Student loans: Michael Lewis exposes some pretty nasty behavior regarding PSLF

[Tangler]

Sorry if this has already been discussed. I personally paid off 300k worth of student loans (finished paying in 2011), and PSLF was not really a thing back then (or at least a thing for me). This might be a one sided view but wow, what horse poo. Anyone get this loan forgiveness thing to work? Anyone else listen to this podcast? Thoughts? Anyway, I will tell you my thoughts on student loans: 1. They are like cancer 2. It is possible to pay them off early in your career and move on with your life 3. I have ZERO regrets regarding having that crap out of my life (Thanks Dave Ramsey!)

Anyway, if you are doing PSLF listen to this podcast!

Listen to The Seven Minute Rule from Against the Rules with Michael Lewis in Podcasts. https://podcasts.apple.com/us/podcast/against-the-rules-with-michael-lewis/id1455379351?i=1000434501803

[Hank]

Any chance of a summary of his arguments vs expecting folks to listen to a 50 minute podcast?

[Tangler]

Summary: PSLS is almost impossible to get because people who control your ability to get it have zero interest and incentive to help you or approve your application. But.......worth a listen. Definitely worth 50 minutes of your life. I have no doggies in any fights. Just found it preposterous and fascinating (like a train crash).

[ENT Doc]

I think taking out debt, funded by the taxpayer, and not paying that debt back (and knowing that you’re not going to from the get-go) is immoral, regardless of what the law allows. There isn’t a shred of personal accountability attached to this.

[wa2106]

ENT Doc wrote:

I think taking out debt, funded by the taxpayer, and not paying that debt back (and knowing that you’re not going to from the get-go) is immoral, regardless of what the law allows. There isn’t a shred of personal accountability attached to this.

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Normally I like your comments ENT Doc (and maybe I'm mis-reading it) but PSLF is designed to reward those who take lower-paying jobs that provide a public service.  The debt is paid back via service rather than the full price.

To imply that those seeking PSLF are immoral is a failure on your part.

[jfoxcpacfp]

Tangler wrote:

Anyway, I will tell you my thoughts on student loans: 1. They are like cancer

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Great simile. I struggle for good ones when speaking with clients and this really describes the oppression of ongoing student loan burdens.

[ENT Doc]

wa2106 wrote:

ENT Doc wrote:

I think taking out debt, funded by the taxpayer, and not paying that debt back (and knowing that you’re not going to from the get-go) is immoral, regardless of what the law allows. There isn’t a shred of personal accountability attached to this.

Click to expand…

Normally I like your comments ENT Doc (and maybe I’m mis-reading it) but PSLF is designed to reward those who take lower-paying jobs that provide a public service.  The debt is paid back via service rather than the full price.

To imply that those seeking PSLF are immoral is a failure on your part.

Click to expand...

No, you are not misreading my comments.  So you think that joining an organization with a 501(c)(3) attached to it necessarily is lower paying, or provides higher value than a non-501(c)(3), or rather that people not joining 501(c)(3)s aren't serving the public?  Please elaborate on that.

I don't think those who created PSLF intended it to apply to a bunch of doctors who have the means to pay for their education.  And regardless of the intent of the legislation the original point still stands.  You want to "serve the public"?  Join the military or a like program that pays up front as an expressed part of the contract.  But don't delude yourself into thinking that 501(c)(3)s, where the majority of doctors seek refuge to have this paid for, are remotely on par with that level of service.

[Tangler]

I see both sides. I personally paid my loans off and i pay a ton in taxes so I sympathize with ENT doc regarding the element of personal responsibility of the borrower. However, if our system wants the to incentivize people to take jobs that provide a needed public service then they shouldn’t lie or mislead those people. It is an important discussion and “kids” borrowing money for school are mislead into thinking it is a low risk great investment in their future. While it can jump start your life/career (and it worked out great for me) it is NOT risk free, and everyone should minimize debt as much as possible in my opinion. Not everyone who gets into medschool will be a great doc and some should change paths, but that is not an option for many. Instead our system creates indentured servants, and profits off of them. I don’t think we should forgive everyone’s debt at tax payers expense but if you tell them they are eligible for PSLF and then hang up on them when they call for help and actively try to screw them out of it, that’s beyond uncool.

[wa2106]

ENT Doc wrote:

wa2106 wrote:

ENT Doc wrote:

I think taking out debt, funded by the taxpayer, and not paying that debt back (and knowing that you’re not going to from the get-go) is immoral, regardless of what the law allows. There isn’t a shred of personal accountability attached to this.

Click to expand…

Normally I like your comments ENT Doc (and maybe I’m mis-reading it) but PSLF is designed to reward those who take lower-paying jobs that provide a public service.  The debt is paid back via service rather than the full price.

To imply that those seeking PSLF are immoral is a failure on your part.

Click to expand…

No, you are not misreading my comments.  So you think that joining an organization with a 501(c)(3) attached to it necessarily is lower paying, or provides higher value than a non-501(c)(3), or rather that people not joining 501(c)(3)s aren’t serving the public?  Please elaborate on that.

I don’t think those who created PSLF intended it to apply to a bunch of doctors who have the means to pay for their education.  And regardless of the intent of the intent of the legislation the original point still stands.  You want to “serve the public”?  Join the military or a like program that pays up front as an expressed part of the contract.  But don’t delude yourself into thinking that 501(c)(3)s, where the majority of doctors seek refuge to have this paid for, are remotely on par with that level of service.

Click to expand...

Don't make this into something I didn't say.  I didn't use the word "immoral" to describe those who are pursuing PSLF.

Public service is defined by the legislation.

[CordMcNally]

I will say, student loan issues aren’t going anywhere soon. While the “free college for all” proposals are great at pandering to voters, it doesn’t even attempt to fix the actual problem. It’s goal is to shift the outrageous costs from a single borrower to all tax payers.

[Tangler]

The costs are ridiculous, asking tax payers to pay is ridiculous, and yes some turd will use that to get elected. I don’t have any easy answers, I feel sorry for the students but I am not interested in paying 90% taxes. The schools are printing $. Tuition is nuts, and they encourage kids to borrow $. Many would be better off learning a trade (hvac repair, plumbing). I cannot encourage a kid to borrow a lot of money to get an education. My undergrad was 2k per year, now (20 years later) it is 24k per year and that is “cheap”. If the kids had to pay up front they would think twice about ROI.

[ThoracicDoc]

Podcast is very interesting. Speaks mostly to the practice of Navient which was a notoriously difficult servicer to deal with. Luckily to get PSLF you probably would have consolidated to Fedloan. Granted, also not the easiest servicer but in my limited anecdotal evidence have not appeared to oppositional interests to mine. I think it's highly unlikely that people already have employment certification forms and plan to work in a non-profit will not get it. The program I think is likely to change or be eliminated for new borrowers at this point. As to the morality I'll leave that to you guys to discuss.

[Zaphod]

I understand the moral argument, however, I think it is balanced by the public good of education for overall society and increased tax revenues over a lifetime from that education. Idk the mechanics or amounts of pslf that actually is paid vs. forgotten since it was after me a bit, but I assume you pay some principle back. Aside from the specific program of pslf I think that when you're paying six figures of federal taxes per year for your career...well thats the payback for the government and society.

I think a solid argument could be made along those lines. Not saying you shouldnt have to pay something back or take on debt with abandon to slough it off, but that the desired aggregate outcome gets there no matter what. Just depends on your view on the point of it all is.

I would be super stoked if I could simply deduct principal and interest payments, that would be very reasonable. Self limiting, promotes payback without tax penalty, and then its over and you're a consumer of the economy and paying ginormous tax bills anyway.

[LIFO]

Just a hint of practical advise: If you have been assigned Navient as your loan servicer, you can apply to enroll in PSLF to have your servicer switched to FedLoans.  They are much better to deal with.  You are not making any commitment nor do you pay any penalty to enroll in PSLF and then subsequently repay or refinance your loans later.

[jhwkr542]

Lots of hawt taeks being spewed. I haven't seen a good solution from a politician yet although I haven't followed all of the lesser known Democratic candidates. Republicans seem more free market based whereas Sanders, AOC, and Warren's utopian plans are not practical (and have no chance of passing either so why bother spewing such nonsensical rhetoric).

I don't buy Lewis's stupid take either. This isn't your boss promising you a promotion if you work hard. This is a governmental program with set rules (although kinda squishy for those trying with non-501c3 orgs). I have documentation on my wife's loans that X number of payments qualify. It's updated with every bill and confirmed every year. She's on the same payment plan and working for the same organization. If she gets to 120 payments and they say "well actually...", they will be sued. They already have and already lost once.