<p>Aside from technical points, who would this benefit most? Someone who gets an expensive law degree and gets employed in a minimally paying position? Is that good for the society?</p>
<p><a href=“Bloomberg - Are you a robot?”>Bloomberg - Are you a robot?;
<p>“…Earlier this year in his proposed 2015 budget, Obama outlined changes to reduce the benefits for large borrowers like grad students, but those haven’t gone through yet. None of the news reports so far have mentioned whether similar changes will be included in this executive order”. </p>
<p>they go on to give an example</p>
<p>“…We have one example of someone who might look similar to an MBA student. He starts out with a starting salary of $90,000 and, by the end of 20 years, is making $243,360. Under the old IBR program, he’ll have paid $409,445 by year 25 and be forgiven $23,892 of his loan balance. Under the new [PAYE] plan, he’ll pay less than half of that, or $202,299, and be forgiven $208,259 by year 20.”</p>
<p>I don’t see anywhere what his original loan amount was…</p>
<p>Do we know how they define earnings? Would they include stock options and/or other fancy payments that can be weasels out as non-payment?</p>
<p>I would expect earnings are based on 1040.
So if you exercise your options that would count as earnings.</p>
<p><a href=“Obama answers Tumblr questions on college loans”>Obama answers Tumblr questions on college loans;
<p>Obama talking to students live right now about debt</p>
<p>With capital gains and options, both pretty big money makers, they can wait to exercise. At 20 years, they are probaly not even 50 years old yet.</p>
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<p>If you leave a company, you usually have 90 days to exercise and when you exercise, it is a taxable event.
If you stay in a company, especially one in which the options “may” be worth a lot, you are a fool to not exercise frequently given the volatility. Looking at you Groupon, Zynga, Twitter, etc…</p>
<p>You only get capital gains if you exercise the options and hold.
The exercise itself is a taxable event normally at your base income tax rate.
Then you have to hold the stock for a year and hope it doesn’t go down in order to get the cap gains tax treatment.</p>
<p>Froma post above,</p>
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<p>My point is the rule is forgiving someone earning $243K/yr a loan of $208K. Do they really need taxpayers’ help?</p>
<p>suggest you read what you write:</p>
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<p>While I’m a big fan of the Arne Duncan, the last time I checked my civics book, no Cabinet Secretary is empowered to “amend” a “law”…some silly document a couple of hundred years old spells out exactly who has authority to make a law or amend it.</p>
<p>Ask anyone with student loans whether this is good news and the answer is yes.
Ask the same person how they feel about getting taxed more to relieve other people’s loans and they will hate it.
This is a band aid for the real problem. College costs too much and kids are often told by school counselors that the sky is the limit-dream big! No college is too good or too expensive for you! Show people a 10 year old car that costs $5000 and a $50,000 luxury car and ask them which one they want and most will pick the luxury car especially if you tell them that someone else will help them pay for it. Add to the fact that the 18 year old is the decision maker makes it even worse.</p>
<p>^ suggest you read what I wrote right after the part you quoted (odd that you left that part out)</p>
<p>There needs to be funding (eg money allocated by Congress)</p>
<p>There needs to be a legal basis (eg either the law provides discretionary latitude on some of the PROVISIONS or the provisions have to be amended through the legal process). </p>
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<p>It costs so much because they can charge that much. Forgiving loans will enable them further by making it easy to pile up loans that in turn will help drive tuition even higher. </p>
<p>If I was King the student would
- Pay back the entire loan
- Pay back a minimum of 10% of your current salary per year
- Have the same interest rate that the govt gives the banks. </p>
<p>Just pay it back for Pete’s sake. </p>
<p>Edited to add…
I guess you have to have some interest …</p>
<p>@flossy I believe France(or maybe England) has a loan forgiveness after 30 years. Supposedly it’s working out for them</p>
<p>Again going back to sax’s quote,</p>
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<p>After 25 years, in this particular example, the forgiven amount will be $23K. After 30 years, there’s a good chance everything is paid off. I’d agree to forgive after 30 years following France/England’s example. At present in the US it is forgievn after 25 years. The president proposes to change it to after 20 years. At 20 years, the amount to forgive jumps to $208K from $23K. What is the median price of a house? Isn’t it like gifting them a house free for racking up a huge laon they can handle? Most students with modest loans would have paid off their loans by year 20 or only a small amount left. This exec order rewards irresponsible behavior.</p>
<p>Why not do this instead of throwing around exec orders,</p>
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<p><a href=“Steve Forbes' solution for student loan debt”>http://finance.yahoo.com/blogs/daily-ticker/even-steve-forbes-is-upset-with-the-high-cost-of-college-and-he-has-suggestions-on-how-to-reduce-them-210548322.html</a></p>
<p>Politics at this point requires a list of “accomplishments”. These useful actions taken by states won’t make that list. Sad, but true. </p>
<p>Fluffy, I fully understand Executive Orders and how they fit into Constitutionality. The point was more about this particular order and whether it would pass Constitutional muster. The orders are really only valid if they are to explain to the Executive branch how to carry out laws passed by Congress or to handle emergency type issues that cannot be addressed by Congress and do not usurp Congressional authority. Changing the language of a specific part of a law would be unconstitutional. The more important thing is that Executive orders cannot really survive their issuers by their very nature. The next president merely needs to override it. Sometimes it may not be expedient to do so, but every new president can issue new orders. The court has weighed in on some, but seldom is it pushed. </p>
<p>343 US 579 (1952) - EO held invalid due to attempt to make law rather than clarify.
83 F. 3d 442 (DC Cir. 1996) - EO was held to pre-empted by National Labor Relations Act as it is regulatory</p>
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<p>The main problem with all of these discussions if that the press generally does a terrible job of reporting and analysis. There is rarely any specifics about what the EO says and rather there is either sloppy or dishonest reporting about it.</p>
<p>For example, “it is legal” or “it is going around Congress” or “it is unconstitutional”- what is the “it”?? Is it a law? A clarification? A request for someone to do something (like work with Congress to amend)? etc.</p>
<p>As an example, there was bro-ha-ha (spelling?) when there were a bunch of EOs right after Sandy Hook, but when you actually look at them (some below), they are not rewriting laws or going around Congress</p>
<p>“Improve incentives for states to share information with the background check system.
Direct the Attorney General to review categories of individuals prohibited from having a gun to make sure dangerous people are not slipping through the cracks.
Propose rulemaking to give law enforcement the ability to run a full background check on an individual before returning a seized gun.
Provide incentives for schools to hire school resource officers.
Develop model emergency response plans for schools, houses of worship and institutions of higher education.”</p>
<p>The press has done a disservice and as a result, they are used for political points:
Like the President? “Great, he is taking action against a do-nothing Congress”
Don’t like the President? “He is circumventing the Constitution”</p>
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<p>That completely depends on how the law was written, for instance whether a provision has discretion or triggers associated with it.
It also depends on whether or not the EO actually is rewriting the law vs. “directing the Secretary to work with Congress to amend the X provision…”</p>
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<p>hmmmm…I need to take a closer look at this.
Is it better to take out loans and then get into this program with such a rich forgiveness amount?<br>
There must be something I am missing about this.
Why would anyone pay for college out of their savings if this worked like this?</p>