True, and as you and I have already agreed, setting a lower top qualifying salary would have been preferred by us.
But not being “perfect” isn’t a disqualifier for me. I’m still in favor of it since I know it will help many worthy students get a small step forward in life.
I’m glad to see Emerson’s poll showing most are in favor of it. I wasn’t sure how it would be taken by the “masses.”
Does this loan forgiveness only cancel interest owed?
@GKUnion this is a cancellation of principal owed.
Thank you @thumper1
It is a cancellation of debt. Loan documents call for payments to be applied to any charges and fees first, then accrued interest, then principal.
If a loan was current when the pause happened, and the borrower was in a repayment status, then there should be very little interest accrued and the majority of the $10k would reduce principal. If the student was still in school, there might be a chunk of interest accrued on 3-4 years of loans, like for an unsubsidized loan where the interest isn’t capitalized until the student leaves school (graduates or leaves). If the loan is in default or deferment, there might be a combination of interest and principal that have been combined.
If your question is is only interest being forgiven, no, principal will also be forgiven. Charges and fees, then interest, then principal.
Still not clear on few items.
Have 2 Parent Plus loans for 2 childrens.
My Spouse took out the loans but she is currently not working and has $0 income for last few years.
My income is $120k per year and I file tax return as couple and declare children as dependent on 2021 Tax return. Will they consider my income since I am filling Tax return as Joint couple.
Is the 10k applied individually like 10k per child or total 10k for both childrens for Parent Plus loans.
Is the 5% applied to Parent plus loans also if minimum payment plan is choosen. Is 5% of Gross income or Net income. ( after tax ).
If Minimum payment plan is choosen will the interest stop accruing on the remaining balance if 5% is payed monthly. That part is very confusing about interest.
Forgiven period is changed to 10 years from 20 years for Parent plus loans also?
Does this forgiveness apply to Grad loans also. My S is currently M3 in med school and he has 25k as undergrad loans and $120k as Grad loans from Med school.
TIA
This is not part of the Executive Order. It is a proposed plan that the Dept of Education will have to develop. It is not proposed the interest stop on the loans, only that the total monthly payment be capped at 5%. If that doesn’t cover the monthly interest amount, then the government will pay (credit) the difference in the interest amount (but no principal).
I would not think that a Parent would get two $10k amounts forgiven even if there are 2 students (but I could be wrong). Students that have 2 or more loans only get one $10k amount forgiven. I don’t know if two (or more) parents each took out a Plus loan if they’d each get a $10k amount forgiven, but probably as each loan is made to one person.
There’s a lot that remains unclear. Twoinanddone already addressed a couple of your questions and I agree with his takes.
As far as #5, yes, it applies to grad school loans also. I haven’t seen anything specific yet but if it wasn’t outlined in last week’s releases, the Department of Education should provide guidance to the loan servicing agencies as to the forgiveness logic (i.e. oldest loan first, highest interest rate loan first, etc.) I would think your son’s med school loans are higher interest rate loans so he’d prefer to have $10k of that forgiven. Definitely sign up for the email updates.
You didn’t ask the question, but another thing that’s unclear with Parent Plus forgiveness is whether or not parents are eligible for the extra $10k for Pell Grant recipients. If so, that adds another complicating factor since the grant history is tied to the student account on studentaid.gov, not the parent’s.
Since Pell grants didnt apply to my children I didnt ask the question. But you are right and thats a valid question for students who had taken Pell grants and their Parents taken Plus loans for the children.
If the student has no income or income below 225% Poverty level the minimum monthly plan payment will be $0 ? So government will be paying the interest accumulated for that month ?
Is the 6 month period has changed to 12 month to start repaying the loans once student is graduated ? Or that part is not changed.
My D graduated in August this year so as per 6 month her loans will be due sometime in Feb.
Believe its called Deferred period…
Do you know how expensive rent, food, gas, is? And a lot of these jobs don’t pay much…
We scrimped and saved too. And my kids were lucky enough to avoid loans. Most of the people we know who took out loans, lived at home during college and would not have been able to go to college and have the opportunities they did if they hadn’t taken out loans to attend. I’ve never heard them complain about their debt at all. The people I know who complain about student loan debt, either never had student loan debt or took out loans to go to a private school when they could’ve gone somewhere cheaper. Then again, life isn’t fair.
And not everyone has parents who are good with money. Some parents don’t care…
If you have quite a bit of student loan debt, working at a low paying restaurant, cashier job isn’t going to make it easy to pay off your loans and live and pay your bills? But loan forgiveness might make it easier for people to put food on the table…And most people go to college so they can get a job that isn’t a cashier job at Ross (not that there is anything wrong with that kind of job, but you know what I mean).
I do sympathize. But “life’s not fair” isn’t a sufficient reason for me to pay your NYU or grad school debt.
It’s not a reason I want to be subsidizing folks on their business losses either.
I can come up with some other things I’d cut from tax exemptions if I were Grand Pumba.
It’s very disappointing that these very OFF TOPIC political statements and general grievance posts can’t be posted in the Politics forum version of this thread. There are many people coming to this thread (NOT in the Politics forum) looking for actionable information and insights into the new policy.
Let’s make it easy for everyone to find what they seek. Please, anyone wanting to discuss anything even a little off topic and/or politically tinged, PLEASE take it to the Politics forum.
I am not a mod. Just someone very interested in learning the details of the plan, and very disinterested in reading political complaints about the plan.
Thank you.
Good point!
Does anyone know if Trade School loans are included?
Or, can parents get Parent Plus loans forgiven if their student has used the 10/20K?
Or can parents who consolidated via SoFi or other company get their loans forgiven?
All questions I’ve been asked, but I don’t know…
There is a Reddit Megathread by the President of The Institute of Student Loan Advisors (TISLA) that has many specific details and places to look for info including studentaid.gov which should be the go to spot for current loan forgiveness information.
But you can not completely pull the political aspect of this topic out, because of the lawsuits that are expected from loan service providers, those with student debt just above the income thresholds, and from political adversaries. This could easily play out with loan forgiveness being held up in the courts and challenged all of the way to the SCOTUS. The timeline for any resolution could be years because of the legal aspects of this topic.
I understand, but those business loans were approved by our duly elected congressional representatives, to whom we could complain if we wish…
I believe trade school loans are included, as students can use federal loans to finance their education there (my H did).
There’s a constitutional separation of powers dispute that has to be settled before we can expect anything. Right now, expect to pay back your loans.