defaulting on their loans ... ask[ing] the Treasury and Education departments to work with tax preparers to increase awareness about tuition tax credits and flexible repayment options." ...</p>
<p>On the surface this seems like a good step. I had not realized the 10% of pay was only for certain years that a loan originated. Expanding that seems fair. I do think you should pay until it is payed off though. </p>
<p>I am not in favor of a massive loan forgiveness program. I am not in favor of discharging loans in bankruptcy.</p>
<p>As long as people can go to community college and cheaper in state options to gain an education taxpayers should not have to carry these loan burdens of those with caviar tastes in education. </p>
<ol>
<li><p>Expand program to limit payments. Could just cap payments, but you still have to pay off the total amount and you have interest accrue on the deferred amounts.
I doubt that if you don’t have a job for instance, that your payments are forgiven until you do</p></li>
<li><p>Direct government to renegotiate contracts. That sounds like political posturing. What if the other people say “no, don’t want to re-negotiate”?</p></li>
<li><p>Treasury dept to evaluate awareness… Ehhhhh…so?</p></li>
</ol>
<p>I guess we will know more tomorrow when they actually announce the program.</p>
<p>This reform would be amazing for students who drop out of college (for whatever reason) and are promptly forced to begin paying their debts. Good for them.
On the other hand, NO remorse should be felt toward people who borrow six figures to attend fancy U or some out of state university and cannot pay. To this group, I suggest watching this video (disclaimer: strong language is featured. If a CC mod deems it inappropriate, I encourage the deletion of this link and anything beyond the period after “pay.”):
<a href=“Dear Stupid Students, America Can't Afford Your Stupidity - YouTube”>Dear Stupid Students, America Can't Afford Your Stupidity - YouTube;
<p>The guy’s not going to be in office much longer in the scheme of things. Executive action, if Constitutional (which I don’t see how he can change a statute by fiat) doesn’t survive his administration unless subsequent executives feel the same. I agree with posturing.</p>
<p>Except that ‘renegotiate with loan servicers’ makes it seem like a potential bank bailout, not student bailout. He doesn’t say negotiate different terms for borrowers, just for servicers (banks). I’m going to read that part, carefully, having seen what the mortgage solution was.</p>
<p>Loan forgiveness typically creates “income” since it is a cancellation of debt that you actually owed. That means that you owe tax on it. If you don’t pay the tax (which often occurs, since the income isn’t associated with receiving cash), then you have an IRS problem, which is really bad, since they aren’t subject to the rules that commercial creditors are subject to. </p>
<p>the government is problem here. the reason that tuition is so high is because the government guarantees student loans to everybody, so students take out loans they cant afford and get worthless liberal arts degrees. the colleges exploit the governments loan guarantees by raising tuition because they know students will go to college regardless (since they can take out loans and our education system encourages higher education). look at tuition before the government got involved, only thousands of dollars. the only way they can fix it is if they get out of the student loan market and so colleges will be forced to be more competitive in tuition and will prioritize effeciency and lower their prices instead of spending billions on pointless state of the art sports complexes.</p>
<p>pompeyfan, hit the nail on the head. Would only add that it will be the taxpayers who will be left holding the bag for making it easier for students to obtain students loans on which they in all likelihood will default.</p>
<p>Agree with both comments above, but the students are left indentured with their credit ruined if they default, as well. It is truly a case of the ‘gift’ creating the problem.</p>
<p>“the government is problem here. the reason that tuition is so high is because the government guarantees student loans to everybody, so students take out loans they cant afford and get worthless liberal arts degrees. the colleges exploit the governments loan guarantees by raising tuition because they know students will go to college regardless (since they can take out loans and our education system encourages higher education). look at tuition before the government got involved, only thousands of dollars. the only way they can fix it is if they get out of the student loan market and so colleges will be forced to be more competitive in tuition and will prioritize effeciency and lower their prices instead of spending billions on pointless state of the art sports complexes.”</p>
<p>@Fredjan that rant was epic-I agree with maybe 10% of it but it was very entertaining!</p>
<p>We have a major problem here and it is going to take all of us to figure out how to fix it. </p>
<p>I sit down with kids and run the amortization tables on loans and they are pretty shocked at how what they take out and what they repay is so different. How about every HS student has to get a tiny bit of education about basic personal finances? It doesn’t take very long for most of them to get the concept of how compounding interest can work for you with savings and against you with debt-printing them out an amortization schedule and then reviewing what is really means when they get out of school is usually enough for them to make a sensible decision.</p>
<p>It’s not just student loans. Some folks find it fine to take out unaffordable loans for homes, cars, vacations…credit card debt. </p>
<p>I’m old enough to remember life before BankAmericard! It was harder to live beyond ones means because one didn’t have plastic to use for spending.</p>
<p>I think a personal finance course should be required in high school, and again in college. It’s fine to educate folks for their career.but I think it’s equally important for them to know how to deal,with the money they earn.</p>
<p>Tuition wouldn’t be so high if the government had higher standards on who received student loans, tuition might be lower. But in any case, it is simply bad praactice to give everyone who needs loans a loan. Banks at least know this basic idea. Don’t give money to people who won’t pay you back.</p>
<p>It isn’t just government the banks are part of the problem too.</p>
<p>@thumper1 yes it is all kinds of debt and yes the easy credit available is a huge problem. I agree with you a little education would go a long way in this area-it really isn’t hard to teach and there is a huge need for it.</p>
<p>@Vlklngboy11 I don’t see anything about liberal arts degrees in that link you posted. Was that supposed to support a comeback against the liberal arts degrees line?</p>