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Odds of 0% forbearance extension? Should I refinance before March?

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  • #46
    With inflation and people having to spend more of their money every month while not budgeting for their student loans, this is going to be even worse for people if/when they start resuming payments again. Once again, the government is not doing anyone any favors and is likely going to make things worse. I can get on board with forgiving interest and making 0% interest loans available going forward but the government is going to end up forcing their own hand.

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    • #47
      You raise a good point. I think a good idea for them would be to offer federal loans at 0% indefinitely as long as regular income based repayments are made. If payments are missed then it could go up to some capped percentage- lets say 3% or something reasonable. It would still incentivize those with the means to pay off the loan to actually commit to a regular payment plan. Even people who make 30k a year can afford income based repayments at 0% interest. Then let’s offer forgiveness after 20 years so we don’t have people indebted for their entire lives. Those with high incomes on IBR will have already paid off their loans in full well before then. Those with low paying salaries will pay what IBR stipulates and at least have the peace of mind knowing that they can only pay at most 20 years. And of course the public service 10 year option should remain as well.

      I think that works well without costing the taxpayer that much. Because at the end of the day, why should John Doe the plumber have to pay for this in taxes if he never took out a student loan in his life. Or so the argument goes. Although, you can also make the argument that this happens a lot already. Look at how schools are often financed- property taxes. If you are childless, you are still paying extra taxes without receiving a benefit. Or consider the exorbitant pensions paid in many states for state employees- why should I have to pay more taxes because the pension doesn’t collect enough to make ends meet. There’s always a little give and take, and it can never be equal to all taxpayers. But at the end of the day we should promote education whether it’s Kindergarten, high school or higher education. Because ultimately a highly educated society thrives and creates innovation that enriches the country as a whole.

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      • #48
        You pay taxes for the poorly managed pension system and for loan forgiveness kicking in now because no one in government cares. No one cares that kids in this country cannot get affordable education. They instead fight over affirmative action details. Its the result of degeneration we have, the politicians being bought by corporations and only after their next election votes.
        Kids of upper level politicians and those running
        corporations are set (in terms of colleges and the jobs they will receive after). Why should they bother with the rest of american kids?



        There are all types of advanced countries with strong standard of living that have affordable education (look at UK system for paying off loans).

        At this time we have a major war and this is where money is going.

        Unsustainable isn't it.

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        • #49
          I think I’ll make my kids go to state school. I’ll pay for it if they go state or they can get loans for the difference if they want to do private school. I can only imagine what private school education will cost in 15 years. Sending my kids to another country for college is honestly not a bad idea either.

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          • #50
            “And of course the public service 10 year option should remain as well.”
            Under IRS definition of tax exempt status does not align necessarily with public services in my opinion. I have a hard time defining public service.
            Starting with rural and unserved might be a starting point. But working for a tax exempt organization doesn’t really hit the mark.

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            • #51
              Originally posted by medicoFIRE View Post
              I think I’ll make my kids go to state school. I’ll pay for it if they go state or they can get loans for the difference if they want to do private school. I can only imagine what private school education will cost in 15 years. Sending my kids to another country for college is honestly not a bad idea either.
              For higher education, there are private schools and then there are private schools. Sketchy for-profit schools that will take all comers? Clearly a bad deal. Chicago, Stanford, Princeton, MIT, Caltech? Yeah, probably worth the difference in cost, even compared to top tier public universities like Berkeley, Michigan, Virginia. But getting a fuzzy major at Bryn Mawr or Oberlin? Yeah, I’m not that convinced, even if the SAT scores are relatively high.

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              • #52
                Yeah I tend to agree with Tim above. No real reason why physicians working for non-profits should get their loans forgiven while someone else working in a contracted private practice group shouldn’t. Maybe neither one should get forgiveness. True public service should be working in an underserved area or rural area but this is hard to categorize and creates a complex enforcement system. But again, those “rural” physicians may make more money anyway which further muddies the waters. I think forgiveness in general is a slippery slope especially with rising tuition costs outpacing inflation. It sets a precedent for future students to take debt even less seriously than it has already been taken by those in the past.

                There is an argument to be made that really nobody should get forgiveness except for the most destitute of borrowers. Instead they should offer student loan interest at 0% indefinitely for everyone with income based repayment. A 20 year forgiveness timeline would ensure that people are not indebted their entire lives. It would also ensure that those with the means to pay would actually pay it in full based on income based repayment. If payments are not made at all, it does not count toward the 20 years. Even those making 30k a year can pay $50 a month. $50 a month for 20 years is fair to them at 0% interest. If you make 400k a year for example, you would pay off the debt well before 20 years under an income based repayment plan. It saves taxpayers while not disincentivizing those with paltry incomes to want to contribute to society and strive to earn more. And the most destitute should be able to declare at least partial bankruptcy. Their credit will be wrecked for 7 years as a consequence which I think is a fair “penalty.” Maybe the bankruptcy terms could be modified to be able to be required to payback 20% of the outstanding balance. It would be a good compromise. And these people could not file for bankruptcy again for 7 years so they would be on the hook for that amount regardless.

                At the end of the day its a complex situation with tradeoffs for every potential solution. It seems they will continue the 0% interest forbearance for the forseeable future. So people would be crazy to refinance now. Its also shocking to see how misinformed some people are. There was a poster earlier who thinks he has to refinance to buy a house. Um no. I bought a house with tons of federal debt and no assets to speak of. Doctor loans are easy to get to buy a house so it is unfortunate that this poster will waste money based on their misunderstandings.

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                • #53
                  Originally posted by medicoFIRE View Post

                  At the end of the day its a complex situation with tradeoffs for every potential solution. It seems they will continue the 0% interest forbearance for the forseeable future. So people would be crazy to refinance now. Its also shocking to see how misinformed some people are. There was a poster earlier who thinks he has to refinance to buy a house. Um no. I bought a house with tons of federal debt and no assets to speak of. Doctor loans are easy to get to buy a house so it is unfortunate that this poster will waste money based on their misunderstandings.
                  I think you're talking about me about the end there. I'm in agreement with you now and definitely not refinancing anytime soon given the high likelihood of the 0% interest extension (and the fact that I also plan to try to pay off my loans ASAP). The issue with me getting a loan for mortgage was more-so due to the fact that I'm a 1099 IC and don't have enough income history yet to qualify for the loan (since I just finished training in 2021). I was incorrect in mentioning my DTI as I did previously.

                  I think you have a lot of great ideas on how to handle the student loan situation you posted here and earlier. Any chance you want to run for office and make these changes happen? You'd have my vote!

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                  • #54
                    Biden expected to extend to Aug 31! Woohoo!

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                    • #55
                      It is finally official. No payments until Sept 1.

                      Do you think payments will ever actually resume at this point?
                      Helping student loan borrowers manage their student loans. StudentLoanAdvice.com. [email protected]

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                      • #56
                        Originally posted by Andrew StudentLoanAdvice View Post
                        It is finally official. No payments until Sept 1.

                        Do you think payments will ever actually resume at this point?
                        Not in 2022

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                        • #57
                          Originally posted by Andrew StudentLoanAdvice View Post
                          It is finally official. No payments until Sept 1.

                          Do you think payments will ever actually resume at this point?
                          Not until the November election of this year.

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                          • #58
                            Originally posted by Andrew StudentLoanAdvice View Post
                            It is finally official. No payments until Sept 1.

                            Do you think payments will ever actually resume at this point?
                            don't they have to? maybe the plan has been all along to never make people pay their student loan debts back. No need to forgive them if you just let the balance sit there forever but never require a payment

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                            • #59
                              Originally posted by JBME View Post

                              don't they have to? maybe the plan has been all along to never make people pay their student loan debts back. No need to forgive them if you just let the balance sit there forever but never require a payment
                              i didn't think that the political aspect wouldve stopped them from resuming payments before, but restarting in august? I really doubt it. I can maybe see them restarting it in 2023 if inflation is down and covid is past us. But i think earliest is 2023 now.

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                              • #60
                                Originally posted by Turf Doc View Post

                                i didn't think that the political aspect wouldve stopped them from resuming payments before, but restarting in august? I really doubt it. I can maybe see them restarting it in 2023 if inflation is down and covid is past us. But i think earliest is 2023 now.
                                honestly by then I can see another excuse/reason not to restart repayments that we can't predict to give another reason to not restart. Agree they won't restart in August. Maybe December 2022. After elections for sure

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