Student Loans News Coming Soon

[uksho]

Just trying to understand how inflation will be affected by this. I m not an economist , but knew for sure the consequences of printing money .

[Tangler]

this is basically just another form of UBI helicopter money to help out some folks that are really hurt by inflation which is in part a result of all the printing of UBI helicopter money. I cant hate it. We elected these people.

I think it is ok to hate it. Wasteful, foolish, myopic.

[resident_1]

Once they resume interest accumulation the $10k they forgave will come right back as people wont be paying their loans due to need to afford necessities given todays high prices (on umm everything).
This is to get votes for November 2022.

[MWPT]

Wouldn’t this be challenged in the courts?

[Tim]

Loan forgiveness or free tuition? What’s the difference?
It might be the individuals, not the lack of opportunities.
5 years running.
https://www.cnbc.com/2022/05/27/new-...free%20college

Are the benefits going to result in improving the education?

[LazerBeams]

Do you think they are smart enough to forgive $10k per person instead of $10k per loan?

My wife has not consolidated and still has 6 separate loans. I've been wondering if she'd get lucky and have each loan forgive the portion. Otherwise I'd hope it would go to the highest interest loan but I don't have tremendous confidence in their ability to implement intelligently.

Either way at this point we're likely to be means tested out. The 10k on it's own won't make a huge difference for us, but I'll be disappointed not to see how it gets implemented.

We've been very fortunate to benefit from the repayment pause. It has made a huge difference in our budget as we transitioned out of residency

[CordMcNally]

Do you think they are smart enough to forgive $10k per person instead of $10k per loan?

My wife has not consolidated and still has 6 separate loans. I've been wondering if she'd get lucky and have each loan forgive the portion. Otherwise I'd hope it would go to the highest interest loan but I don't have tremendous confidence in their ability to implement intelligently.

Either way at this point we're likely to be means tested out. The 10k on it's own won't make a huge difference for us, but I'll be disappointed not to see how it gets implemented.

We've been very fortunate to benefit from the repayment pause. It has made a huge difference in our budget as we transitioned out of residency

There's 0% chance it'll be per loan.

[drmka26]

This leak for 10k forgiveness for < 150k is very interesting... almost intentional to see public reaction?
Even weirder that it doesn't say anything about the interest rate at all....

[Turf Doc]

This leak for 10k forgiveness for < 150k is very interesting... almost intentional to see public reaction?
Even weirder that it doesn't say anything about the interest rate at all....

The obscene interests rates really show how screwed up this system is. My grad plus loans this year are going to be 7.5% with 4.3% taken off the top for fees. Completely predatory.

[drmka26]

The obscene interests rates really show how screwed up this system is. My grad plus loans this year are going to be 7.5% with 4.3% taken off the top for fees. Completely predatory.

Yeah, I mean - in what developed country do they make money off of educating their citizens?? its truly bizarre... we are turning into one of those countries with the super rich and super poor with shrinking of the middle class into oblivion.

[Hank]

Yeah, I mean - in what developed country do they make money off of educating their citizens??

Hopefully every one. If the future tax revenue and reduced social spending outlays for a more educated populace isn’t, on average, substantially positive, then why waste money on State spending for higher education?

[Lordosis]

The obscene interests rates really show how screwed up this system is. My grad plus loans this year are going to be 7.5% with 4.3% taken off the top for fees. Completely predatory.

I imagine they are high because the default rate is high. Punish people who pay and forgive those who don't.

[Tim]

I imagine they are high because the default rate is high. Punish people who pay and forgive those who don't.

https://www.foxbusiness.com/economy/...-inflation.amp

The good part is universities have a way to deal with “transitory inflation”. Forgive the old loans and create more for the current and future!
Kick the can down the road, raise tuition due to inflation.
One root cause is that not everyone needs to pay for higher education.

[medicoFIRE]

While I’m a firm believer in public education K-12 and government management/funding for it, I think higher education is different. Not everyone wants to or should pursue higher education. So why should that be 100% funded by taxpayers? The incentive to pay for higher education with loans is because you are investing in yourself to establish a good career that pays the bills and allows you to live a comfortable life. With that said, there should be a state colleges which have tuition controls in place if they expect to receive state or federal funding. And federal government should not be making money off student loans. Rates should be capped at 3%. If they’re worried about the effect of inflation then the govt should rein that in. There is an macroeconomic advantage to subsidizing higher education. A highly educated society creates more innovations which increases overall inflows of cash to our country. We need to stay competitive in STEM fields which are the future or innovation. If other countries subsidize this, we are at a disadvantage globally. Outright paying 100% of higher education is different than subsidizing it with lower interest rates etc.

[medicoFIRE]

To lordosis- there is a mechanism to deal with and prevent student loan defaults while accounting for those who have no way to reasonably pay off their debts. Bankruptcy. Let people discharge student loans in bankruptcy. Their credit will be wrecked for 7 years which is punishment enough for many people. Those that can pay will continue to pay because they wont want to wreck their credit in bankruptcy. Also it doesn’t have to be completely forgiven in bankruptcy. The law could be based on a formula - that they have to pay back lets say 100% of the loan if they make 300k, 75% of the loan if they make 100-150k, 50% of the loan if they make 75-100k, 25% of the loan if they make 50-75k etc etc.