The outcome is the same … no diploma, harder to repay the debt.
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I know young teachers with student loans who spend $3000 a year on their students. One had to buy her own books, etc. I have no problem with $10,000 of their loan being wiped away.
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Can someone explain with an example how the 5% income cap will work??? I need a visual or example! 
I think if the Administration really wants to help Americans, they should forgive the debt of the US Treasury. As most of this debt is held by foreigners, who cares if it unfair? (they can’t vote)
Meeting financial obligations is so old school…
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I feel that my kiddos need to wait and see.
The forgiveness may be stalled by either lawsuits,
or change in Congress if the Republican party takes control of House and/or Senate.
Forgiveness may not start til January 2023.
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This link has information on how to calculate payments for current IDR plans: How To Calculate Discretionary Income | Bankrate. Current plans use 10%, and they use 150% of the poverty guideline. The new plan uses 5% and 225% of the poverty guideline. It gets confusing, but there is a repayment simulator for current repayment plans on the federal website where borrowers can view their loan information.
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I look at it as good people just trying to get ahead. We paid for like 10 years monthly and like nothing happened. We came into a very forutate situation and our house equity exploded and used that to pay off our over $350,000 in undergrad and medical school loans back in the day. We were very lucky. It just shouldn’t be that hard.
I am also glad the payment scheme of 5% will be started. This can cut many people’s Current payments in half on repayment. I just don’t see anything wrong with this. It will help many.
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The white house release actually gave examples of this which I think is somewhere above.
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That was helpful to see along with the text info below:
“For each of these borrowers, their balances would not grow as long as they are making their monthly payments, and their remaining debt would be forgiven after they make the required number of qualifying payments.”
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Regarding the June 30 cutoff…I am still struggling to understand why current students who borrowed money last year (and won’t graduate for a few years) will be advantaged by forgiveness, but current students who borrowed money for this coming school year (who also won’t graduate for a few years) will get nothing forgiven.
In our case, we have two kids in college. We decided to take the federal loans this year as the 529s are almost depleted and we needed a little more breathing room.
I feel they could have used a 8/24 cutoff (day of announcement) and said any loans originated prior could be included.
As it is, a number of current students who had already signed on to take loans are left out just by virtue of timing.
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I’ve not been in favor of the federal government being a lending institution. I think that grants should be available to the lowest incomes (I think it would be a good idea to raise them), no interest loans to those with middle incomes and government guarantees to the highest incomes. This forgiveness will probably benefit us but I was prepared to pay the entire amount. I think if there are to be loans with interest they should either come at the state level, from the universities themselves or private concerns.
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From CNN:
The immediate effect of Biden’s executive order, if it survives possible court challenges, will be alleviating some of the burden of debt for graduates who sometimes struggle to make payments or have to delay major life decisions like buying a home.
Can’t repay student loan but can repay mortgage?
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I’m happy for S to be getting the relief, BUT I am TOTALLY AGAINST debt forgiveness. Sends the wrong message and is totally unfair to all the other variables out there.
We were very specific about his responsibilities when choosing a school. He had options at various price points. He chose door # 3 which required him to take the 27k over 4 yrs (to lower our out of pocket a bit and to have skin in the game). He balanced the debt against anticipated outstanding opportunities / results (which he generated / received). In essence it was go to X and pay nothing or go to Y and take out loans, work summer jobs and during school to earn spending money. He chose Y and for good reason (based on his own criteria). He was prepared to pay back the loan. Yes he’s happy that it’s only 17k now (or in January) but this devalues his whole decision making process. Frankly the money should come to me as I was the one paying for things but it doesn’t work that way.
Bottom line, people should make good on their promises and pay back their debt. Terrible message is being sent to millions of people.
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Prior to the federal government getting involved in lending for student loans (late 2000’s), things were a mess in the student lending landscape. I know it may be hard to believe, but moving from FFEL to Direct lending was good for students. I can tell you from experience (I was a financial aid director) that it’s not easy to run lending programs. Perkins loans used federal funding, but they were run by the schools. I saw so many defaults of Perkins loans that occurred because the schools were simply unable to properly administer them. If an institution runs its own loan program, it would take additional staff … and the TILA regulations are kind of overwhelming (meaning more staff for compliance). States have been cutting higher Ed funding for years, and the cost to run loan programs would mean that funding for colleges & any state student aid would need to be further cut to finance the loan programs. The bottom line is that it’s actually very difficult & expensive to properly run a loan program, especially if it’s one that will protect borrowers. I saw that first hand when I attended federal training sessions. Lending at the federal level makes the most sense.
And cutting out lending programs would be a huge setback for equity in higher education.
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Are the only two lending options the feds and the schools? I don’t think either should be in the college loan business.
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I believe the issue is that people cannot save for a down-payment while paying back student loans.
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I am delighted you were able to repay your loans, but you are the poster child for who should not be getting loan relief-wealthy doctors do not, honestly, need this relief. Your patients could use debt relief from their medical bills far more.
I think a major issue it that many have paid off the amount they borrowed, a ton more in interest, and can’t afford to pay down the interest to start to pay down the principle. I know someone in his 40’s who borrowed $22,000, paid back $52,000, still owes $30,000. Even though 4 of my kids will benefit from this, I think the crippling interest is what needs to be fixed (and the insane cost of public universities).
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