Debt relief doesn’t just fall short of addressing the problem of student debt it likely increases and perpetuates it. Going forward students will likely take on incremental debt in the hopes of future relief having seen it before. While often called a moral hazard in this case it will be a learned behavior.
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We all received Covid stimulus $$$ to the tune of a lot of money a couple of times the last couple of years. I do not have it in my head to keep a wish list of items to buy because I’m expecting stimulus money to keep rolling.
10K isn’t going to eliminate loans for most students just starting out who may be trying to decide whether to attend school or not. It is certainly helpful but is just a drop in the bucket of college costs.
I wish this thread would just focus on the ins and outs of this specific current agenda. The info and the process going forward for the forgiveness. No one needs to feel guilty or taking handouts undeserved or whatever in what I thought was suppose to be an informative thread.
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Well, not all of us received stimulus payments, but regardless, no one is suggesting recipients of student loans feel guilt. The likely consequences and policy implications of this proposal for higher education were intended to be discussed in this thread-that is why I started it.
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The income level for loan forgiveness ($125,000) is too high for federal loan recipients and Pell Grant recipients.
Also, I do not support loan forgiveness for grad school, law school, med school, etc.
BUT one way of looking at it, I suppose, is that this generation is going to be burdened with inevitable tax increases for years to come. More and more boomers are entering the Social Security and Medicare arenas every year (and most recipients are/will be against ANY cuts to those programs), there is much U.S. debt to be repaid, there will be the many effects of long covid on many aspects of society for years to come, etc.
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My bad, on the stimulus $$ - in my world, most everyone I know received it.
Also my bad for assuming the thread was started as an informative, helpful discussion for those who will benefit to navigate the parameters and process. You might want to edit your original post to indicate consequences/policy implications - because there is no content to identify that as the discussion topic.
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About one year ago Speaker Pelosi made her thoughts quite clear about the prospect of debt forgiveness by EO.
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I am hoping it still is an informative and helpful thread.
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The Office of General Counsel released their opinion that Biden can cancel student debt under the HEROES act. I have read that the challenges may come because Congress never explicitly gave the President the power to cancel debt.
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Re: medical school loans…many of these folks are still residents making a smaller salary by a lot than the upper level amount. And some have hundreds of thousands of dollars in medical school loans including direct and grad plus loans. If someone has close to $400,000 in debt and gets a $10,000 break, they are still paying $390,000 back in loans and eventually with some amount of interest.
I’m sorry. But I don’t see this as an issue. We need and want doctors from all socioeconomic backgrounds. Medical school shouldn’t be the place for just those who don’t need a lot of loans to get through.
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This is actually something I was considering. And then I thought, well if I am considering it, how many other people are? My first thought was $10,000, but then why stop there? I should have my kids go for $50,000. They don’t need a loan but the possibility of $50,000 in free money should at least be considered. Why not? And then there will be more clamoring for more money and greater amounts. No way is this a one and done deal.
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I was just going to say this. No one complained back then getting money to help. Also many students living at home received about the same amounts. Many used it to live but many used it to buy a used car etc also. Many put it on future investments. They could still use that money to help pay off their loans. Yes, people that really, really didn’t need the money still took it. Same thing here. If you don’t feel you need it then don’t take it. This was never going to be a solution for higher Ed. This is just helping out some people. No question cost of education has to come down and be more affordable but unless we decide and become Sweden, etc. I just don’t see that happening. I know they are talking about making all community colleges free. That would be a good start at the very least. I read here that this won’t help people taking out $240,000 for undergraduate schooling. Sorry, that is a choice made. I know of no local public college costing that much.
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Anybody know if a student needs to graduate to receive forgiveness? So someone drops out sophomore year. Are they eligible?
I just paid a college bill, a few days before this announcement. I am retired, low-income, and live in a small apartment. I should have encouraged my daughter to take out a loan instead, since she gets a Pell grant. She does have a small loan that will qualify.
But I support this debt relief since I know many young people who are struggling under a burden of debt from school. But I also expect and understand any anger or bitterness this causes.
I hope this thread provides information. So far, I understand that students need to file an application for this relief, and that current students will be covered as long as the disbursement was by the stated date. But I am unclear which past students are covered- how far back does i it go? And for incoming or future students, is the idea that they now try to avoid debt or is the forgiveness going to happen again?
The income limits seem quite high to me: could those change? I think that a lower limit would have helped politically.
One issue with the Pell grant qualification is that some lower income or family/working folks take one class at a time. They are low income but do not receive financial aid because two classes are required. This needs to change, not only for the $20k here but so they have financial aid, period.
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I don’t sympathize much with those taking out $240k for education loans, but I also don’t sympathize with those in households with incomes of $250k who should have to repay their loans without government forgiveness.
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Yes, those students are eligible. In fact, those students will be the ones most helped by the forgiveness. I can’t cite statistics off the top of my head, but I have seen reports showing how crippling loan debt is for students who start school & are unable to complete their degrees. No diploma can make it harder to repay the debt. This will alleviate some of that.
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I think the largest impact will be the non incruing interest if I am reading this correctly, to many. I experienced this and keep hearing people saying they are making their monthly payments but the principal hasn’t been touched in over 5 years of payments. Taking out loans shouldn’t be a prison sentence.
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I support that part of it. For sure. It seems so predatory to have such high interest rates and typically accruing before the students even graduate (I think?).
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Leaving school because you couldn’t afford it is vastly different from flunking out however.
Excited to learn more in the future about how this moves some people from negative wealth to zero or positive. Hoping to learn more about how this might make a dent in the racial gap in wealth, especially at the lower end of the income distribution.
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It covers any outstanding loan balances for federally held loans. The repayment pause includes FFEL loans that are federally held, but not those that are privately held; I assume this will mirror the repayment pause rules. Any FFEL loans consolidated into a Direct loan will definitely qualify. Perkins loans do not qualify, unless they were previously consolidated into a Direct loan.
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