Student Loans News Coming Soon

[drmka26]

Biden is considering some big move on student loans in the next couple weeks. He is quoted to say that it will not be 50k forgiveness like many progressives had hoped. What do you think will happen?

[bovie]

I was looking for the option for him confusedly mumbling something about “$100 million forgiveness for everyone” which then of course would have to be walked back to reality by his handlers, but it appears to be missing.

[Huggy]

As somebody holding >300k in student loans and still in training, the idea of additional forgiveness beyond the current interest freeze scares me. Forgiveness does nothing to address the underlying causes of students graduating with insurmountable debts. There will be downstream consequences...

[CordMcNally]

My guess is something in the $10k range. I think there’s a chance it’ll be based on income. It’s just Monopoly money at this point.

I also think the 0% interest will continue indefinitely. It’s going to be such a mess when/if they make people start making payments again.

[Turf Doc]

As somebody holding >300k in student loans and still in training, the idea of additional forgiveness beyond the current interest freeze scares me. Forgiveness does nothing to address the underlying causes of students graduating with insurmountable debts. There will be downstream consequences...

Whats scary about it? Money is fungible. We spend a ton of money on stuff all the time. I don't really understand why people think that only student loan cancellation will be "paid back". What about the TCJA? Wasn't that a 2T tax cut?

[Huggy]

Whats scary about it? Money is fungible. We spend a ton of money on stuff all the time. I don't really understand why people think that only student loan cancellation will be "paid back". What about the TCJA? Wasn't that a 2T tax cut?

It sets a precedent. What do we do in 5 years when the next round of graduates have insurmountable debt? Forgive again? I wouldn't put it past every school in the country raising tuition accordingly with increasing amounts of forgiveness being handed out. I would expect many student to take on additional loans knowing that these policies keep getting put in place. Dr. Dahle addressed this in one of his podcasts, I believe it's the moral hazard.

I also agree that we waste money on massive amounts of other projects. That doesn't justify wasting money in this way, too. It does nothing to address the underlying cause.

[Turf Doc]

It sets a precedent. What do we do in 5 years when the next round of graduates have insurmountable debt? Forgive again? I wouldn't put it past every school in the country raising tuition accordingly with increasing amounts of forgiveness being handed out. I would expect many student to take on additional loans knowing that these policies keep getting put in place. Dr. Dahle addressed this in one of his podcasts, I believe it's the moral hazard.

I also agree that we waste money on massive amounts of other projects. That doesn't justify wasting money in this way, too. It does nothing to address the underlying cause.

I agree that I would want to see some sort of sustainable policy change going forward since the problem would just creep up again. Technically though, under the current system you basically make enough to pay it off yourself, or the amount of debt you take out is completely irrelevant to how much you pay back if you go on a income-based repayment. So I feel like the moral hazard is already there. I wonder if anyone has done a calculation on the amount of debt that is already going to be cancelled from PSLF or IBR programs, since the only real increase in cancellation comes from the delta between the oustanding debt and the debt thats already going to be cancelled anyway in 10/20/25 years.

[bovie]

I agree that I would want to see some sort of sustainable policy change going forward since the problem would just creep up again.

You have it backward. The problem isn't the debt, the problem is the system that created the debt.

There is nothing to creep up again, as it would never go away in the first place--forgiveness does nothing to fix that system or solve the problem.

It's like putting a Band-Aid on an arterial bleed.

[legobikes]

Voted for the option I'm hoping for - extension in $0 payments. Obviously partial forgiveness won't help anyone shooting for PSLF.

[bovie]

Technically though, under the current system you basically make enough to pay it off yourself

For physicians, sure.

But we are the overwhelming minority when it comes to student debt.

Do you think a gender studies major taking out $70k per year for undergrad will ever be able to pay that back?

In what reality should this even be allowed to happen?

[CordMcNally]

For physicians, sure.

But we are the overwhelming minority when it comes to student debt.

Do you think a gender studies major taking out $70k per year for undergrad will ever be able to pay that back?

In what reality should this even be allowed to happen?

I imagine Chief Adversity Officer and Chief Equality Officer positions pay pretty well.

[CordMcNally]

I think there are some majors that should only be offered to people that already have full time jobs and careers.

[Turf Doc]

For physicians, sure.

But we are the overwhelming minority when it comes to student debt.

Do you think a gender studies major taking out $70k per year for undergrad will ever be able to pay that back?

In what reality should this even be allowed to happen?

I think a minority of undergrads taking out 70k/yr would ever be able to pay it back... not just the genders studies majors, and i question how common that major really is....

[Turf Doc]

You have it backward. The problem isn't the debt, the problem is the system that created the debt.

There is nothing to creep up again, as it would never go away in the first place--forgiveness does nothing to fix that system or solve the problem.

It's like putting a Band-Aid on an arterial bleed.

The problem is all the debt people take out to get a degree. If you wipe it, not a problem for now, but if nothing changes all the debt will probably just come back. Thats what i mean by "creep up".

What's weird to me is why this is only a problem in the US. I imagine in other countries getting an education is a decent path to making above average income as well, and yet it seems their universities don't extort their students like here. If you cut off federal loans, maybe that would work, but i worry that people would just turn to private loans instead. I know i would for med school since it would still make sense to take out the debt, so that wouldnt fix anything...

[The White Coat Investor]

It's clearly bad policy, but that doesn't mean it won't happen. All these student loan payment extensions are basically the same thing. I mean, if you've got $200K in 6% loans, you're basically getting $12K+ (the + is for the time value of money) a year forgiven right now.

My guess is $10K. That's what the president has said all along. The nice thing about $10K it it makes a huge difference for those on the bottom end, dramatically reduces the number of indebted people without helping docs and other high earners much at all.