Student Debt Forgiveness Is Finally Here
August 24, 2022 10:07 AM Subscribe
The Biden Administration has officially released their student debt forgiveness program in an announcement today.
The details are as follows:
* Forgiveness will be up to $10k for non-Pell borrowers, up to $20k for Pell borrowers. This will be means-tested, with the income caps at $125k/yr individual/$250k/yr household.
* Forbearance will continue through 2022. No action is necessary on the part of borrowers.
* Public Student Loan Forgiveness program waivers will continue to 10/31/2022.
* Income repayment plans will be changed to an income based model with greater protections for borrowers, such as lowering income requirements for payment as well as covering unpaid interest.
The details are as follows:
* Forgiveness will be up to $10k for non-Pell borrowers, up to $20k for Pell borrowers. This will be means-tested, with the income caps at $125k/yr individual/$250k/yr household.
* Forbearance will continue through 2022. No action is necessary on the part of borrowers.
* Public Student Loan Forgiveness program waivers will continue to 10/31/2022.
* Income repayment plans will be changed to an income based model with greater protections for borrowers, such as lowering income requirements for payment as well as covering unpaid interest.
I know we always make jokes about how the democrats add so much means-testing to things...but I honestly have not been able to figure out if this will apply to my loans at all, and so I'm right back to feeling kinda sick over the idea of payments restarting. (That's not to stop anybody from celebrating--I'm sure some folks will get a lot of benefit from this. But...does it have to be this complicated?)
posted by mittens at 10:18 AM on August 24, 2022 [13 favorites]
posted by mittens at 10:18 AM on August 24, 2022 [13 favorites]
Wow, there's some impressive stuff in the details:
Payments are capped at 5% of monthly income.
No interest accrues as long as payments are being made.
If you're under 225% of the federal poverty limit, your monthly payment is 0 and interest still doesn't accrue.
Those are some pretty big changes that are going to help a lot of people.
posted by Eddie Mars at 10:21 AM on August 24, 2022 [126 favorites]
Payments are capped at 5% of monthly income.
No interest accrues as long as payments are being made.
If you're under 225% of the federal poverty limit, your monthly payment is 0 and interest still doesn't accrue.
Those are some pretty big changes that are going to help a lot of people.
posted by Eddie Mars at 10:21 AM on August 24, 2022 [126 favorites]
Great. Here I am having JUST (as of last week) paid off the loan(s) I have had hanging over my head since 1995.
posted by KickTheBobo at 10:22 AM on August 24, 2022 [13 favorites]
posted by KickTheBobo at 10:22 AM on August 24, 2022 [13 favorites]
It's okay. It doesn't help me a ton (I have tens of thousands of dollars of capitalized interest that will never be paid back) but covering interest now at least means my 6-figure loan balance won't get bigger and I will have that psychological burden lifted, at least. I'm still facing down the barrel of another 14 years of this with no guarantee that at the end it will a) be forgiven as the policy states and b) won't be treated as taxable income but... it's something.
posted by rhymedirective at 10:22 AM on August 24, 2022 [8 favorites]
posted by rhymedirective at 10:22 AM on August 24, 2022 [8 favorites]
The changes for ongoing payments (5% cap, no interest accruing) are significant. These federal loans are now under very generous terms. This doesn't apply to private loans though and from early comments I've seen, people don't understand the difference.
One detail: you can get a refund if you paid loans off during the pause since March 2020 even though you didn't have to.
posted by Nelson at 10:26 AM on August 24, 2022 [49 favorites]
One detail: you can get a refund if you paid loans off during the pause since March 2020 even though you didn't have to.
posted by Nelson at 10:26 AM on August 24, 2022 [49 favorites]
income caps at $125k/yr
This does appear to be a hard cap rather than a phaseout, which is going to be frustrating for some people.
up to $20k for Pell borrowers
Pell borrowers tend to have higher debt overall, but on average "only" $4500 more than others. Also, Pell eligibility was determined at the time the grant was made, but the means testing for forgiveness uses current income. It's kind of a weird proxy that will disproportionately benefit people who received Pell grants but then went on to high paying jobs.
In my particular case the IBR changes are potentially much more meaningful than the $10k in forgiveness.
posted by jedicus at 10:28 AM on August 24, 2022 [6 favorites]
This does appear to be a hard cap rather than a phaseout, which is going to be frustrating for some people.
up to $20k for Pell borrowers
Pell borrowers tend to have higher debt overall, but on average "only" $4500 more than others. Also, Pell eligibility was determined at the time the grant was made, but the means testing for forgiveness uses current income. It's kind of a weird proxy that will disproportionately benefit people who received Pell grants but then went on to high paying jobs.
In my particular case the IBR changes are potentially much more meaningful than the $10k in forgiveness.
posted by jedicus at 10:28 AM on August 24, 2022 [6 favorites]
This also helps those who issue loans, I assume? Or are the amounts so small that it doesn't matter to big financial firms?
posted by schmudde at 10:29 AM on August 24, 2022
posted by schmudde at 10:29 AM on August 24, 2022
> Great. Here I am having JUST (as of last week) paid off the loan(s) I have had hanging over my head since 1995.
Congratulations, that's great news!
posted by Godspeed.You!Black.Emperor.Penguin at 10:29 AM on August 24, 2022 [84 favorites]
Congratulations, that's great news!
posted by Godspeed.You!Black.Emperor.Penguin at 10:29 AM on August 24, 2022 [84 favorites]
I paid off my loans this year too, and it felt great, and I am SO PLEASED for any incremental progress on loan forgiveness.
It's okay to be happy for other peoples' good fortune.
posted by Lawn Beaver at 10:35 AM on August 24, 2022 [125 favorites]
It's okay to be happy for other peoples' good fortune.
posted by Lawn Beaver at 10:35 AM on August 24, 2022 [125 favorites]
The forgiveness isn't going to mean much for most borrowers. The adjustments to IBR are the real point. Ease the debt burden, but keep everyone on the hamster wheel.
posted by snuffleupagus at 10:40 AM on August 24, 2022 [2 favorites]
posted by snuffleupagus at 10:40 AM on August 24, 2022 [2 favorites]
Here's a Fact Sheet from the White House.
posted by msbutah at 10:45 AM on August 24, 2022 [2 favorites]
posted by msbutah at 10:45 AM on August 24, 2022 [2 favorites]
If they’re going to have arbitrary income limits, I wish they included more info on how and when income would be measured. I’m sure it’s forthcoming but still - what is income? Is it AGI? Taxable income? What is the measuring period? 2021? 2022? Why is $125k/250k the right cutoff for this to target lower and middle income but $400k was the right cutoff for “no tax increases” on low and middle income households?
posted by ohneat at 10:45 AM on August 24, 2022 [5 favorites]
posted by ohneat at 10:45 AM on August 24, 2022 [5 favorites]
It's kind of a weird proxy that will disproportionately benefit people who received Pell grants but then went on to high paying jobs.
High-paying jobs will hit the cap. Is there really a problem with a person who started at a disadvantage and now is earning $100K getting a bit more forgiveness than his colleague in the next office?
I'm going to throw rocks at anyone who gets salty about this, because all the changes of the past two years were considered wild pipe dreams ten years ago, and the amount of work and dedication to vision involved from tons of people to get these changes, which have brought real help to people, done has been staggering. It's a litmus test for whether you're capable of recognizing incremental benefits of the kind that are most likely to survive the political process as benefits at all.
posted by praemunire at 10:45 AM on August 24, 2022 [108 favorites]
High-paying jobs will hit the cap. Is there really a problem with a person who started at a disadvantage and now is earning $100K getting a bit more forgiveness than his colleague in the next office?
I'm going to throw rocks at anyone who gets salty about this, because all the changes of the past two years were considered wild pipe dreams ten years ago, and the amount of work and dedication to vision involved from tons of people to get these changes, which have brought real help to people, done has been staggering. It's a litmus test for whether you're capable of recognizing incremental benefits of the kind that are most likely to survive the political process as benefits at all.
posted by praemunire at 10:45 AM on August 24, 2022 [108 favorites]
Before the inevitable tide of mefites griping about how this isn't enough and doesn't help them specifically, I'd like to say that while this isn't enough it's a campaign promise and far better than what I expected, and it in fact helps me specifically. So . . . FWIW.
posted by aspersioncast at 10:47 AM on August 24, 2022 [26 favorites]
posted by aspersioncast at 10:47 AM on August 24, 2022 [26 favorites]
According to recent data from The Washington Post, most federal student loan borrowers do in fact have small balances and would therefore benefit greatly from having $10,000 wiped away. About a third (33%) of borrowers owe less than $10,000, while another 20% owe less than $20,000.
Somewhere between 33% and 53% of borrowers is a lot of people who will be helped.
I'm sure someone did the math, but the marginal political value of raising that limit to benefit people with higher loan amounts probably dropped off sharply.
I probably would have benefited a bit from this if I hadn't paid off my loans so aggressively a few years ago, but that's okay. I DO still benefit from it by virtue of living in a less financially distressed nation than I did before.
posted by The Monster at the End of this Thread at 10:48 AM on August 24, 2022 [73 favorites]
Somewhere between 33% and 53% of borrowers is a lot of people who will be helped.
I'm sure someone did the math, but the marginal political value of raising that limit to benefit people with higher loan amounts probably dropped off sharply.
I probably would have benefited a bit from this if I hadn't paid off my loans so aggressively a few years ago, but that's okay. I DO still benefit from it by virtue of living in a less financially distressed nation than I did before.
posted by The Monster at the End of this Thread at 10:48 AM on August 24, 2022 [73 favorites]
what is income? Is it AGI?
They use AGI for most borrower calculations, so it's most likely this.
What is the measuring period? 2021? 2022?
Is there some reason to think that 2022 incomes will be unusually high, thus making a big difference in the validity of using that vs. 2021? However, if they're doing this before midterms, which they probably are, in order to use existing data, it will have to be 2021.
Why is $125k/250k the right cutoff for this to target lower and middle income but $400k was the right cutoff for “no tax increases” on low and middle income households?
Because enough people regard actual cash grants (which these effectively are) as more of a "government benefit" than not increasing existing taxes, and a lot of people would regard someone earning $125K (probably AGI, so probably closer to $150K if making 401(k) contributions, etc.) as an individual as capable of making their loan payments without undue distress.
posted by praemunire at 10:53 AM on August 24, 2022 [2 favorites]
They use AGI for most borrower calculations, so it's most likely this.
What is the measuring period? 2021? 2022?
Is there some reason to think that 2022 incomes will be unusually high, thus making a big difference in the validity of using that vs. 2021? However, if they're doing this before midterms, which they probably are, in order to use existing data, it will have to be 2021.
Why is $125k/250k the right cutoff for this to target lower and middle income but $400k was the right cutoff for “no tax increases” on low and middle income households?
Because enough people regard actual cash grants (which these effectively are) as more of a "government benefit" than not increasing existing taxes, and a lot of people would regard someone earning $125K (probably AGI, so probably closer to $150K if making 401(k) contributions, etc.) as an individual as capable of making their loan payments without undue distress.
posted by praemunire at 10:53 AM on August 24, 2022 [2 favorites]
I DO still benefit from it by virtue of living in a less financially distressed nation than I did before.
Yes, this. That having been said why isn’t it a phaseout? Step-function caps create weird incentives near the boundary.
posted by nat at 10:54 AM on August 24, 2022 [11 favorites]
Yes, this. That having been said why isn’t it a phaseout? Step-function caps create weird incentives near the boundary.
posted by nat at 10:54 AM on August 24, 2022 [11 favorites]
I'm in my late 40's and still owe just under $2K from undergrad, anything that helps others not be in this position is worth it, even if it doesn't help me directly. (I'm not sure if it will yet)
nothing was going to please everyone but amazing if anywhere near the 53% cited upthread is assisted
posted by djseafood at 10:56 AM on August 24, 2022 [12 favorites]
nothing was going to please everyone but amazing if anywhere near the 53% cited upthread is assisted
posted by djseafood at 10:56 AM on August 24, 2022 [12 favorites]
Recognizing this as completely uncharitable, I'm going to assume that anyone talking about how this won't make a difference makes more than $20k a year.
I'm someone with a large amount of debt, but this knocks me from completely insurmountable" to "something that might be paid off before I'm 80." Erasing more than a year's worth of salary in debt is actually huge for a lot of people.
posted by brook horse at 10:58 AM on August 24, 2022 [83 favorites]
I'm someone with a large amount of debt, but this knocks me from completely insurmountable" to "something that might be paid off before I'm 80." Erasing more than a year's worth of salary in debt is actually huge for a lot of people.
posted by brook horse at 10:58 AM on August 24, 2022 [83 favorites]
Here I am having JUST (as of last week) paid off the loan(s) I have had hanging over my head since 1995.
1995 was about when I finished paying off my own loans, which I did on my own.
And you know what? I'm thrilled for the people who will benefit from this. Your debt load from 1995 was probably a little more than mine from 1988; but the people with student debt today have considerably more than either of us, to the point that paying it all off independently might be impossible.
The debt I suffered under in recent years was different (cash advances on a credit card to cover underemployment following the 2008 Recession) and the debt friends suffer is also different mortgages and suchlike), but it almost doesn't matter what the source of that debt was, because it crushes us all. There's a reason why the Old Testament suggested that all debts should be wiped out for everyone, without question, something like once every 25 years or so. All that debt load is stopping people from doing the things they want to do that might contribute to society but can't do because they need to consider how to pay off their debt.
And anything that can ease that burden for anyone so they can get going on doing their real work benefits us all. We were a little unlucky that we were struggling with this earlier, but by the same token we were lucky in that our burden already was a good deal lighter.
posted by EmpressCallipygos at 10:58 AM on August 24, 2022 [24 favorites]
1995 was about when I finished paying off my own loans, which I did on my own.
And you know what? I'm thrilled for the people who will benefit from this. Your debt load from 1995 was probably a little more than mine from 1988; but the people with student debt today have considerably more than either of us, to the point that paying it all off independently might be impossible.
The debt I suffered under in recent years was different (cash advances on a credit card to cover underemployment following the 2008 Recession) and the debt friends suffer is also different mortgages and suchlike), but it almost doesn't matter what the source of that debt was, because it crushes us all. There's a reason why the Old Testament suggested that all debts should be wiped out for everyone, without question, something like once every 25 years or so. All that debt load is stopping people from doing the things they want to do that might contribute to society but can't do because they need to consider how to pay off their debt.
And anything that can ease that burden for anyone so they can get going on doing their real work benefits us all. We were a little unlucky that we were struggling with this earlier, but by the same token we were lucky in that our burden already was a good deal lighter.
posted by EmpressCallipygos at 10:58 AM on August 24, 2022 [24 favorites]
What we need and STAT is widely disseminated wisdom for helping people overcome the totally human feelings of resentment about having recently paid off their own loans. I mean I am very happy this is happening and it’s a definite step forward but grrrr.
posted by HotToddy at 11:01 AM on August 24, 2022 [1 favorite]
posted by HotToddy at 11:01 AM on August 24, 2022 [1 favorite]
Yes, this. That having been said why isn’t it a phaseout? Step-function caps create weird incentives near the boundary.
Is it based on 2021 income? If so no weird incentives at all. If it's 2022--then yes, but as a one time thing it's not huge. Some earners who are around the top decile beg their employers to get an unpaid leave at the end of the year? Or choose not to sell appreciated stock until January? That seems fine.
The forgiveness isn't going to mean much for most borrowers. The adjustments to IBR are the real point. Ease the debt burden, but keep everyone on the hamster wheel.
I'm more excited about the adjustments since they are ongoing, but as others have noted up to half of all borrowers are gong to see their debt vanish.
posted by mark k at 11:05 AM on August 24, 2022 [2 favorites]
Is it based on 2021 income? If so no weird incentives at all. If it's 2022--then yes, but as a one time thing it's not huge. Some earners who are around the top decile beg their employers to get an unpaid leave at the end of the year? Or choose not to sell appreciated stock until January? That seems fine.
The forgiveness isn't going to mean much for most borrowers. The adjustments to IBR are the real point. Ease the debt burden, but keep everyone on the hamster wheel.
I'm more excited about the adjustments since they are ongoing, but as others have noted up to half of all borrowers are gong to see their debt vanish.
posted by mark k at 11:05 AM on August 24, 2022 [2 favorites]
A reminder as they become due again, it's not an easy process, but if you have become disabled (looks around at mass disabling pandemic), your loans can be discharged. Total Permanent Disability Discharge. Again, not easy, a lot of red tape to jump through. But most don't know about this option.
posted by Crystalinne at 11:06 AM on August 24, 2022 [15 favorites]
posted by Crystalinne at 11:06 AM on August 24, 2022 [15 favorites]
Your debt load from 1995 was probably a little more than mine from 1988; but the people with student debt today have considerably more than either of us, to the point that paying it all off independently might be impossible.
I graduated from an Ivy in the 90s owing $4K. A family member graduated in-state from one of the better public state universities a decade later owing ten times as much. The slope is steep!
widely disseminated wisdom for helping people overcome the totally human feelings of resentment about having recently paid off their own loans
If you suffered unfairly, you should not want others to do the same. Otherwise, you are just internalizing the values of the people who hurt you. Everyone needs to be sexually assaulted during fraternity hazing because you were....right?
posted by praemunire at 11:06 AM on August 24, 2022 [22 favorites]
I graduated from an Ivy in the 90s owing $4K. A family member graduated in-state from one of the better public state universities a decade later owing ten times as much. The slope is steep!
widely disseminated wisdom for helping people overcome the totally human feelings of resentment about having recently paid off their own loans
If you suffered unfairly, you should not want others to do the same. Otherwise, you are just internalizing the values of the people who hurt you. Everyone needs to be sexually assaulted during fraternity hazing because you were....right?
posted by praemunire at 11:06 AM on August 24, 2022 [22 favorites]
Re the disability discharge, be aware that this can be an impossible amount of red tape to get through. The reason my loan balance is so high now is because of how strict the disability process is, and has been, for decades.
posted by mittens at 11:11 AM on August 24, 2022 [7 favorites]
posted by mittens at 11:11 AM on August 24, 2022 [7 favorites]
Somewhere between 33% and 53% of borrowers is a lot of people who will be helped.
That surprised me, and I'm glad to hear it. Not that I begrudge anyone any relief that's available, but it will make a bigger difference in more people's lives than I had thought.
posted by snuffleupagus at 11:13 AM on August 24, 2022 [2 favorites]
That surprised me, and I'm glad to hear it. Not that I begrudge anyone any relief that's available, but it will make a bigger difference in more people's lives than I had thought.
posted by snuffleupagus at 11:13 AM on August 24, 2022 [2 favorites]
does it have to be this complicated
I could've done with no means-testing at all, but if you're already on an income-driven repayment plan, then ED almost certainly has your income information, so...God willing and vague competence on the part of the bureaucracy...you probably won't have to do anything if you're qualified.
The adjustments to IBR are the real point. Ease the debt burden, but keep everyone on the hamster wheel.
Payoff in ten years is way better than payoff in twenty. Literally no one would even be qualifying for the 20- (or 25-!) year IBR forgiveness under the modern plans until the middle of the decade.
posted by praemunire at 11:14 AM on August 24, 2022 [1 favorite]
I could've done with no means-testing at all, but if you're already on an income-driven repayment plan, then ED almost certainly has your income information, so...God willing and vague competence on the part of the bureaucracy...you probably won't have to do anything if you're qualified.
The adjustments to IBR are the real point. Ease the debt burden, but keep everyone on the hamster wheel.
Payoff in ten years is way better than payoff in twenty. Literally no one would even be qualifying for the 20- (or 25-!) year IBR forgiveness under the modern plans until the middle of the decade.
posted by praemunire at 11:14 AM on August 24, 2022 [1 favorite]
nothing was going to please everyone but amazing if anywhere near the 53% cited upthread is assisted
Bear in mind its 53% of college attendees. Who borrowed money. If you worked your ass off to get a full scholarship, or went to a cheaper school because you feared the Ivy league price tags, you have no debt to forgive and don't show up in the denominator at all. But at least you went to college and can expect a corresponding increase in lifetime earnings of like a million dollars.
And if you didnt go at all, well, I guess you got some unempolyment checks last year?
posted by pwnguin at 11:14 AM on August 24, 2022 [2 favorites]
Bear in mind its 53% of college attendees. Who borrowed money. If you worked your ass off to get a full scholarship, or went to a cheaper school because you feared the Ivy league price tags, you have no debt to forgive and don't show up in the denominator at all. But at least you went to college and can expect a corresponding increase in lifetime earnings of like a million dollars.
And if you didnt go at all, well, I guess you got some unempolyment checks last year?
posted by pwnguin at 11:14 AM on August 24, 2022 [2 favorites]
From White House correspondent Zolan Kanno-Youngs: Seeing questions about the income cap.
Senior official: For the purposes of the immediate debt relief, a borrower's income in EITHER 2020 or 2021 tax year is assessed. If their income was below the cap in either year, they would be eligible.
So no weird incentives here, if you were under the $125k/250k filing jointly cap in 2020 or 2021, you're good.
posted by yasaman at 11:17 AM on August 24, 2022 [12 favorites]
Senior official: For the purposes of the immediate debt relief, a borrower's income in EITHER 2020 or 2021 tax year is assessed. If their income was below the cap in either year, they would be eligible.
So no weird incentives here, if you were under the $125k/250k filing jointly cap in 2020 or 2021, you're good.
posted by yasaman at 11:17 AM on August 24, 2022 [12 favorites]
Re the disability discharge, be aware that this can be an impossible amount of red tape to get through
In July the Biden administration began a rulemaking process that would, among other things, somewhat simplify and (very) slightly lower the bar for disability discharge:
posted by jedicus at 11:20 AM on August 24, 2022 [8 favorites]
In July the Biden administration began a rulemaking process that would, among other things, somewhat simplify and (very) slightly lower the bar for disability discharge:
The proposed regulations would allow more borrowers who meet the statutory requirements for one of these discharges to receive a discharge by allowing additional categories of disability determinations by the Social Security Administration to qualify for a discharge. They would also allow additional types of medical professionals to certify that a borrower has a total and permanent disability. The regulations would also allow more borrowers who received a discharge to avoid having their loans reinstated by removing the 3-year income monitoring period that currently exists in regulationIt will probably be a while before this become an actual new regulation, though.
posted by jedicus at 11:20 AM on August 24, 2022 [8 favorites]
Ayanna Pressley: President @JoeBiden
just canceled student debt. To every organizer who fought so hard, this victory is yours. This is going to change and save lives.
Please, folks, take the win! This is a good day.
posted by Going To Maine at 11:24 AM on August 24, 2022 [50 favorites]
just canceled student debt. To every organizer who fought so hard, this victory is yours. This is going to change and save lives.
Please, folks, take the win! This is a good day.
posted by Going To Maine at 11:24 AM on August 24, 2022 [50 favorites]
This is one of those topics where popular and expert opinion sharply diverge. In addition to MeFi, I follow Econ Twitter, and it's two completely different worlds. (Not all economists and budget wonks oppose the proposal, but many or most Democratic-leaning ones do, and even those who support it understand and engage with the arguments against it, rather than assuming that everyone reading agrees with them, as seems to be the case here.) A sample.
Melissa Kearney, UMD: The inequity…inefficiency…level of spending…perverse incentives going forward…subsidies to a higher ed market that already has terribly screwed up pricing….
What an astoundingly bad policy move.
Ben Ritz, Progressive Policy Institute: "..Canceling debt for most borrowers is a giveaway to affluent households — paid for by workers..."
Adam Looney: Student loan forgiveness is regressive whether measured by income, education, or wealth
Mark Goldwein: Student debt cancellation will:
- Cost $400 to $600 billion
- Wipe out Inflation Reduction Act savings twice over
- Add up to a quarter point to inflation
- Benefit MDs, JDs, and MBAs
- Drive up tuition costs
- Increase risk or recession
Shai Akabas: If you told me Biden was looking for a policy that would boost inflation, provide most of its benefits to the upper-middle class, and undo the fiscal achievement of his recently passed IRA, I wouldn't believe you, yet that's where we are w/ tomorrow's student loan announcement
Jason Furman: This is not free money.
Jeffrey Brown: I am huge believer in transformative power of education. I’m a believer in creating access by reducing barriers, including cost. I am supportive of spending billions to invest in education or help those in need. But student loan forgiveness is not the best way to do these things.
Lanae Erickson: "...it will be a huge mistake. Why? Because it would be economically fraught, legally dubious, and politically harmful."
Thomas Kahn: Why canceling so many student loans is a mistake
posted by Mr.Know-it-some at 11:25 AM on August 24, 2022 [17 favorites]
Melissa Kearney, UMD: The inequity…inefficiency…level of spending…perverse incentives going forward…subsidies to a higher ed market that already has terribly screwed up pricing….
What an astoundingly bad policy move.
Ben Ritz, Progressive Policy Institute: "..Canceling debt for most borrowers is a giveaway to affluent households — paid for by workers..."
Adam Looney: Student loan forgiveness is regressive whether measured by income, education, or wealth
Mark Goldwein: Student debt cancellation will:
- Cost $400 to $600 billion
- Wipe out Inflation Reduction Act savings twice over
- Add up to a quarter point to inflation
- Benefit MDs, JDs, and MBAs
- Drive up tuition costs
- Increase risk or recession
Shai Akabas: If you told me Biden was looking for a policy that would boost inflation, provide most of its benefits to the upper-middle class, and undo the fiscal achievement of his recently passed IRA, I wouldn't believe you, yet that's where we are w/ tomorrow's student loan announcement
Jason Furman: This is not free money.
Jeffrey Brown: I am huge believer in transformative power of education. I’m a believer in creating access by reducing barriers, including cost. I am supportive of spending billions to invest in education or help those in need. But student loan forgiveness is not the best way to do these things.
Lanae Erickson: "...it will be a huge mistake. Why? Because it would be economically fraught, legally dubious, and politically harmful."
Thomas Kahn: Why canceling so many student loans is a mistake
posted by Mr.Know-it-some at 11:25 AM on August 24, 2022 [17 favorites]
Somewhere between 33% and 53% of borrowers is a lot of people who will be helped.
It's a lot more than that, this helps every single borrower below the $125k income cap. 33-53% of borrowers will have all their debt discharged. But a bunch of people will also have some of their debt discharged; if you owe $30,000 now you only owe $10,000 (or $20,000, depending). That's also a big deal.
The changes to payment terms going forward will help every single person who already has or will have a federal student loan.
There's a detailed breakdown of who is helped; it's Forbes, so low quality site, but the article looks plausible.
posted by Nelson at 11:27 AM on August 24, 2022 [11 favorites]
It's a lot more than that, this helps every single borrower below the $125k income cap. 33-53% of borrowers will have all their debt discharged. But a bunch of people will also have some of their debt discharged; if you owe $30,000 now you only owe $10,000 (or $20,000, depending). That's also a big deal.
The changes to payment terms going forward will help every single person who already has or will have a federal student loan.
There's a detailed breakdown of who is helped; it's Forbes, so low quality site, but the article looks plausible.
posted by Nelson at 11:27 AM on August 24, 2022 [11 favorites]
And if you didnt go at all, well, I guess you got some unempolyment checks last year?
This is obviously meant in jest, but quips about how hard people who didn't attend college have it are the epitome of punching down.
(And also play into bad policy crap. Remember when the big idea of the Democrats was that if you got laid off from a steel plant you should just "learn to code"? The country needs to work for everyone, not just the 40% who graduate college.)
posted by mark k at 11:28 AM on August 24, 2022 [7 favorites]
This is obviously meant in jest, but quips about how hard people who didn't attend college have it are the epitome of punching down.
(And also play into bad policy crap. Remember when the big idea of the Democrats was that if you got laid off from a steel plant you should just "learn to code"? The country needs to work for everyone, not just the 40% who graduate college.)
posted by mark k at 11:28 AM on August 24, 2022 [7 favorites]
This is one of those topics where popular and expert opinion sharply diverge.
When economists start condemning Milton Freeman instead of canonizing him, then I'll take their complaints about student loan forgiveness seriously.
posted by NoxAeternum at 11:28 AM on August 24, 2022 [32 favorites]
When economists start condemning Milton Freeman instead of canonizing him, then I'll take their complaints about student loan forgiveness seriously.
posted by NoxAeternum at 11:28 AM on August 24, 2022 [32 favorites]
"If you suffered unfairly, you should not want others to do the same. Otherwise, you are just internalizing the values of the people who hurt you. Everyone needs to be sexually assaulted during fraternity hazing because you were....right?"
I think it really trivializes sexual assault to compare it to the resentment someone might feel about their student loans. Especially since there's a solid chance there are people participating in this thread who have experienced sexual assault. And HotToddy even acknowledges that this is good news. And it is very good news!
posted by cakelite at 11:29 AM on August 24, 2022 [9 favorites]
I think it really trivializes sexual assault to compare it to the resentment someone might feel about their student loans. Especially since there's a solid chance there are people participating in this thread who have experienced sexual assault. And HotToddy even acknowledges that this is good news. And it is very good news!
posted by cakelite at 11:29 AM on August 24, 2022 [9 favorites]
Oh, shit. Just realized something potentially huge about this. I have some friends who defaulted on their student loans which subsequently wrecked their credit scores. They haven't been able to get approved for apartments because their credit scores are so low, so have been bouncing between AirBnBs (which don't care about that if you pay the month up front).
This will not only wipe out their debt, it will also (I think) remove the default from their credit report the same way payment in full would (they're on income driven repayment but it'll take 10 months for that to remove it, versus now).
They may actually have a chance at stable housing before winter. I bet they're not the only people in a situation like this, either.
posted by brook horse at 11:34 AM on August 24, 2022 [29 favorites]
This will not only wipe out their debt, it will also (I think) remove the default from their credit report the same way payment in full would (they're on income driven repayment but it'll take 10 months for that to remove it, versus now).
They may actually have a chance at stable housing before winter. I bet they're not the only people in a situation like this, either.
posted by brook horse at 11:34 AM on August 24, 2022 [29 favorites]
Economists calling for austerity? why I never
posted by StarkRoads at 11:37 AM on August 24, 2022 [36 favorites]
posted by StarkRoads at 11:37 AM on August 24, 2022 [36 favorites]
Did the economists miss that the inflationary impact already happened, when we didn't have to pay our loans for two years?
posted by mittens at 11:44 AM on August 24, 2022 [22 favorites]
posted by mittens at 11:44 AM on August 24, 2022 [22 favorites]
When have facts ever stopped the economic field's hard on for "austerity" no matter the human cost? Hence my point above - I'd take these arguments seriously if the field actually showed they gave a shit about people.
posted by NoxAeternum at 11:50 AM on August 24, 2022 [16 favorites]
posted by NoxAeternum at 11:50 AM on August 24, 2022 [16 favorites]
More people going to college helps me, in a broad more-educated-society way. People having their lives weighed down by debt for decades does not benefit me, that I've noticed. The permanence of student debt seems uniquely awful: can't go bankrupt, can't sell the asset, maybe get forgiveness if you have the right loans and job and can navigate bureaucracy for a decade.
This current plan isn't for me specifically, but I support it and hopefully further measures to deal with the problem.
posted by mersen at 11:52 AM on August 24, 2022 [17 favorites]
This current plan isn't for me specifically, but I support it and hopefully further measures to deal with the problem.
posted by mersen at 11:52 AM on August 24, 2022 [17 favorites]
How does this apply to people who took out loans this semester? Also, does it apply to grad school?
posted by corb at 11:54 AM on August 24, 2022 [2 favorites]
posted by corb at 11:54 AM on August 24, 2022 [2 favorites]
"More people going to college helps me, in a broad more-educated-society way."
Agreed, but *fewer* people have been going to American colleges and universities for a decade.
posted by doctornemo at 11:56 AM on August 24, 2022 [3 favorites]
Agreed, but *fewer* people have been going to American colleges and universities for a decade.
posted by doctornemo at 11:56 AM on August 24, 2022 [3 favorites]
Personally, this should help my family.
I'm 55 and am still paying off debt from BA, MA, and PhD.
Our children are in their 20s and are depressed at how much university debt they carry.
$10K will make a meaningful difference.
posted by doctornemo at 11:57 AM on August 24, 2022 [19 favorites]
I'm 55 and am still paying off debt from BA, MA, and PhD.
Our children are in their 20s and are depressed at how much university debt they carry.
$10K will make a meaningful difference.
posted by doctornemo at 11:57 AM on August 24, 2022 [19 favorites]
Re: Disability discharge. There are 3 options with varying requirements: 1)Disabled Veterans, 2) SSDI/SSI/SSA path 3) Physicians Certification. For (3) you need a short form from your doctor and supporting paperwork under a Physician's Certification. Yes, disability programs can be impossible to access and take years, I am painfully aware. But it's important to share information on repayment and removal process so everyone can fully explore them, especially now.
posted by Crystalinne at 11:59 AM on August 24, 2022 [8 favorites]
posted by Crystalinne at 11:59 AM on August 24, 2022 [8 favorites]
I see a lot of people in this thread ignoring the context: Profits and income inequality keep growing while wages are stagnant.
From a personal standpoint, my calculus of "do I pay for therapy and medical care, or my loans I took out for a degree I couldn't finish because of the situation that made me need therapy and medical care" has changed to "holy shit I could potentially finish my degree."
Agreed, but *fewer* people have been going to American colleges and universities for a decade.
You don't say. Wonder why that is.
posted by Jarcat at 12:02 PM on August 24, 2022 [18 favorites]
From a personal standpoint, my calculus of "do I pay for therapy and medical care, or my loans I took out for a degree I couldn't finish because of the situation that made me need therapy and medical care" has changed to "holy shit I could potentially finish my degree."
Agreed, but *fewer* people have been going to American colleges and universities for a decade.
You don't say. Wonder why that is.
posted by Jarcat at 12:02 PM on August 24, 2022 [18 favorites]
This is one of those topics where popular and expert opinion sharply diverge.
I am not someone who ordinarily pooh-poohs expert knowledge, but I find myself totally unable to credit, e.g., Larry Summers on this. Or Jason Furman, who has a building at NYU Law named after his dad, and not because he was a brilliant legal scholar. Neoliberal economists' resolute opposition to anything that might directly assist the poor, especially if you can't institute a massive bureaucratic gatekeeping process between the poor and the help, while rolling over for every corporate giveaway, has fully discredited them as judges of policy priorities. Regardless of whether they are correct about the drawbacks (and frankly we don't know that they are), they are hardwired to oppose programs like this and incapable of offering fair opinions on whether the drawbacks are worth the benefits or whether these drawbacks are better faced than, ohhhhh, those of the forgiveable PPP loans.
posted by praemunire at 12:03 PM on August 24, 2022 [50 favorites]
I am not someone who ordinarily pooh-poohs expert knowledge, but I find myself totally unable to credit, e.g., Larry Summers on this. Or Jason Furman, who has a building at NYU Law named after his dad, and not because he was a brilliant legal scholar. Neoliberal economists' resolute opposition to anything that might directly assist the poor, especially if you can't institute a massive bureaucratic gatekeeping process between the poor and the help, while rolling over for every corporate giveaway, has fully discredited them as judges of policy priorities. Regardless of whether they are correct about the drawbacks (and frankly we don't know that they are), they are hardwired to oppose programs like this and incapable of offering fair opinions on whether the drawbacks are worth the benefits or whether these drawbacks are better faced than, ohhhhh, those of the forgiveable PPP loans.
posted by praemunire at 12:03 PM on August 24, 2022 [50 favorites]
Echoing comments from others, I am delighted by this.
I started taking out student loans from the very start of my college education as my father chose to pay only a token amount to help me ($5K out of a $20K/year tuition, back in 1986). I relied on Stafford Loans for college, and then for 2 years of graduate classes, and then loans to help me not starve to death during an 8-year MD/PhD program. When I exited school in 2001 I started immediately into 3 years of residency (getting paid a whopping $35K/year) followed by 4 years of fellowship. I took forbearance and so the accrued interested was "capitalized". When all was said and done I owed $175,000 when my payback started.
We were pretty parsimonious about spending and really had to budget, but even with consolidation, I was going to end up paying $1100/month for 30 years to get out of debt. Fortunately, after 10 years I was able to pay everything off. It was a fabulous feeling. But the loan burden weighed on me for all of those years.
So how do I feel now, seeing so many people getting relief from their loans?
Absolutely fucking fabulous.
What a remarkable benefit to a generation who has watched their job and earning potential flatten, who has had to try to grow up and start their lives during COVID, and to a group of students whose college costs have gone up at 2-3x the rate of inflation over the past 10-20 years. Well done, Joe Biden.
posted by scblackman at 12:03 PM on August 24, 2022 [58 favorites]
I started taking out student loans from the very start of my college education as my father chose to pay only a token amount to help me ($5K out of a $20K/year tuition, back in 1986). I relied on Stafford Loans for college, and then for 2 years of graduate classes, and then loans to help me not starve to death during an 8-year MD/PhD program. When I exited school in 2001 I started immediately into 3 years of residency (getting paid a whopping $35K/year) followed by 4 years of fellowship. I took forbearance and so the accrued interested was "capitalized". When all was said and done I owed $175,000 when my payback started.
We were pretty parsimonious about spending and really had to budget, but even with consolidation, I was going to end up paying $1100/month for 30 years to get out of debt. Fortunately, after 10 years I was able to pay everything off. It was a fabulous feeling. But the loan burden weighed on me for all of those years.
So how do I feel now, seeing so many people getting relief from their loans?
Absolutely fucking fabulous.
What a remarkable benefit to a generation who has watched their job and earning potential flatten, who has had to try to grow up and start their lives during COVID, and to a group of students whose college costs have gone up at 2-3x the rate of inflation over the past 10-20 years. Well done, Joe Biden.
posted by scblackman at 12:03 PM on August 24, 2022 [58 favorites]
President Biden’s action to cancel a big chunk of student debt is a huge step forward for working people. For people who didn’t come from a family that could write a big check, but still did what they had to do to continue their education. For people who helped a child or grandchild pay for school and ended up having their Social Security checks garnished. For people who may not have been able to finish their degree, like around 40% of borrowers, because life got in the way, and would now have to pay off loans with what they could earn on a high school diploma. -- Senator Elizabeth Warren, from a Warren Democrats email.
Warren's first bill in the Senate was the Bank on Students Loan Fairness Act [with the Bank on Students Emergency Loan Refinancing Act the following year], and she planned to cancel student debt if elected president. After the election, Warren and her colleagues continued to urge Biden to cancel student debt via executive authority.
corb: "The Department is also proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers. The proposed rule would protect more income from loan payments. It would cut in half—from 10% to 5% of discretionary income—the amount that borrowers have to pay each month on their undergraduate loans, while borrowers with both undergraduate and graduate loans will pay a weighted average rate." - U.S. Dept. of Education press release.
Same ed.gov press release: "Nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the Department. The Department is also making available a legal memorandum regarding its authority for these discharges."
posted by Iris Gambol at 12:04 PM on August 24, 2022 [6 favorites]
Warren's first bill in the Senate was the Bank on Students Loan Fairness Act [with the Bank on Students Emergency Loan Refinancing Act the following year], and she planned to cancel student debt if elected president. After the election, Warren and her colleagues continued to urge Biden to cancel student debt via executive authority.
corb: "The Department is also proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers. The proposed rule would protect more income from loan payments. It would cut in half—from 10% to 5% of discretionary income—the amount that borrowers have to pay each month on their undergraduate loans, while borrowers with both undergraduate and graduate loans will pay a weighted average rate." - U.S. Dept. of Education press release.
Same ed.gov press release: "Nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the Department. The Department is also making available a legal memorandum regarding its authority for these discharges."
posted by Iris Gambol at 12:04 PM on August 24, 2022 [6 favorites]
Senior official: For the purposes of the immediate debt relief, a borrower's income in EITHER 2020 or 2021 tax year is assessed. If their income was below the cap in either year, they would be eligible.
This is awesome - I’m so glad they’re doing a lookback for this, and to a year when many folks had a lower AGI than 2022. A lot of people who weren’t required to file returns still submitted a simple “return” of sorts to get their stimulus payments so hopefully the government can use that info and people won’t need to get a lot of additional paperwork together.
posted by ohneat at 12:04 PM on August 24, 2022 [1 favorite]
This is awesome - I’m so glad they’re doing a lookback for this, and to a year when many folks had a lower AGI than 2022. A lot of people who weren’t required to file returns still submitted a simple “return” of sorts to get their stimulus payments so hopefully the government can use that info and people won’t need to get a lot of additional paperwork together.
posted by ohneat at 12:04 PM on August 24, 2022 [1 favorite]
Recognizing this as completely uncharitable, I'm going to assume that anyone talking about how this won't make a difference makes more than $20k a year.
I'm someone with a large amount of debt, but this knocks me from completely insurmountable" to "something that might be paid off before I'm 80." Erasing more than a year's worth of salary in debt is actually huge for a lot of people.
Right? Like, I'm making $50k now as a postdoc and my partner is working now as a nurse, which brings us into the $70-90k range jointly, and like. We're still, a year later, kind of looking around wide-eyed and going "shit shit we might be able to save things now? whoa . We can... pay down some debt? We could go on a vacation for the first time in ten years?!" Because we were making about $30-40k jointly for the past eight years before that, things have suddenly shifted pretty dramatically. Not as much as they might have, because of inflation, but still quite a lot.
The thing is, I survived grad school amid multiple natural disasters partly by taking out six figures of loans, and I had sort of been figuring we would be repaying them until the end of time--not to mention my spouse's (much more modest) loans. I graduated into loan forbearance in late 2020, so I've been nervily trying to figure out paying mine. I don't know if any of this does apply to grad school loans, but if it does that will be incredibly meaningful--and even if it doesn't, I am utterly delighted on behalf of my friends and colleagues who are trying to figure out their own situations.
I'm also trying to untangle the PSLF rules, and whether they apply to academics on federal grants or whether we're technically contractors or what. There are a lot of people out there employed by governments, by the military, by nonprofits--this is a major, major thing that a lot of people should be investigating ASAP.
posted by sciatrix at 12:05 PM on August 24, 2022 [14 favorites]
I'm someone with a large amount of debt, but this knocks me from completely insurmountable" to "something that might be paid off before I'm 80." Erasing more than a year's worth of salary in debt is actually huge for a lot of people.
Right? Like, I'm making $50k now as a postdoc and my partner is working now as a nurse, which brings us into the $70-90k range jointly, and like. We're still, a year later, kind of looking around wide-eyed and going "shit shit we might be able to save things now? whoa . We can... pay down some debt? We could go on a vacation for the first time in ten years?!" Because we were making about $30-40k jointly for the past eight years before that, things have suddenly shifted pretty dramatically. Not as much as they might have, because of inflation, but still quite a lot.
The thing is, I survived grad school amid multiple natural disasters partly by taking out six figures of loans, and I had sort of been figuring we would be repaying them until the end of time--not to mention my spouse's (much more modest) loans. I graduated into loan forbearance in late 2020, so I've been nervily trying to figure out paying mine. I don't know if any of this does apply to grad school loans, but if it does that will be incredibly meaningful--and even if it doesn't, I am utterly delighted on behalf of my friends and colleagues who are trying to figure out their own situations.
I'm also trying to untangle the PSLF rules, and whether they apply to academics on federal grants or whether we're technically contractors or what. There are a lot of people out there employed by governments, by the military, by nonprofits--this is a major, major thing that a lot of people should be investigating ASAP.
posted by sciatrix at 12:05 PM on August 24, 2022 [14 favorites]
And HotToddy even acknowledges that this is good news.
I'm sorry, I should have been clearer, I was paraphrasing the other view rather than attributing it to HotToddy. Sorry, HotToddy!
posted by praemunire at 12:05 PM on August 24, 2022 [3 favorites]
I'm sorry, I should have been clearer, I was paraphrasing the other view rather than attributing it to HotToddy. Sorry, HotToddy!
posted by praemunire at 12:05 PM on August 24, 2022 [3 favorites]
This is really good, and I'm happy for everyone it helps, but I'm kind of shocked that there's no discussion over reforms. Are we just planning on doing this every time dems get the white house or something?
Like the government is saying "What happened to you is bad and you deserve relief from it, but nothing should change"
FWIW, colleges are increasing tuition costs by record amounts this year.
posted by hermanubis at 12:06 PM on August 24, 2022 [9 favorites]
Like the government is saying "What happened to you is bad and you deserve relief from it, but nothing should change"
FWIW, colleges are increasing tuition costs by record amounts this year.
posted by hermanubis at 12:06 PM on August 24, 2022 [9 favorites]
whether they apply to academics on federal grants or whether we're technically contractors or what
It's based on your actual employer of record. So, if you are working at a private for-profit employer on, say, an NIH grant, no joy. But if you're working at a non-profit employer, it doesn't matter where the money comes from.
posted by praemunire at 12:07 PM on August 24, 2022 [3 favorites]
It's based on your actual employer of record. So, if you are working at a private for-profit employer on, say, an NIH grant, no joy. But if you're working at a non-profit employer, it doesn't matter where the money comes from.
posted by praemunire at 12:07 PM on August 24, 2022 [3 favorites]
If you want to know how seriously you should take Lanae Erickson's argument, check out the opening to her Medium post:
posted by overglow at 12:09 PM on August 24, 2022 [30 favorites]
If you spend any time on Twitter, you know that loud and increasingly aggressive voices have called for President Joe Biden to #CancelStudentDebt pretty much every minute of the day since he took office. From Senators to celebrities, the slogan has been all the rage, even donning posters pasted to the lampposts all around the White House. And to the pundits that reside in this milieu, it seems like debt cancellation would be an obvious way to energize the Democratic base of young voters in advance of a midterm election.Which completely ignores the fact that cancelling student loan debt was part of Biden's platform. That's the thing that truly boggles my mind about all these "centrist" pundits and economists screaming about this being a bad decision--don't they get how demoralized and apathetic most young people are about politicians being untrustworthy and/or ineffective? Do they understand how damaging it would have been for Biden to break this campaign promise?
He’s resisted the pressure for 17 months. But this week, the scuttlebutt is that the President might succumb and attempt to use his magic executive pen to provide blanket debt forgiveness. If he does, it will be a huge mistake.
posted by overglow at 12:09 PM on August 24, 2022 [30 favorites]
The Department is also making available a legal memorandum regarding its authority for these discharges.
For those of you who follow administrative law, which is admittedly and quite reasonably probably only a tiny percentage of Mefites, FN 5 is fucking hilarious.
posted by praemunire at 12:10 PM on August 24, 2022 [3 favorites]
For those of you who follow administrative law, which is admittedly and quite reasonably probably only a tiny percentage of Mefites, FN 5 is fucking hilarious.
posted by praemunire at 12:10 PM on August 24, 2022 [3 favorites]
Explain the joke? I'm curious!
posted by sciatrix at 12:10 PM on August 24, 2022 [4 favorites]
posted by sciatrix at 12:10 PM on August 24, 2022 [4 favorites]
Good guy Joe.
posted by hijinx at 12:17 PM on August 24, 2022 [5 favorites]
posted by hijinx at 12:17 PM on August 24, 2022 [5 favorites]
FWIW, colleges are increasing tuition costs by record amounts this year.
Interestingly, for some decades, tuition has gone up faster than inflation on average, year over year — except for the last fiscal year (2021), where average increases were less than inflation. This may explain the record increase this year.
Any loan forgiveness is a good start and I'm of the opinion this implementation fulfills a campaign promise, however much of an incremental step it may be. More of this, please.
Future steps can expand the amount of debt forgiveness and the income window — as well as look into regulating by how much public and private institutions that receive federal dollars may increase tuition costs, which are ultimately what force students into crushing debt.
posted by They sucked his brains out! at 12:20 PM on August 24, 2022 [7 favorites]
Interestingly, for some decades, tuition has gone up faster than inflation on average, year over year — except for the last fiscal year (2021), where average increases were less than inflation. This may explain the record increase this year.
Any loan forgiveness is a good start and I'm of the opinion this implementation fulfills a campaign promise, however much of an incremental step it may be. More of this, please.
Future steps can expand the amount of debt forgiveness and the income window — as well as look into regulating by how much public and private institutions that receive federal dollars may increase tuition costs, which are ultimately what force students into crushing debt.
posted by They sucked his brains out! at 12:20 PM on August 24, 2022 [7 favorites]
Explain the joke? I'm curious!
At the very end of the Trump administration (January 12 and 18, 2021) the Department of Education's Principal Deputy General Counsel wrote a memo addressed to recently-resigned Education Secretary DeVos arguing that the Secretary did not have wide-ranging authority to forgive student loans. The point of this was to establish a pseudo-precedent that would restrict the incoming Biden administration's ability to forgive student loans.
Footnote 5 of the Biden admin's counter-memo points out that the Trump admin's memo was issued in contravention of some of Trump's own rules and executive orders intended to slow and restrict federal rulemaking. Those Trump rules and orders were themselves later rescinded by Biden, thus permitting the counter-memo to be made without those restrictions.
As has so often been the case, the Trump administration was hoist by its own legal petard.
posted by jedicus at 12:36 PM on August 24, 2022 [35 favorites]
At the very end of the Trump administration (January 12 and 18, 2021) the Department of Education's Principal Deputy General Counsel wrote a memo addressed to recently-resigned Education Secretary DeVos arguing that the Secretary did not have wide-ranging authority to forgive student loans. The point of this was to establish a pseudo-precedent that would restrict the incoming Biden administration's ability to forgive student loans.
Footnote 5 of the Biden admin's counter-memo points out that the Trump admin's memo was issued in contravention of some of Trump's own rules and executive orders intended to slow and restrict federal rulemaking. Those Trump rules and orders were themselves later rescinded by Biden, thus permitting the counter-memo to be made without those restrictions.
As has so often been the case, the Trump administration was hoist by its own legal petard.
posted by jedicus at 12:36 PM on August 24, 2022 [35 favorites]
I refinanced with a private lender during the depths of DeVos Despair (plus I was tired of my fedloan servicer refusing to accept payments on weekends, even when my actual due date fell on a weekend). It was an incredibly naïve move on my part — more, I’d argue, than taking out student loans in the first place. My balance will continue to laugh in my face until rigor mortis sets in. That’s on me.
And you know? I am tickled effing pink for everyone who will benefit directly from this. I also look forward to benefiting indirectly, as others have pointed out upthread, from a better-educated and less-debt-burdened society.
This is a good first step.
🥂
posted by armeowda at 12:41 PM on August 24, 2022 [21 favorites]
And you know? I am tickled effing pink for everyone who will benefit directly from this. I also look forward to benefiting indirectly, as others have pointed out upthread, from a better-educated and less-debt-burdened society.
This is a good first step.
🥂
posted by armeowda at 12:41 PM on August 24, 2022 [21 favorites]
I paid off 80% of mine, but will get to wave goodbye to the last bit. I'm stoked. I'm even more stoked for people getting that relief much sooner in their personal timelines.
posted by DirtyOldTown at 12:45 PM on August 24, 2022 [13 favorites]
posted by DirtyOldTown at 12:45 PM on August 24, 2022 [13 favorites]
Isnt the broader issue the absurd cost of higher ed in the states? What's going to be done about that?
posted by lemur at 12:48 PM on August 24, 2022 [3 favorites]
posted by lemur at 12:48 PM on August 24, 2022 [3 favorites]
Reporter tosses softball, gets it returned to the rhetorical wibbly bits:
REPORTER: Is this unfair to people who paid their student loans or chose not to take out loans?posted by NoxAeternum at 12:52 PM on August 24, 2022 [35 favorites]
BIDEN: Is it fair to people who, in fact, do not own multi-billion-dollar businesses if they see one of these guys getting all the tax breaks? Is that fair? What do you think?
"Isnt the broader issue the absurd cost of higher ed in the states? What's going to be done about that?"
It's a good question. Will the loan bubble just re-inflate after this partial forgiveness?
The official statement mentions measures to try keeping college and university prices from rising, with language like “Protect future students and taxpayers by reducing the cost of college and holding schools accountable when they hike up prices” and “colleges have an obligation to keep prices reasonable and ensure borrowers get value for their investments, not debt they cannot afford.” However, it’s not clear what this might actually mean as specifics are few. There’s a bit about “continu[ing] to fight to double the maximum Pell Grant and make community college free.” And this is just… open ended? “The Department of Education is announcing new efforts to ensure student borrowers get value for their college costs.”
More to the point is going after colleges by addressing their accreditors: “The [Department of Education] has re-established the enforcement unit in the Office of Federal Student Aid and it is holding accreditors’ feet to the fire.” For-profit higher ed receives particular attention: “In fact, the Department just withdrew authorization for the accreditor that oversaw schools responsible for some of the worst for-profit scandals.” I'm emailing some accreditors to see what they think.
There are other hints about controlling prices, like this line about addressing career programs – does this mean vocational schools? “The agency will also propose a rule to hold career programs accountable for leaving their graduates with mountains of debt they cannot repay, a rule the previous Administration repealed.”
The administration will also create a new, public document: “an annual watch list of the programs with the worst debt levels in the country, so that students registering for the next academic year can steer clear of programs with poor outcomes.”
Lastly, this push for certain schools, with the administration “requesting institutional improvement plans from the worst actors that outline how the colleges with the most concerning debt outcomes intend to bring down debt levels.”
Overall, it feels vague on this score.
posted by doctornemo at 12:52 PM on August 24, 2022 [6 favorites]
It's a good question. Will the loan bubble just re-inflate after this partial forgiveness?
The official statement mentions measures to try keeping college and university prices from rising, with language like “Protect future students and taxpayers by reducing the cost of college and holding schools accountable when they hike up prices” and “colleges have an obligation to keep prices reasonable and ensure borrowers get value for their investments, not debt they cannot afford.” However, it’s not clear what this might actually mean as specifics are few. There’s a bit about “continu[ing] to fight to double the maximum Pell Grant and make community college free.” And this is just… open ended? “The Department of Education is announcing new efforts to ensure student borrowers get value for their college costs.”
More to the point is going after colleges by addressing their accreditors: “The [Department of Education] has re-established the enforcement unit in the Office of Federal Student Aid and it is holding accreditors’ feet to the fire.” For-profit higher ed receives particular attention: “In fact, the Department just withdrew authorization for the accreditor that oversaw schools responsible for some of the worst for-profit scandals.” I'm emailing some accreditors to see what they think.
There are other hints about controlling prices, like this line about addressing career programs – does this mean vocational schools? “The agency will also propose a rule to hold career programs accountable for leaving their graduates with mountains of debt they cannot repay, a rule the previous Administration repealed.”
The administration will also create a new, public document: “an annual watch list of the programs with the worst debt levels in the country, so that students registering for the next academic year can steer clear of programs with poor outcomes.”
Lastly, this push for certain schools, with the administration “requesting institutional improvement plans from the worst actors that outline how the colleges with the most concerning debt outcomes intend to bring down debt levels.”
Overall, it feels vague on this score.
posted by doctornemo at 12:52 PM on August 24, 2022 [6 favorites]
Mark Goldwein: Student debt cancellation will:
- Cost $400 to $600 billion
- Wipe out Inflation Reduction Act savings twice over
- Add up to a quarter point to inflation
- Benefit MDs, JDs, and MBAs
- Drive up tuition costs
- Increase risk or recession
Shai Akabas: If you told me Biden was looking for a policy that would boost inflation, provide most of its benefits to the upper-middle class, and undo the fiscal achievement of his recently passed IRA, I wouldn't believe you, yet that's where we are w/ tomorrow's student loan announcement
With due respect to whoever these people are, I don't understand how they're getting at this conclusion. While the $10k forgiveness applies to grad degrees, the rest of the provisions don't. At best an MD, JD, or MBA will get $10k in relief - nice, but hardly a dent in what is owed by very recent grads, who are the only grad degree holders likely to qualify under the income limits. By contrast, it's going to wipe out the debt of lower and middle income grads.
Progressive Policy Institute's Ben Ritz comes to this conclusion by arguing that this will benefit the upper class because "through inflation today, or higher taxes and spending cuts tomorrow", the lower classes will pay. That's a whole lot of assumptions being made.
posted by schoolgirl report at 12:53 PM on August 24, 2022 [13 favorites]
- Cost $400 to $600 billion
- Wipe out Inflation Reduction Act savings twice over
- Add up to a quarter point to inflation
- Benefit MDs, JDs, and MBAs
- Drive up tuition costs
- Increase risk or recession
Shai Akabas: If you told me Biden was looking for a policy that would boost inflation, provide most of its benefits to the upper-middle class, and undo the fiscal achievement of his recently passed IRA, I wouldn't believe you, yet that's where we are w/ tomorrow's student loan announcement
With due respect to whoever these people are, I don't understand how they're getting at this conclusion. While the $10k forgiveness applies to grad degrees, the rest of the provisions don't. At best an MD, JD, or MBA will get $10k in relief - nice, but hardly a dent in what is owed by very recent grads, who are the only grad degree holders likely to qualify under the income limits. By contrast, it's going to wipe out the debt of lower and middle income grads.
Progressive Policy Institute's Ben Ritz comes to this conclusion by arguing that this will benefit the upper class because "through inflation today, or higher taxes and spending cuts tomorrow", the lower classes will pay. That's a whole lot of assumptions being made.
posted by schoolgirl report at 12:53 PM on August 24, 2022 [13 favorites]
Though I must now qualify my argument to account for grad degree holders like doctornemo, for whom this will indeed be meaningful. Which is a good thing!
posted by schoolgirl report at 12:57 PM on August 24, 2022 [4 favorites]
posted by schoolgirl report at 12:57 PM on August 24, 2022 [4 favorites]
Great. Here I am having JUST (as of last week) paid off the loan(s) I have had hanging over my head since 1995.
Unfortunately, there will always be unfortunate individuals on the wrong side of relief programs, you are by no means alone.
Those of us in the midst of closing on home loans as lehman collapsed in 2008 got a 15-year loan that we are still paying off each year. While the more fortunate among us got an equivalent amount of $ with no need to repay just a few short months afterwards. There are much bigger tragedies, I know ... but what seemed unfair was that those who still have to repay the loan closed on pre-crash prices and those who got the relief money for free also were closing on much discounted prices ...
I'm mostly over this now, except every year at tax time when the automated program reminds that that payment is due each year, then there's a tinge of bitterness .... but even so, I think that relief is still a great thing for the thousands / millions who get the benefit, though it kinda sucks that there will always be those who nearly miss out on the $ .... it's also evident that the price caps in place for these student loans affect individuals and families differently in different regions of this country where cost of living varies ... I'm sure others have pointed this out already anyhow
posted by clandestiny's child at 1:06 PM on August 24, 2022 [3 favorites]
Unfortunately, there will always be unfortunate individuals on the wrong side of relief programs, you are by no means alone.
Those of us in the midst of closing on home loans as lehman collapsed in 2008 got a 15-year loan that we are still paying off each year. While the more fortunate among us got an equivalent amount of $ with no need to repay just a few short months afterwards. There are much bigger tragedies, I know ... but what seemed unfair was that those who still have to repay the loan closed on pre-crash prices and those who got the relief money for free also were closing on much discounted prices ...
I'm mostly over this now, except every year at tax time when the automated program reminds that that payment is due each year, then there's a tinge of bitterness .... but even so, I think that relief is still a great thing for the thousands / millions who get the benefit, though it kinda sucks that there will always be those who nearly miss out on the $ .... it's also evident that the price caps in place for these student loans affect individuals and families differently in different regions of this country where cost of living varies ... I'm sure others have pointed this out already anyhow
posted by clandestiny's child at 1:06 PM on August 24, 2022 [3 favorites]
Agreed, but *fewer* people have been going to American colleges and universities for a decade.
This is true, but only after several decades decades of increasing attendance and a particularly sharp rise during the previous ten years.
That's just the rate of current attendance though. The percentage of the population who had completed a degree at some point continued to go up.
As various people in this thread have testified, there are decades-old debts on the chopping block.
posted by StarkRoads at 1:06 PM on August 24, 2022 [4 favorites]
This is true, but only after several decades decades of increasing attendance and a particularly sharp rise during the previous ten years.
That's just the rate of current attendance though. The percentage of the population who had completed a degree at some point continued to go up.
As various people in this thread have testified, there are decades-old debts on the chopping block.
posted by StarkRoads at 1:06 PM on August 24, 2022 [4 favorites]
Paul Krugman explains why neoliberal economists claiming forgiveness will be inflationary are full of shit.
posted by NoxAeternum at 1:06 PM on August 24, 2022 [16 favorites]
posted by NoxAeternum at 1:06 PM on August 24, 2022 [16 favorites]
This is really good, and I'm happy for everyone it helps, but I'm kind of shocked that there's no discussion over reforms. Are we just planning on doing this every time dems get the white house or something?
Like the government is saying "What happened to you is bad and you deserve relief from it, but nothing should change"
Totally valid point, and I'd point out that this .... isn't exactly new ... debt relief has been a topic of conversation since, what, Occupy Wall Street? Or maybe 2015? It's been enough time for the various "debt relief" proposals to be argued, think tanked, and shopped around, so now in 2021 Biden+team could look through a lot of analysis about pros and cons.
And so it's also been enough time for people to investigate what's driving the rise in college price in the first place. I have seen explainers about Baumol's price disease, or administrative bloat, or regulatory burden, just to name the factors I remember reading about. But I haven't seen any about how those factors could be reduced. I haven't seen anyone try to campaign on reducing the cost of college. It just hasn't been part of the conversation, as far as I can tell, for the past ten years.
It's kind of a sidepoint, but it was on my mind in case anyone calls this debt relief "bold action from the Biden administration"; it's bold in that it's controversial, and big enough to be consequential, but it's not in the least bit rash. It's the exact opposite of rash.
posted by Rainbo Vagrant at 1:08 PM on August 24, 2022 [1 favorite]
Like the government is saying "What happened to you is bad and you deserve relief from it, but nothing should change"
Totally valid point, and I'd point out that this .... isn't exactly new ... debt relief has been a topic of conversation since, what, Occupy Wall Street? Or maybe 2015? It's been enough time for the various "debt relief" proposals to be argued, think tanked, and shopped around, so now in 2021 Biden+team could look through a lot of analysis about pros and cons.
And so it's also been enough time for people to investigate what's driving the rise in college price in the first place. I have seen explainers about Baumol's price disease, or administrative bloat, or regulatory burden, just to name the factors I remember reading about. But I haven't seen any about how those factors could be reduced. I haven't seen anyone try to campaign on reducing the cost of college. It just hasn't been part of the conversation, as far as I can tell, for the past ten years.
It's kind of a sidepoint, but it was on my mind in case anyone calls this debt relief "bold action from the Biden administration"; it's bold in that it's controversial, and big enough to be consequential, but it's not in the least bit rash. It's the exact opposite of rash.
posted by Rainbo Vagrant at 1:08 PM on August 24, 2022 [1 favorite]
REPORTER: Is this unfair to people who paid their student loans or chose not to take out loans?This is the Biden I voted for. Someone else might have given a wishy-washy answer about creating opportunities, but this gets right to the point about how hypocritical the news media is when they report on things which benefit people as opposed to corporations.
BIDEN: Is it fair to people who, in fact, do not own multi-billion-dollar businesses if they see one of these guys getting all the tax breaks? Is that fair? What do you think?
posted by RonButNotStupid at 1:10 PM on August 24, 2022 [47 favorites]
Apparently, the FAFSA servers are getting organically DDOS'ed.
posted by NoxAeternum at 1:19 PM on August 24, 2022 [9 favorites]
posted by NoxAeternum at 1:19 PM on August 24, 2022 [9 favorites]
Completely coincidentally, my interview for SNAP benefits was a few minutes ago and they said they needed some FAFSA documents to prove my student status. I hung up, went to StudentAid.gov, tried to login and got an error, tried to refresh and it wouldn't load at all for several minutes, and then finally got the page to load with a new notification bar at the top (not there five minutes ago):
posted by brook horse at 1:19 PM on August 24, 2022 [7 favorites]
A lot of people are interested in our website. As a result, some pages may take longer to display than usual. Thank you for your patience.Not entirely sure what this means, but I suspect the news has reached a lot of people very quickly.
posted by brook horse at 1:19 PM on August 24, 2022 [7 favorites]
BIDEN: Is it fair to people who, in fact, do not own multi-billion-dollar businesses if they see one of these guys getting all the tax breaks? Is that fair? What do you think?
This was extremely fucking gratifying to hear. Not just the substance of the response but Biden's obvious impatience and irritation at the question channeled what I've felt every time this bullshit line of argument has come up. Feels good, man.
I am someone whose circumstances are significantly changed both by the direct forgiveness and by the revamp of the income-driven repayment system; I am also frankly astounded this has happened at all and would scarcely have believed it 5 years ago. I still wish fiercely that this went further and intend to keep pushing for candidates who prioritize full relief for ALL borrowers, including and especially those with large private loans. Ideally this will serve as a proof-of-concept/precedent for more ambitious action.
(In other news, Nelnet's log-in page seems to have crashed following the announcement. EDIT: looks like they aren't the only ones!)
posted by TinyChicken at 1:19 PM on August 24, 2022 [11 favorites]
This was extremely fucking gratifying to hear. Not just the substance of the response but Biden's obvious impatience and irritation at the question channeled what I've felt every time this bullshit line of argument has come up. Feels good, man.
I am someone whose circumstances are significantly changed both by the direct forgiveness and by the revamp of the income-driven repayment system; I am also frankly astounded this has happened at all and would scarcely have believed it 5 years ago. I still wish fiercely that this went further and intend to keep pushing for candidates who prioritize full relief for ALL borrowers, including and especially those with large private loans. Ideally this will serve as a proof-of-concept/precedent for more ambitious action.
(In other news, Nelnet's log-in page seems to have crashed following the announcement. EDIT: looks like they aren't the only ones!)
posted by TinyChicken at 1:19 PM on August 24, 2022 [11 favorites]
Whoops, NoxAeternum got there first.
posted by brook horse at 1:20 PM on August 24, 2022 [1 favorite]
posted by brook horse at 1:20 PM on August 24, 2022 [1 favorite]
On declining enrollments:
"That's just the rate of current attendance though."
It is just, but it means a *lot*. The supermajority of American colleges and universities depend on tuition and fees for the majority of their funding. That's because only a tiny handful have rich enough endowments to count, and because a generation of state defunding* means public institutions have seen that support dwindle.
For example, my alma mater's president once said this:
As university president I used to explain that during this period we had evolved from a state-supported to a state-assisted to a state-related to a state-located university. In fact, with Michigan campuses now located in Europe and Asia, we remain only a state-molested institution.
So if student payments are critical to an institution's survival, decreasing numbers of students are a problem. And they peaked in 2012, according to my research, which is what wins me some notoriety for coining the term "peak higher ed." Every year - every semester, in fact - American enrollment has ticked down. Mostly it's been slight, but it added up. And COVID saw enrollment really hit.
(Yeah, we can find all kinds of exceptions and tweaks to this. The elite institutions are doing fine with enrollments. A few states have upped payments. I'm talking about the macro level here.)
*especially on a per-student basis.
posted by doctornemo at 1:20 PM on August 24, 2022 [5 favorites]
"That's just the rate of current attendance though."
It is just, but it means a *lot*. The supermajority of American colleges and universities depend on tuition and fees for the majority of their funding. That's because only a tiny handful have rich enough endowments to count, and because a generation of state defunding* means public institutions have seen that support dwindle.
For example, my alma mater's president once said this:
As university president I used to explain that during this period we had evolved from a state-supported to a state-assisted to a state-related to a state-located university. In fact, with Michigan campuses now located in Europe and Asia, we remain only a state-molested institution.
So if student payments are critical to an institution's survival, decreasing numbers of students are a problem. And they peaked in 2012, according to my research, which is what wins me some notoriety for coining the term "peak higher ed." Every year - every semester, in fact - American enrollment has ticked down. Mostly it's been slight, but it added up. And COVID saw enrollment really hit.
(Yeah, we can find all kinds of exceptions and tweaks to this. The elite institutions are doing fine with enrollments. A few states have upped payments. I'm talking about the macro level here.)
*especially on a per-student basis.
posted by doctornemo at 1:20 PM on August 24, 2022 [5 favorites]
I think the $10k/$20k subject to a (relatively high) income cap is great. I borrowed and paid off about $25k, and I'm not upset in the least.
I would be pretty upset if it was $50k or $100k going to MBA's, JD's, etc, for their professional school loans because I believe people borrowing large sums for professional school are placing a bet eyes-wide-open. But that's not what happened here - what happened here was politically doable and also material for a large number of people who followed common wisdom to go to college to better their lives at a time when they had no idea how to value that education in the real world.
posted by everythings_interrelated at 1:26 PM on August 24, 2022 [7 favorites]
I would be pretty upset if it was $50k or $100k going to MBA's, JD's, etc, for their professional school loans because I believe people borrowing large sums for professional school are placing a bet eyes-wide-open. But that's not what happened here - what happened here was politically doable and also material for a large number of people who followed common wisdom to go to college to better their lives at a time when they had no idea how to value that education in the real world.
posted by everythings_interrelated at 1:26 PM on August 24, 2022 [7 favorites]
My husband has a bunch of student loans that he got consolidated years ago. So, they're now owned by a different company than originally issued them... He didn't get a pause in repayment during the pandemic, for instance. Is he just out of luck on forgiveness, too? Or is there some (possibly magical) way this will actually affect his loans?
Because, while I'll be very happy no matter what for everyone else getting their loans forgiven, I'd really like to be happy for my own benefit too.
posted by meese at 1:27 PM on August 24, 2022 [1 favorite]
Because, while I'll be very happy no matter what for everyone else getting their loans forgiven, I'd really like to be happy for my own benefit too.
posted by meese at 1:27 PM on August 24, 2022 [1 favorite]
$10,000 and $20,000 forgiveness for existing borrowers is going to get all the headlines, but Part 3 of Biden's plan cuts interest rates to 0% for all borrowers making on-time payments on income driven payment plans (which all federal borrowers are eligible for). That's huge, that means that the feds would be getting out of the business on profiting from student loans. That's something that will benefit current and future borrowers, and is frankly way more than I expected of Biden.
Also, I was curious about how payments would actually change under the third part of the plan, which is a "proposed rule": it would lower monthly payments dramatically for those with only undergraduate loans. Currently, income-based repayment plans require borrowers to pay 10% of all income above 150% of the poverty level, but would change to
5% of income above 225% of the poverty level.
For most U.S. residents, the poverty level is $13,590 for singles, $18,310 for couples, and $$27,750 for a family of four. The current system thus requires a single person with an AGI of $60,000 to make payments of $330 a month, and $653 for a family of four. Those both seem like serious roadblocks for a comfortable life even assuming a modest lifestyle in a moderate cost of living area, especially since borrowers are often looking at making these payments for 10-20 years.
Under the proposed rule, taking a lower percentage of smaller amount, the single person with an AGI of $60,000 would only have to pay $123/month, and the family of four making $120,000 would pay $239. Still significant, but when that's all paired with covering interest payments for anyone making on-time payments, that's a pretty big benefit overall. I guess those with only graduate loans will still be on the hook for 10% of income above the threshold, but that's still significantly less than previously.
From a policy perspective, I'd imagine the provision keeping interest rates at 0% for on-time payments will make people a lot more likely to make on-time payments, and hopefully that can be used to help increase the plan's popularity. What's not clear to me are what hurdles there are for making this go from "proposed rule" to actual policy.
posted by skewed at 1:29 PM on August 24, 2022 [15 favorites]
Also, I was curious about how payments would actually change under the third part of the plan, which is a "proposed rule": it would lower monthly payments dramatically for those with only undergraduate loans. Currently, income-based repayment plans require borrowers to pay 10% of all income above 150% of the poverty level, but would change to
5% of income above 225% of the poverty level.
For most U.S. residents, the poverty level is $13,590 for singles, $18,310 for couples, and $$27,750 for a family of four. The current system thus requires a single person with an AGI of $60,000 to make payments of $330 a month, and $653 for a family of four. Those both seem like serious roadblocks for a comfortable life even assuming a modest lifestyle in a moderate cost of living area, especially since borrowers are often looking at making these payments for 10-20 years.
Under the proposed rule, taking a lower percentage of smaller amount, the single person with an AGI of $60,000 would only have to pay $123/month, and the family of four making $120,000 would pay $239. Still significant, but when that's all paired with covering interest payments for anyone making on-time payments, that's a pretty big benefit overall. I guess those with only graduate loans will still be on the hook for 10% of income above the threshold, but that's still significantly less than previously.
From a policy perspective, I'd imagine the provision keeping interest rates at 0% for on-time payments will make people a lot more likely to make on-time payments, and hopefully that can be used to help increase the plan's popularity. What's not clear to me are what hurdles there are for making this go from "proposed rule" to actual policy.
posted by skewed at 1:29 PM on August 24, 2022 [15 favorites]
I'd also like to consider what an effective 0% interest-rate on federal student loans will do to the market for private loans, and the private-for-profit schools which often depend on those loans.
posted by skewed at 1:32 PM on August 24, 2022 [4 favorites]
posted by skewed at 1:32 PM on August 24, 2022 [4 favorites]
I'd also like to consider what an effective 0% interest-rate on federal student loans will do to the market for private loans, and the private-for-profit schools which often depend on those loans.
With luck, the financial equivalent of a tire iron to the knee.
posted by NoxAeternum at 1:34 PM on August 24, 2022 [45 favorites]
With luck, the financial equivalent of a tire iron to the knee.
posted by NoxAeternum at 1:34 PM on August 24, 2022 [45 favorites]
My wife and I have way more than $10k ins loans for graduate degrees. But we make more than $250K, so nothing for us. And I'm completely fine with that, no argument.
But if I'm understanding everything, my 22 year old daughter is falling into an unfortunate gap. She graduated from college a few months ago, and has a moderate amount of loans. 2 weeks ago she moved out of my house, and just this week started her first full-time job teaching 2nd grade (so making way, WAY less than $150K!). But since I claimed her as a dependent in 2021 (cuz, you know, she was!) her income won't matter, mine does. And so she won't qualify for any relief.
She can't possible be the only recent grad to fall into this gap, and it kinda sucks. Especially when you consider that everyone falling into this gap also spent about half their college career dealing with Covid (no classes, remote classes, dorm lock downs, etc). Unfairness piled on top of unfairness.
I'm hoping I'm wrong, and they'll be something in the fine print somewhere for her, and others like here. But nothing I've seen so far.
posted by Frayed Knot at 1:45 PM on August 24, 2022 [1 favorite]
But if I'm understanding everything, my 22 year old daughter is falling into an unfortunate gap. She graduated from college a few months ago, and has a moderate amount of loans. 2 weeks ago she moved out of my house, and just this week started her first full-time job teaching 2nd grade (so making way, WAY less than $150K!). But since I claimed her as a dependent in 2021 (cuz, you know, she was!) her income won't matter, mine does. And so she won't qualify for any relief.
She can't possible be the only recent grad to fall into this gap, and it kinda sucks. Especially when you consider that everyone falling into this gap also spent about half their college career dealing with Covid (no classes, remote classes, dorm lock downs, etc). Unfairness piled on top of unfairness.
I'm hoping I'm wrong, and they'll be something in the fine print somewhere for her, and others like here. But nothing I've seen so far.
posted by Frayed Knot at 1:45 PM on August 24, 2022 [1 favorite]
One detail: you can get a refund if you paid loans off during the pause since March 2020 even though you didn't have to.
Wow, Nelson, thanks for that. Count me among those who finally paid off their loans over the past 2 years (hated having them around), and also among those delighted that others will be getting some relief. I had no idea refunds for payments made during the pause was even on the table, but am now looking forward to seeing what my loan servicer has to say about that. Currently a half-hour wait on the phone to talk to them lol.
posted by mediareport at 1:51 PM on August 24, 2022 [12 favorites]
Wow, Nelson, thanks for that. Count me among those who finally paid off their loans over the past 2 years (hated having them around), and also among those delighted that others will be getting some relief. I had no idea refunds for payments made during the pause was even on the table, but am now looking forward to seeing what my loan servicer has to say about that. Currently a half-hour wait on the phone to talk to them lol.
posted by mediareport at 1:51 PM on August 24, 2022 [12 favorites]
I still wish fiercely that this went further and intend to keep pushing for candidates who prioritize full relief for ALL borrowers,
"ALL" borrowers, or only those who borrowed money in exchange for college credentialing? What about (yes, "what about") people who took out loans for housing, medical care, transportation or other essential reasons? What about people who are in overwhelming debt despite not having actively borrowed money?
posted by cinchona at 1:52 PM on August 24, 2022 [3 favorites]
"ALL" borrowers, or only those who borrowed money in exchange for college credentialing? What about (yes, "what about") people who took out loans for housing, medical care, transportation or other essential reasons? What about people who are in overwhelming debt despite not having actively borrowed money?
posted by cinchona at 1:52 PM on August 24, 2022 [3 favorites]
> Apparently, the FAFSA servers are getting organically DDOS'ed.
I think old school Internet nerds call this the SlashDebt Effect.
posted by tonycpsu at 1:55 PM on August 24, 2022 [35 favorites]
I think old school Internet nerds call this the SlashDebt Effect.
posted by tonycpsu at 1:55 PM on August 24, 2022 [35 favorites]
Uuuh...yes, actually, cinchona, I do think we need radical debt relief/a debt jubilee/etc., sorry if my phrasing ruffled anyone's feathers. Yikes.
posted by TinyChicken at 1:56 PM on August 24, 2022 [5 favorites]
posted by TinyChicken at 1:56 PM on August 24, 2022 [5 favorites]
Also, bankruptcy is available for other types of debt.
posted by ohneat at 1:57 PM on August 24, 2022 [5 favorites]
posted by ohneat at 1:57 PM on August 24, 2022 [5 favorites]
Screenshots of reddit commenters celebrating the impact of this cancelled debt. Let nobody be in doubt that the impact is real, lives are being changed today, and this is a big deal.
posted by MiraK at 2:00 PM on August 24, 2022 [23 favorites]
posted by MiraK at 2:00 PM on August 24, 2022 [23 favorites]
Frayed Knot, the income-based repayment plans allow for people to submit paystubs to determine their income rather than AGI when they have significant changes in economic circumstances. This is so that people are not wedded to their monthly payment even after their salary goes down if they lose their jobs. If your daughter will no longer qualify as a dependent, she could contact her borrower and should be able to submit paystubs to demonstrate what her current income is and make payments based on that. The drawback is that payments based on paystubs reflect gross pay rather than AGI, but should still result in a smaller payment than she would have as part of your household.
posted by skewed at 2:00 PM on August 24, 2022 [8 favorites]
posted by skewed at 2:00 PM on August 24, 2022 [8 favorites]
Thanks, Skewed, that's SUPER helpful. I'm wondering about the $10K loan forgiveness not the IBR, but perhaps she'll be able to use that same method.
posted by Frayed Knot at 2:04 PM on August 24, 2022 [1 favorite]
posted by Frayed Knot at 2:04 PM on August 24, 2022 [1 favorite]
Frayed Knot, with respect, your daughter still has two parents who jointly make $250k+ and were prepared to support her financially last year. I don't think she's really falling between the cracks. Families like yours are doing fine already; if she doesn't qualify for the loan forgiveness because of your income when you claimed her as a dependent, that seems pretty fair to me.
posted by biogeo at 2:06 PM on August 24, 2022 [7 favorites]
posted by biogeo at 2:06 PM on August 24, 2022 [7 favorites]
ah, yeah, I was just so focused on calculating monthly payments after writing my last post. Not sure how forgiveness will work there, I'm sure a lot of people will have the same situation though, so probably someone will have a better answer.
posted by skewed at 2:07 PM on August 24, 2022 [1 favorite]
posted by skewed at 2:07 PM on August 24, 2022 [1 favorite]
This is amazing!!!!!!! What a win for so many people. I have multiple friends posting about how they’re crying with relief today. I am absolutely overjoyed that movement is happening.
posted by Bottlecap at 2:10 PM on August 24, 2022 [5 favorites]
posted by Bottlecap at 2:10 PM on August 24, 2022 [5 favorites]
TBH I don't know enough to say how to rate the outcome - whether it's OK, really good, great, etc. If Biden could've done more, whether there's a downside politically or fiscally, etc. Might be a while before we can assess if this is the right thing at the right time or what.
But, what I do know:
- It doesn't help me at all. My income is above the cap and I've paid almost all of my loans off after more than 25 years(!).
- My debt was high but not staggering and far better than many.
- I feel fairly confident this is going to help a decent chunk of people, and that's better than not helping a decent chunk of people.
- As a society we should be aiming to abolish student debt and medical debt. While we are awash in billionaire money distorting politics this is a pretty big ask.
- As I said - doesn't help me at all, but that's OK. Nobody else needs to suffer because I did. There are many ways the world was better for me than for people before me, and that's how it should continue to be. If there's a bunch of people breathing sighs of relief today because they're having debt cancelled - that's fantastic.
posted by jzb at 2:15 PM on August 24, 2022 [13 favorites]
But, what I do know:
- It doesn't help me at all. My income is above the cap and I've paid almost all of my loans off after more than 25 years(!).
- My debt was high but not staggering and far better than many.
- I feel fairly confident this is going to help a decent chunk of people, and that's better than not helping a decent chunk of people.
- As a society we should be aiming to abolish student debt and medical debt. While we are awash in billionaire money distorting politics this is a pretty big ask.
- As I said - doesn't help me at all, but that's OK. Nobody else needs to suffer because I did. There are many ways the world was better for me than for people before me, and that's how it should continue to be. If there's a bunch of people breathing sighs of relief today because they're having debt cancelled - that's fantastic.
posted by jzb at 2:15 PM on August 24, 2022 [13 favorites]
Uuuh...yes, actually, cinchona, I do think we need radical debt relief/a debt jubilee/etc.,
Thanks for elaborating. It doesn't seem to me that most student-debt cancellation advocates are especially interested in universal debt relief, but I could be wrong.
Also, bankruptcy is available for other types of debt.
Yeah, you can just file for bankruptcy if you have other types of debt. You can also just default on student loans.
posted by cinchona at 2:17 PM on August 24, 2022
Thanks for elaborating. It doesn't seem to me that most student-debt cancellation advocates are especially interested in universal debt relief, but I could be wrong.
Also, bankruptcy is available for other types of debt.
Yeah, you can just file for bankruptcy if you have other types of debt. You can also just default on student loans.
posted by cinchona at 2:17 PM on August 24, 2022
This is great.
The ongoing changes help a tiny bit with future affordability, too. But I assume if we do nothing else the benefits will rapidly end up in the hands of the college administrators, not the students. I paid $600 a quarter for tuition in the UC system, that seems a good maximum price for a top state school.
But as ever, the root cause of so many problems is the extreme inequality. Cheaper college helps with mobility a bit, but less so with inequality. A lot of people are saying more people going to college helps everyone, which is sort of true. But it's also sort of true that people who'd rather skip college get a degree they don't want because it's a requirement for a job that won't actually use it, it makes everyone worse off.
How you fix that I have no idea. Solve the problems you can first, I guess.
posted by mark k at 2:26 PM on August 24, 2022 [1 favorite]
The ongoing changes help a tiny bit with future affordability, too. But I assume if we do nothing else the benefits will rapidly end up in the hands of the college administrators, not the students. I paid $600 a quarter for tuition in the UC system, that seems a good maximum price for a top state school.
But as ever, the root cause of so many problems is the extreme inequality. Cheaper college helps with mobility a bit, but less so with inequality. A lot of people are saying more people going to college helps everyone, which is sort of true. But it's also sort of true that people who'd rather skip college get a degree they don't want because it's a requirement for a job that won't actually use it, it makes everyone worse off.
How you fix that I have no idea. Solve the problems you can first, I guess.
posted by mark k at 2:26 PM on August 24, 2022 [1 favorite]
Yeah, you can just file for bankruptcy if you have other types of debt. You can also just default on student loans.
Bankruptcy falls off your credit report in 10 years; defaulting on a Federal Perkins Loans does not. That stays on until the loan is paid.
posted by brook horse at 2:26 PM on August 24, 2022 [10 favorites]
Bankruptcy falls off your credit report in 10 years; defaulting on a Federal Perkins Loans does not. That stays on until the loan is paid.
posted by brook horse at 2:26 PM on August 24, 2022 [10 favorites]
This quote from the McSweeney's stood out to me: "Things should not get better just because they could get better. Suffering must be eternal, passed on from generation to generation. A safer experience at the zoo should not be possible, despite the fact that it’s totally possible."
Anyway...I'm glad some people get drops in the bucket, for what that's worth.
posted by jenfullmoon at 2:35 PM on August 24, 2022 [7 favorites]
Anyway...I'm glad some people get drops in the bucket, for what that's worth.
posted by jenfullmoon at 2:35 PM on August 24, 2022 [7 favorites]
I refinanced with a private lender during the depths of DeVos Despair (plus I was tired of my fedloan servicer refusing to accept payments on weekends, even when my actual due date fell on a weekend). It was an incredibly naïve move on my part
Same here. My wife applied for PSLF during the Trump admin, and was part of the 99% who got denied. We figured that having been turned down for forgiveness, we’d have to settle for getting the best interest rate we could. With a private lender, we dropped her rate from 8.75 to 3.25. That’s a big help, but if we had any idea that PSLF waivers and $10,000 forgiveness were coming, we obviously wouldn’t have done it.
My loans are still federal, though, so the $20,000 I still owe at age 50 is about to be $10,000. It makes a difference.
posted by Pater Aletheias at 2:36 PM on August 24, 2022 [8 favorites]
Same here. My wife applied for PSLF during the Trump admin, and was part of the 99% who got denied. We figured that having been turned down for forgiveness, we’d have to settle for getting the best interest rate we could. With a private lender, we dropped her rate from 8.75 to 3.25. That’s a big help, but if we had any idea that PSLF waivers and $10,000 forgiveness were coming, we obviously wouldn’t have done it.
My loans are still federal, though, so the $20,000 I still owe at age 50 is about to be $10,000. It makes a difference.
posted by Pater Aletheias at 2:36 PM on August 24, 2022 [8 favorites]
In email just now, from the Debt Collective:
After months of dragging his feet, Biden has finally announced his plan of debt cancellation: up to $10,000 for borrowers with incomes under $125,000 a year and up to $20,000 of cancellation for Pell grant recipients.
We know this is far from what justice demands – to close the racial wealth gap, to unchain generations of indebted families, to actually have a reparative higher education policy. We know the road ahead is long, with much much more work to do.
But right, now we’re celebrating. Organized debtors forced Biden — who has sided with banks over debtors his entire career — to administer debt cancelation for working-class communities. This is a testament to the power of a union of debtors banding together to exercise political and financial power.
If you came to a debtors’ assembly, this is your win. If you invited a friend to come to the action with you, if you made a sign, if you signed a petition, if you talked to a colleague about your debt, if you wore your debt to work, if you wrote an op-ed, if you pledged to strike, this is your win.
Please join our Jubilee Hour tomorrow, 7:30-8:30PM EST. We will gather to take a moment to bask in how far we’ve come, and point out the horizons we’re still marching towards. Biden didn't do this -- WE did.
Also be sure not to miss the awesome “Freedom Dreams” documentary that dropped yesterday about Black women’s leadership in the fight for debt cancellation.
posted by doctornemo at 2:37 PM on August 24, 2022 [18 favorites]
After months of dragging his feet, Biden has finally announced his plan of debt cancellation: up to $10,000 for borrowers with incomes under $125,000 a year and up to $20,000 of cancellation for Pell grant recipients.
We know this is far from what justice demands – to close the racial wealth gap, to unchain generations of indebted families, to actually have a reparative higher education policy. We know the road ahead is long, with much much more work to do.
But right, now we’re celebrating. Organized debtors forced Biden — who has sided with banks over debtors his entire career — to administer debt cancelation for working-class communities. This is a testament to the power of a union of debtors banding together to exercise political and financial power.
If you came to a debtors’ assembly, this is your win. If you invited a friend to come to the action with you, if you made a sign, if you signed a petition, if you talked to a colleague about your debt, if you wore your debt to work, if you wrote an op-ed, if you pledged to strike, this is your win.
Please join our Jubilee Hour tomorrow, 7:30-8:30PM EST. We will gather to take a moment to bask in how far we’ve come, and point out the horizons we’re still marching towards. Biden didn't do this -- WE did.
Also be sure not to miss the awesome “Freedom Dreams” documentary that dropped yesterday about Black women’s leadership in the fight for debt cancellation.
posted by doctornemo at 2:37 PM on August 24, 2022 [18 favorites]
Honestly, I think this is fabulous. A super part of the package (in addition to the debt forgiveness part) is suspension of accruing interest, at least that is what I understand. It always struck me as a uniquely stupid part of college loans that the US government was in the business of collecting interest.
I'm also very happy to see the comments from those who have/had college loans who support this action. As a parent who paid private college tuition for three kids (we could do it with some very careful planning) I am delighted - we didn't want them to have to take out loans and I, as do they, realize this was a very privileged position to be in.
posted by bluesky43 at 2:43 PM on August 24, 2022 [3 favorites]
I'm also very happy to see the comments from those who have/had college loans who support this action. As a parent who paid private college tuition for three kids (we could do it with some very careful planning) I am delighted - we didn't want them to have to take out loans and I, as do they, realize this was a very privileged position to be in.
posted by bluesky43 at 2:43 PM on August 24, 2022 [3 favorites]
REPORTER: Is this unfair to people who paid their student loans or chose not to take out loans?
BIDEN: Is it fair to people who, in fact, do not own multi-billion-dollar businesses if they see one of these guys getting all the tax breaks? Is that fair? What do you think?
(from the Press Conf)
posted by bluesky43 at 2:51 PM on August 24, 2022 [5 favorites]
BIDEN: Is it fair to people who, in fact, do not own multi-billion-dollar businesses if they see one of these guys getting all the tax breaks? Is that fair? What do you think?
(from the Press Conf)
posted by bluesky43 at 2:51 PM on August 24, 2022 [5 favorites]
Finished mine off last year, staying in a job that was deleterious to my health to do so, and 100% stoked for everyone today.
posted by snerson at 2:51 PM on August 24, 2022 [13 favorites]
posted by snerson at 2:51 PM on August 24, 2022 [13 favorites]
Bankruptcy falls off your credit report in 10 years; defaulting on a Federal Perkins Loans does not. That stays on until the loan is paid.
Of course there are differences between bankruptcy and defaulting. But the option of bankruptcy is sometimes presented as though it's without any consequences.
posted by cinchona at 3:08 PM on August 24, 2022
Of course there are differences between bankruptcy and defaulting. But the option of bankruptcy is sometimes presented as though it's without any consequences.
posted by cinchona at 3:08 PM on August 24, 2022
the option of bankruptcy is sometimes presented as though it's without any consequences
The consequences of bankruptcy aren't really that high. Which is a good thing! What kills your credit score is waiting to declare bankruptcy until you have a bunch of late payments on your credit report. If you do it before that happens and have some credit accounts with relatively small balances you keep, your credit score doesn't suffer much and you can get new credit at good rates in about a year if you need to buy a car or something.
It's a bigger issue if you want to buy a house, but auto lenders and credit card companies really don't give a shit. Except Amex. They get personally offended if you don't pay them. Everyone else is like "eh, whatever, it's not like they can go BK again any time soon".
posted by wierdo at 3:29 PM on August 24, 2022 [2 favorites]
The consequences of bankruptcy aren't really that high. Which is a good thing! What kills your credit score is waiting to declare bankruptcy until you have a bunch of late payments on your credit report. If you do it before that happens and have some credit accounts with relatively small balances you keep, your credit score doesn't suffer much and you can get new credit at good rates in about a year if you need to buy a car or something.
It's a bigger issue if you want to buy a house, but auto lenders and credit card companies really don't give a shit. Except Amex. They get personally offended if you don't pay them. Everyone else is like "eh, whatever, it's not like they can go BK again any time soon".
posted by wierdo at 3:29 PM on August 24, 2022 [2 favorites]
I repaid $60k in undergrad and grad loans with my first few years of paychecks, instead of investing in my retirement or buying a house or what have you, and I could not be fucking happier. What fantastic news.
posted by rrrrrrrrrt at 3:31 PM on August 24, 2022 [8 favorites]
posted by rrrrrrrrrt at 3:31 PM on August 24, 2022 [8 favorites]
So my consolidated federal loan didn’t qualify for the COVID payment pause for some reason I don’t understand (administered by Nelnet) - does that mean it won’t qualify for this as well? If it did it would completely wipe out my debt which is kind of breaking my mind.
posted by ukdanae at 3:36 PM on August 24, 2022
posted by ukdanae at 3:36 PM on August 24, 2022
This does appear to be a hard cap rather than a phaseout, which is going to be frustrating for some people.
Why design this so stupidly? I teach calculus, and a standard part of my spiel is "policies are crafted so that they have continuous functions behind them because doing otherwise is stupid and I don't know why the UK's land duty stamp tax was like it until 2014, but it was but other than that these things are usually made gradual and that's why everyone on TV talking about income tax cliffs is wrong", and now we're back to making a major benefit actually hard-edged? I assume someone smarter than me (or, more to the point, smarter than the dumbest student I see nodding when I explain how marginal tax rates work) is on the policy team for this, so what gives?
posted by jackbishop at 3:45 PM on August 24, 2022 [2 favorites]
Why design this so stupidly? I teach calculus, and a standard part of my spiel is "policies are crafted so that they have continuous functions behind them because doing otherwise is stupid and I don't know why the UK's land duty stamp tax was like it until 2014, but it was but other than that these things are usually made gradual and that's why everyone on TV talking about income tax cliffs is wrong", and now we're back to making a major benefit actually hard-edged? I assume someone smarter than me (or, more to the point, smarter than the dumbest student I see nodding when I explain how marginal tax rates work) is on the policy team for this, so what gives?
posted by jackbishop at 3:45 PM on August 24, 2022 [2 favorites]
My wife and I scrimped and saved to pay off our loans. I took a job in higher ed so my kids could get a tuition deal, and they busted their asses to get scholarships -- so this doesn't help anyone in my family.
But I am still happy for the folks it does help!
And I do kind of understand the people who already paid their loans off and are a little hurt that their effort and sacrifice now makes them look like suckers.
But mostly I am glad that millions of people are out of the hole!
posted by wenestvedt at 3:50 PM on August 24, 2022 [3 favorites]
But I am still happy for the folks it does help!
And I do kind of understand the people who already paid their loans off and are a little hurt that their effort and sacrifice now makes them look like suckers.
But mostly I am glad that millions of people are out of the hole!
posted by wenestvedt at 3:50 PM on August 24, 2022 [3 favorites]
This is going to make grad school less scary for me! I might even be able to consider programs in fields that seemed off limits due to the cost.
posted by Comet Bug at 4:34 PM on August 24, 2022 [4 favorites]
posted by Comet Bug at 4:34 PM on August 24, 2022 [4 favorites]
Fear of debt and being unable to repay it, and graduating in 1998 with nearly $19k in loans, I had absolutely no idea what to do or how to begin repaying. Somewhere along the lines in my education, I missed out on learning how to find a job after university. I did what a good number of people used to do (not really anymore, it's not remotely a viable option now), I went to Japan, and, even several trips home during that time frame, I worked a lot, and paid my loans back by about 2004, and even then, the interest had already risen to the point where my final repayment was $24k.
The thing that sticks in my mind about this is that I was not alone. If you were an English teacher in Japan, and from America, chances were you were here because of student loans (as you couldn't get the visa most teachers have without a college degree). I'm not nearly the only one who ended up just staying in Japan and building a life here, which was very much the result of a bunch of decisions I have made throughout my adult life. Yet, the loans were at the very beginning of that chain, and one of the prime movers for how my life has played out. In very simple terms, I have not, and will almost certainly never will contribute to the American economy in any meaningful way. My labor will never be available to the economy. I pay taxes in a foreign country.
I can't honestly imagine what my life would have been like had I stayed. I don't know what I would have done, or how I would have been able to pay back even the minuscule (by today's standards) debt that I had. But goddamn if I don't wonder about that version of me, and what I might have been able to accomplish back home.
All of that said, I not only don't begrudge the people who will benefit from this, I am ecstatic for them. The good that has just entered their lives will flow outwards and impact so many others. If nothing else, this means money siphoned out of their lives into loan repayments will be used on thing necessary, yet put off. It will be used to buy things that will bring happiness that was denied for too long. It will, and this is the big thing, let people who were working jobs they hated, suppressing the dreams they have because they don't pay enough to manage student loans, give them a chance to do the things they really want to do.
The benefit of that, of people finally being able to do what they dreamed of doing goes beyond economical, I'd be willing to say it's psychological, yet on a national scale: that deep breath taken from chests clenched for too long, that feeling of doing something you want to do, rather than the thing you have to do to pay the outsized bills, multiplied across the nation, that's a large and positive good for everyone they come into contact with. This is a good thing, and goddamn, I'm happy for anyone that this helps.
posted by Ghidorah at 4:35 PM on August 24, 2022 [14 favorites]
The thing that sticks in my mind about this is that I was not alone. If you were an English teacher in Japan, and from America, chances were you were here because of student loans (as you couldn't get the visa most teachers have without a college degree). I'm not nearly the only one who ended up just staying in Japan and building a life here, which was very much the result of a bunch of decisions I have made throughout my adult life. Yet, the loans were at the very beginning of that chain, and one of the prime movers for how my life has played out. In very simple terms, I have not, and will almost certainly never will contribute to the American economy in any meaningful way. My labor will never be available to the economy. I pay taxes in a foreign country.
I can't honestly imagine what my life would have been like had I stayed. I don't know what I would have done, or how I would have been able to pay back even the minuscule (by today's standards) debt that I had. But goddamn if I don't wonder about that version of me, and what I might have been able to accomplish back home.
All of that said, I not only don't begrudge the people who will benefit from this, I am ecstatic for them. The good that has just entered their lives will flow outwards and impact so many others. If nothing else, this means money siphoned out of their lives into loan repayments will be used on thing necessary, yet put off. It will be used to buy things that will bring happiness that was denied for too long. It will, and this is the big thing, let people who were working jobs they hated, suppressing the dreams they have because they don't pay enough to manage student loans, give them a chance to do the things they really want to do.
The benefit of that, of people finally being able to do what they dreamed of doing goes beyond economical, I'd be willing to say it's psychological, yet on a national scale: that deep breath taken from chests clenched for too long, that feeling of doing something you want to do, rather than the thing you have to do to pay the outsized bills, multiplied across the nation, that's a large and positive good for everyone they come into contact with. This is a good thing, and goddamn, I'm happy for anyone that this helps.
posted by Ghidorah at 4:35 PM on August 24, 2022 [14 favorites]
Why design this so stupidly? . . . I assume someone smarter than me (or, more to the point, smarter than the dumbest student I see nodding when I explain how marginal tax rates work) is on the policy team for this, so what gives?
(1) If it's last reported (2021) income, there's nothing stupid about this at all. I mean, I suppose you have an incentive to invent a time machine, but hey, that's a public good.
(2) If it's current year income, then yes, some earners have an incentive to play around. At this point the public benefit is making a relatively simple to understand program at the cost of maybe letting a few top decile households get more money from the government than they otherwise would by deferring income.
The decision making in case (2) for high earners is, well, really boring. If you list out the strategies people might choose to use it's not going be similar to the really perverse ongoing incentives that might make a bottom quintile earner pass up a promotion and stay trapped in the bottom quintile if there's a benefits cliff. Do we care if someone making well into six figures takes a month of unpaid leave in December?
posted by mark k at 4:40 PM on August 24, 2022 [3 favorites]
(1) If it's last reported (2021) income, there's nothing stupid about this at all. I mean, I suppose you have an incentive to invent a time machine, but hey, that's a public good.
(2) If it's current year income, then yes, some earners have an incentive to play around. At this point the public benefit is making a relatively simple to understand program at the cost of maybe letting a few top decile households get more money from the government than they otherwise would by deferring income.
The decision making in case (2) for high earners is, well, really boring. If you list out the strategies people might choose to use it's not going be similar to the really perverse ongoing incentives that might make a bottom quintile earner pass up a promotion and stay trapped in the bottom quintile if there's a benefits cliff. Do we care if someone making well into six figures takes a month of unpaid leave in December?
posted by mark k at 4:40 PM on August 24, 2022 [3 favorites]
Explain the joke? I'm curious!
To explain what jedicus said in slightly more detail: Conservatives have long argued that agencies were abusing their authority by issuing informal guidance on matters under their jurisdiction rather than going through the formal notice-and-comment process for regulations, which is fairly elaborate. (There is a tiny seed of validity in there, but really it's been a bad-faith argument aimed at the destruction of the administrative state altogether.) So one of Trump's "swamp-draining" tactics was to issue an executive order restricting the use of such informal guidance on matters of any importance. Except, um, they went ahead and did that here anyway. Oops!
posted by praemunire at 4:47 PM on August 24, 2022 [3 favorites]
To explain what jedicus said in slightly more detail: Conservatives have long argued that agencies were abusing their authority by issuing informal guidance on matters under their jurisdiction rather than going through the formal notice-and-comment process for regulations, which is fairly elaborate. (There is a tiny seed of validity in there, but really it's been a bad-faith argument aimed at the destruction of the administrative state altogether.) So one of Trump's "swamp-draining" tactics was to issue an executive order restricting the use of such informal guidance on matters of any importance. Except, um, they went ahead and did that here anyway. Oops!
posted by praemunire at 4:47 PM on August 24, 2022 [3 favorites]
Oh, and I myself put in several miserable years in Biglaw to pay off my substantial law school debt. Years of my relative youth I'll never get back! (My timing was terrible; made my job choices not long before PSLF became available, paid off my loans before this.) And yet I passionately support forgiveness. Let the next smart young law student without family support pick any other route than big corporate law.
posted by praemunire at 4:51 PM on August 24, 2022 [11 favorites]
posted by praemunire at 4:51 PM on August 24, 2022 [11 favorites]
So my consolidated federal loan didn’t qualify for the COVID payment pause for some reason I don’t understand (administered by Nelnet) - does that mean it won’t qualify for this as well?
Sounds like you may have older FFEL loans (do you remember applying to a bank rather than the federal government?). If so, I don't know what the cutoff is or was, but you should apply to "consolidate" them into the Direct loan program. It's free and basically just transfers your debt to the federal government (may possibly result in a tiny change in monthly payment). Even if it's too late for this round of forgiveness, you have better options for repayment in the Direct program.
It's also possible you may have Parent PLUS or other weird outlier loans consolidated in there. That, it may not be possible to fix.
posted by praemunire at 4:54 PM on August 24, 2022 [2 favorites]
Sounds like you may have older FFEL loans (do you remember applying to a bank rather than the federal government?). If so, I don't know what the cutoff is or was, but you should apply to "consolidate" them into the Direct loan program. It's free and basically just transfers your debt to the federal government (may possibly result in a tiny change in monthly payment). Even if it's too late for this round of forgiveness, you have better options for repayment in the Direct program.
It's also possible you may have Parent PLUS or other weird outlier loans consolidated in there. That, it may not be possible to fix.
posted by praemunire at 4:54 PM on August 24, 2022 [2 favorites]
I'm seeing a lot of people online that are frustrated this bill doesn't cover them. And the general consensus is "it's ok to be happy for other people." And it is! But it's also ok to acknowledge that things were REALLY BAD for a long time and there are people who went through the badness that this will not help. And that's a shame.
I grew up working class with no safety net. The only way "out" was college or the military. I went to school and graduated with 5 figures worth of loans. It was insurmountable. I tried to pay it back, but it didn't take long for me to fall behind and I just... stopped paying them. And I was so ashamed of that. There was so much I didn't do, so many bad situations I stayed in because my credit was shot. I know I'm not the only person who made hard choices because of these loans. But basically I chose to try to survive and take the hits as they came. Then I got INCREDIBLY lucky and landed a job in my field and I was able to pay back my loans in full. By then, it had ballooned to 6 figures, which frankly it would have if I had been paying steadily or not because the original figure was so high. I'm so happy for people that are getting this relief. But the student loan racket SHOULD NOT HAVE HAPPENED. That's why this forgiveness is happening, right? It's ok to acknowledge that too.
posted by Pretty Good Talker at 4:57 PM on August 24, 2022 [31 favorites]
I grew up working class with no safety net. The only way "out" was college or the military. I went to school and graduated with 5 figures worth of loans. It was insurmountable. I tried to pay it back, but it didn't take long for me to fall behind and I just... stopped paying them. And I was so ashamed of that. There was so much I didn't do, so many bad situations I stayed in because my credit was shot. I know I'm not the only person who made hard choices because of these loans. But basically I chose to try to survive and take the hits as they came. Then I got INCREDIBLY lucky and landed a job in my field and I was able to pay back my loans in full. By then, it had ballooned to 6 figures, which frankly it would have if I had been paying steadily or not because the original figure was so high. I'm so happy for people that are getting this relief. But the student loan racket SHOULD NOT HAVE HAPPENED. That's why this forgiveness is happening, right? It's ok to acknowledge that too.
posted by Pretty Good Talker at 4:57 PM on August 24, 2022 [31 favorites]
Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
The one thing I haven't seen much clarification on is this part. Is this only applicable going forward from 2023, as in if you pay until 2033, then your balance of $12k or less gets forgiven? Or is it retroactive, as in if you have to-date paid for ten years and, after getting this one-time $10k-20k forgiveness, you have less than $12k left, the remaining balance is forgiven?
posted by yasaman at 5:10 PM on August 24, 2022 [1 favorite]
The one thing I haven't seen much clarification on is this part. Is this only applicable going forward from 2023, as in if you pay until 2033, then your balance of $12k or less gets forgiven? Or is it retroactive, as in if you have to-date paid for ten years and, after getting this one-time $10k-20k forgiveness, you have less than $12k left, the remaining balance is forgiven?
posted by yasaman at 5:10 PM on August 24, 2022 [1 favorite]
i'm definitely taking a moment to savor this win, but as we discuss bankruptcy and student loans, wasn't Senator Joe Biden a driving force in making sure student loans were not dischargeable in bankruptcy? He shouldn't get a pass on fixing that, which needs to happen immediately. (Elizabeth Warren's 2020 platform specifically promised to "End the absurd rules that make it nearly impossible to discharge student loan debt in bankruptcy.")
Some backstory here about Biden's role in passing the 2005 bankruptcy bill, which helped bring us to this horrible point and caused massive pain to working families:
A 2011 study from the Federal Reserve Bank of New York found that the 2005 bankruptcy bill led to a surge of foreclosures that may not have happened otherwise, translating to an additional 29,000 foreclosures every three months.
posted by mediareport at 5:49 PM on August 24, 2022 [8 favorites]
Some backstory here about Biden's role in passing the 2005 bankruptcy bill, which helped bring us to this horrible point and caused massive pain to working families:
A 2011 study from the Federal Reserve Bank of New York found that the 2005 bankruptcy bill led to a surge of foreclosures that may not have happened otherwise, translating to an additional 29,000 foreclosures every three months.
posted by mediareport at 5:49 PM on August 24, 2022 [8 favorites]
Alexandra Petri, Stop improving things right now! Everyone must suffer as I did!
posted by nanook at 5:56 PM on August 24, 2022 [6 favorites]
posted by nanook at 5:56 PM on August 24, 2022 [6 favorites]
I haven't seen an answer to this yet: If I had a principal of around 20k many many years ago, and through decades of forbearances and Income Based Repayments, my principal is now, say, 90k because of compounded interest. Does this program wipe out all that accrued interest too? Or only interest going forward on my current amount? Is this 10k forgiveness coming off the top of 20k or from 90k?
I mean, either way, this is a huge deal and good news. I'm just a very selfish person and I want to know how much I will benefit.
posted by Laura Palmer's Cold Dead Kiss at 6:00 PM on August 24, 2022 [2 favorites]
I mean, either way, this is a huge deal and good news. I'm just a very selfish person and I want to know how much I will benefit.
posted by Laura Palmer's Cold Dead Kiss at 6:00 PM on August 24, 2022 [2 favorites]
I paid off my loans this year too, and it felt great, and I am SO PLEASED for any incremental progress on loan forgiveness.
I paid off my loans two decades ago and I'm totally delighted to see this news today. It would have been huge for young-me had this happened then, but also this must feel amazing to someone who was slowly working the balance down over a couple of decades and now can feel some respite.
Is it perfect? No. I would say it doesn't go far enough (nor does it do enough to stem the problem going forward) but this directly helps lots of people and I'm going to savor that feeling.
posted by Dip Flash at 6:02 PM on August 24, 2022 [3 favorites]
I paid off my loans two decades ago and I'm totally delighted to see this news today. It would have been huge for young-me had this happened then, but also this must feel amazing to someone who was slowly working the balance down over a couple of decades and now can feel some respite.
Is it perfect? No. I would say it doesn't go far enough (nor does it do enough to stem the problem going forward) but this directly helps lots of people and I'm going to savor that feeling.
posted by Dip Flash at 6:02 PM on August 24, 2022 [3 favorites]
(I want to offer a quiet round of thanks for everyone who recently paid off their loans, has some bittersweet feelings about the timing of all of this, but is still being a good sport and showing real happiness for others. You are appreciated!)
posted by ducky l'orange at 6:54 PM on August 24, 2022 [17 favorites]
posted by ducky l'orange at 6:54 PM on August 24, 2022 [17 favorites]
I'm also trying to untangle the PSLF rules, and whether they apply to academics on federal grants ...
This seems like an opportune time & place to remind recent PhD grads* of the NIH Loan Repayment Programs (grant).
*Congrats, sciatrix!
posted by Dashy at 7:03 PM on August 24, 2022 [1 favorite]
This seems like an opportune time & place to remind recent PhD grads* of the NIH Loan Repayment Programs (grant).
*Congrats, sciatrix!
posted by Dashy at 7:03 PM on August 24, 2022 [1 favorite]
wasn't Senator Joe Biden a driving force in making sure student loans were not dischargeable in bankruptcy?
That law and the de-federalization of student loans are together what allowed institutions and lenders to charge and load up mind-blowing debt loads into unsuspecting teenagers.
The part that really kills me is the usury. Interest rates are generally understood to be a reward for risk. But student loans, for lenders, became almost entirely riskless once they were excluded from bankruptcy. Even with this new act, it's not the private lenders taking a write down.
I think of this every time I read about loan balances that are higher after 10 years of faithful payments. The only word is: usury.
Riskless student loans should be federally capped at 0.5% APR. That would address a few of the structural problems in one stroke.
posted by Dashy at 7:15 PM on August 24, 2022 [32 favorites]
That law and the de-federalization of student loans are together what allowed institutions and lenders to charge and load up mind-blowing debt loads into unsuspecting teenagers.
The part that really kills me is the usury. Interest rates are generally understood to be a reward for risk. But student loans, for lenders, became almost entirely riskless once they were excluded from bankruptcy. Even with this new act, it's not the private lenders taking a write down.
I think of this every time I read about loan balances that are higher after 10 years of faithful payments. The only word is: usury.
Riskless student loans should be federally capped at 0.5% APR. That would address a few of the structural problems in one stroke.
posted by Dashy at 7:15 PM on August 24, 2022 [32 favorites]
Riskless student loans should be federally capped at 0.5% APR.
Well, there's inflation and whatnot to deal with, which is a pretty sad factor at the moment. But hopefully we find a way to bring that down.
When I did my undergrad my loans were tied to the 91 day treasury auctions. That seems like a decent automatic benchmark. You can quibble over maturity -- 91d is typically the cheapest but maybe the 10y is more appropriate to match the expected student loan repayment time. But either one is a step towards a more sensible policy than the 6.8% fixed bullshit people are tied to now, and it seems well within the realm of the possible given that it used to be the way things worked.
posted by pwnguin at 8:03 PM on August 24, 2022 [4 favorites]
Well, there's inflation and whatnot to deal with, which is a pretty sad factor at the moment. But hopefully we find a way to bring that down.
When I did my undergrad my loans were tied to the 91 day treasury auctions. That seems like a decent automatic benchmark. You can quibble over maturity -- 91d is typically the cheapest but maybe the 10y is more appropriate to match the expected student loan repayment time. But either one is a step towards a more sensible policy than the 6.8% fixed bullshit people are tied to now, and it seems well within the realm of the possible given that it used to be the way things worked.
posted by pwnguin at 8:03 PM on August 24, 2022 [4 favorites]
I think of this every time I read about loan balances that are higher after 10 years of faithful payments.
I paid $600/mo for 10 years when I finally got a decent job at age 40 and was in a long term relationship where I could share expenses. But my Navient (Sallie Mae) loans already had accrued so much interest that it barely made a dent. And then I accrued additional interest for a year thinking I was in deferment before someone on AskMe told me how to consolidate with Great Lakes. (My fault for not paying attention to them, I know.)
My current balance is 90k, much more than I took out in the 90s. I had a lot of terrible jobs for a long long time. Doing better now.
10k is definitely something, and the other provisions are pretty huge. I was very touched by those reddit screenshots. It was a good day.
posted by Glinn at 9:35 PM on August 24, 2022 [4 favorites]
I paid $600/mo for 10 years when I finally got a decent job at age 40 and was in a long term relationship where I could share expenses. But my Navient (Sallie Mae) loans already had accrued so much interest that it barely made a dent. And then I accrued additional interest for a year thinking I was in deferment before someone on AskMe told me how to consolidate with Great Lakes. (My fault for not paying attention to them, I know.)
My current balance is 90k, much more than I took out in the 90s. I had a lot of terrible jobs for a long long time. Doing better now.
10k is definitely something, and the other provisions are pretty huge. I was very touched by those reddit screenshots. It was a good day.
posted by Glinn at 9:35 PM on August 24, 2022 [4 favorites]
The reddit screenshots made me tear up a little. Seeing that level of unmitigated joy at having that kind of weight lifted was such a strong jolt of positive... goodness? that, after so long without things like that, I had difficulty processing. I am so, so happy for those people (and, of course, everyone here who is expressing the same feeling, I'm thrilled for all of you).
posted by Ghidorah at 10:05 PM on August 24, 2022 [4 favorites]
posted by Ghidorah at 10:05 PM on August 24, 2022 [4 favorites]
I paid off my loans a long time ago. It was painful, but this sort of bailout was never an option so I'm not missing out. I'm glad for anyone who benefited from this.
I wish this policy would have addressed inflation even a little bit. It would have been so simple to say "If you pay as agreed starting next month, we'll forgive $10k-20k next year." It's an incentive to start paying again (after YEARS of no payments/zero interest), and drains money out of the economy in the short term. But they made it a windfall, with no need to pay anything. There's no incentive to start paying again except default.
posted by netowl at 10:36 PM on August 24, 2022
I wish this policy would have addressed inflation even a little bit. It would have been so simple to say "If you pay as agreed starting next month, we'll forgive $10k-20k next year." It's an incentive to start paying again (after YEARS of no payments/zero interest), and drains money out of the economy in the short term. But they made it a windfall, with no need to pay anything. There's no incentive to start paying again except default.
posted by netowl at 10:36 PM on August 24, 2022
This may be the wrong place to ask, but I think survey questions are verboten on AskMe, and y'all would definitely be able to help me out, so:
I think I've been under a misapprehension about student loans for my entire life. I'm American, but I haven't lived in America for decades, and I don't really deal with the expat community here, so I've got practically no first- or second-hand knowledge, just vague third-hand impressions from the internet.
As an only child with frugal parents and a scholarship, I managed to go to school without any student loans. My parents paid for my college, and, as far as I know, it was typical that parents paid whatever they could of tuition. Of course, lots of households didn't have enough income/savings to pay all, so people took out loans, but the loans were to supplement the shortfall in the parents' payments for tuition.
So I thought that student loans were, when possible, generally repaid by parents, and that what I was reading about online were the exceptions -- people whose parents barely made enough money to get by, so the (former) students paid their student loans themselves; people whose parents had passed away; people who had broken off their relationships with their parents; people whose parents paid for their bachelor's degree, but who were paying for a masters or PhD on their own; things like that.
Obviously, it being a big country, there would be lots of exceptions, and it didn't seem strange to me to see so many people talking about paying their own student loans. Plenty of poverty and thus parents unable to pay. Plenty of gay/lesbian/trans folks who had been disowned. Plenty of everything. But I assumed that this was all, of course, outnumbered by even more "typical" families, in which parents spent years or decades paying off the loans taken out for their kids' education, and they didn't speak a lot in discussions like this because why would they?
But reading this thread, I'm starting to think that in the US, even if parents have the financial room to pay off their kids' student loans, maybe it's actually uncommon to do so? So my question is: while I understand that students are the ones legally responsible for paying back the loans, is it also part of the culture that students are simply expected to be the ones to pay off the loans, and that parents paying student loans is the exception, not the rule?
(For background on the situation here, my kids aren't college age yet, so I haven't looked that much into loans, but everything I've seen points to them being "loans for parents to enable them to send their kids to school". Like, the student loan page of the Japan Finance Corporation is full of references to "your child" and "how many children you have" and "your household income". The second Google hit, a bank, explicitly says "guardians are legally responsible for the repayment of educational loans". Etc.)
posted by Bugbread at 10:40 PM on August 24, 2022
I think I've been under a misapprehension about student loans for my entire life. I'm American, but I haven't lived in America for decades, and I don't really deal with the expat community here, so I've got practically no first- or second-hand knowledge, just vague third-hand impressions from the internet.
As an only child with frugal parents and a scholarship, I managed to go to school without any student loans. My parents paid for my college, and, as far as I know, it was typical that parents paid whatever they could of tuition. Of course, lots of households didn't have enough income/savings to pay all, so people took out loans, but the loans were to supplement the shortfall in the parents' payments for tuition.
So I thought that student loans were, when possible, generally repaid by parents, and that what I was reading about online were the exceptions -- people whose parents barely made enough money to get by, so the (former) students paid their student loans themselves; people whose parents had passed away; people who had broken off their relationships with their parents; people whose parents paid for their bachelor's degree, but who were paying for a masters or PhD on their own; things like that.
Obviously, it being a big country, there would be lots of exceptions, and it didn't seem strange to me to see so many people talking about paying their own student loans. Plenty of poverty and thus parents unable to pay. Plenty of gay/lesbian/trans folks who had been disowned. Plenty of everything. But I assumed that this was all, of course, outnumbered by even more "typical" families, in which parents spent years or decades paying off the loans taken out for their kids' education, and they didn't speak a lot in discussions like this because why would they?
But reading this thread, I'm starting to think that in the US, even if parents have the financial room to pay off their kids' student loans, maybe it's actually uncommon to do so? So my question is: while I understand that students are the ones legally responsible for paying back the loans, is it also part of the culture that students are simply expected to be the ones to pay off the loans, and that parents paying student loans is the exception, not the rule?
(For background on the situation here, my kids aren't college age yet, so I haven't looked that much into loans, but everything I've seen points to them being "loans for parents to enable them to send their kids to school". Like, the student loan page of the Japan Finance Corporation is full of references to "your child" and "how many children you have" and "your household income". The second Google hit, a bank, explicitly says "guardians are legally responsible for the repayment of educational loans". Etc.)
posted by Bugbread at 10:40 PM on August 24, 2022
Most US college students are expected to pay for their education, both in reality (student signs contract saying they will repay student loans) and by cultural expectation. There are many reasons for this, but probably the main one is that most people's parents don't have enough income to afford to pay for a child's college education even if they wanted to.
posted by Nec_variat_lux_fracta_colorem at 10:54 PM on August 24, 2022 [7 favorites]
posted by Nec_variat_lux_fracta_colorem at 10:54 PM on August 24, 2022 [7 favorites]
Does anyone know how this affects loans which are in default?
posted by Ivan Fyodorovich at 11:00 PM on August 24, 2022 [1 favorite]
posted by Ivan Fyodorovich at 11:00 PM on August 24, 2022 [1 favorite]
I don't know anyone whose parents paid/are paying off their loans. Either the parents pay the tuition at the time or the students take out, and repay, the loans. I'm sure sometimes students get lump sums from parents that can be directed to student loans, and parents do sometimes take out supplemental loans, but you don't hear of parents just paying off students' loans month-by-month for years.
Man. I started working on student loan issues in the first half of the 2010s. It was a wasteland, incredibly depressing, a profoundly industry-captured ED even with Obama in office, every predatory for-profit chicken come home to roost post-Great Recession. I still can't believe this happened.
posted by praemunire at 11:39 PM on August 24, 2022 [11 favorites]
Man. I started working on student loan issues in the first half of the 2010s. It was a wasteland, incredibly depressing, a profoundly industry-captured ED even with Obama in office, every predatory for-profit chicken come home to roost post-Great Recession. I still can't believe this happened.
posted by praemunire at 11:39 PM on August 24, 2022 [11 favorites]
But reading this thread, I'm starting to think that in the US, even if parents have the financial room to pay off their kids' student loans, maybe it's actually uncommon to do so?
If you've been gone decades, your age sounds similar to mine, so I'd say college has changed a lot. It's just so much more expensive and their are very few cheap options.
My parents supported me as much as they could, but that meant graduate a state university debt free or a good private school with $75k debt. I went public, go figure.
I just looked up the options today: It'd be ~$75k debt for the state school or over a quarter million for the private school. And that's just undergrad. The number of parents who can pay that--especially if they have more than one kid!--is obviously pretty small, and many of the ones who can just pay it up front from their 529 accounts. No one judges even upper middle class parents for not picking up the whole tab.
IME it is more common for adult parents in the upper middle class who have money to help out in other ways, rather than assume student loan debt--down payment on a house, lump sums as they perhaps get an inheritance or downsize their house, etc.
posted by mark k at 12:31 AM on August 25, 2022 [4 favorites]
If you've been gone decades, your age sounds similar to mine, so I'd say college has changed a lot. It's just so much more expensive and their are very few cheap options.
My parents supported me as much as they could, but that meant graduate a state university debt free or a good private school with $75k debt. I went public, go figure.
I just looked up the options today: It'd be ~$75k debt for the state school or over a quarter million for the private school. And that's just undergrad. The number of parents who can pay that--especially if they have more than one kid!--is obviously pretty small, and many of the ones who can just pay it up front from their 529 accounts. No one judges even upper middle class parents for not picking up the whole tab.
IME it is more common for adult parents in the upper middle class who have money to help out in other ways, rather than assume student loan debt--down payment on a house, lump sums as they perhaps get an inheritance or downsize their house, etc.
posted by mark k at 12:31 AM on August 25, 2022 [4 favorites]
But it's also ok to acknowledge that things were REALLY BAD for a long time and there are people who went through the badness that this will not help.
"It's okay to be happy for others" is a good message, but one I haven't seen much is "let's make this be just the start." Because there are a lot of of other badnesses that still affect, or will in the future affect, both people who missed out on this benefit and everybody else, like medical debt and the healthcare system in general. Channel disappointment and frustration into supporting reforms more and more people can benefit from, so we can all get our turn seeing what it's like to have needless burdens lifted.
posted by trig at 12:35 AM on August 25, 2022 [5 favorites]
"It's okay to be happy for others" is a good message, but one I haven't seen much is "let's make this be just the start." Because there are a lot of of other badnesses that still affect, or will in the future affect, both people who missed out on this benefit and everybody else, like medical debt and the healthcare system in general. Channel disappointment and frustration into supporting reforms more and more people can benefit from, so we can all get our turn seeing what it's like to have needless burdens lifted.
posted by trig at 12:35 AM on August 25, 2022 [5 favorites]
There's plenty, from a wonky policy and economics perspective not to like about this:
First, and probably worst, it doesn't fix the underlying problems with American higher education funding. Everyone is just getting right back on the merry-go-round.
Second, yes it isn't fair to give a bunch of money to the middle-middle class at the expense of poorer people without college debt. It also isn't fair to give money to people in one generational cohort but not to those who have either paid off their debt or are yet to incur it.
Third, cliff-edge policies are bad. Ok, yeah people with an AGI of $150k can of course "afford" their debt repayments but people with an AGI of $149,999 can afford it basically the same as people with an AGI of $150,001 and one of them gets $10k more than the other. That seems strange and not necessary. I wonder if there is some rule-making / legal reason for that? There almost has to be otherwise you'd just graduate the relief.
The idea that is is inflationary is nonsense though since repayments were already paused. Was pausing repayments inflationary? Probably, yeah. Is forgiving the debt inflationary? Very hard case to make for that.
However, there are two very major reasons that none of that matters:
First, with the American system the way it is, Biden has unusual discretionary authority over student loans that he just doesn't have over the whole of tertiary education. Even if the Democrats had massive majorities in both the house and the senate, there would still be a lot of stuff at state level. So he has done what can be done with his executive authority. It's a good start!
Of course, a more thorough reform would be better. Of course it would be fairer to help people who already paid off their debt or are just starting college. But Joe Biden cannot do those things! (and the changes to IBR actually do make things a lot better for future borrowers as well)
Second, and far more importantly, this is what he ran on. If people voted for him they either believed: "he said he will do this specific thing" or "I know he is lying about this thing but I will vote for him anyway". The second is bad because it's not a good recipe for long term voter engagement. The first means that people voted, having already heard (or had the opportunity to hear) the economic arguments against this as a policy.
You can't campaign on something, have economists say at the time that this is flawed policy, win the election and then "discover" what the economists have been saying! That's bullshit. This is what people voted for. Maybe next time he can campaign on a more thorough policy and win on that basis and then people can have that one as well.
It is a big deal, to just... do what you said you would do because it's dynamite in future elections. "I said X and then I did it, now I am saying Y, vote for me and I will do that as well". Arguments that it is badly formulated policy don't really make sense in that political context. I think people are so used to politicians just not doing anything they said they would that we don't even know how to think about a case where they just do it.
posted by atrazine at 1:07 AM on August 25, 2022 [15 favorites]
First, and probably worst, it doesn't fix the underlying problems with American higher education funding. Everyone is just getting right back on the merry-go-round.
Second, yes it isn't fair to give a bunch of money to the middle-middle class at the expense of poorer people without college debt. It also isn't fair to give money to people in one generational cohort but not to those who have either paid off their debt or are yet to incur it.
Third, cliff-edge policies are bad. Ok, yeah people with an AGI of $150k can of course "afford" their debt repayments but people with an AGI of $149,999 can afford it basically the same as people with an AGI of $150,001 and one of them gets $10k more than the other. That seems strange and not necessary. I wonder if there is some rule-making / legal reason for that? There almost has to be otherwise you'd just graduate the relief.
The idea that is is inflationary is nonsense though since repayments were already paused. Was pausing repayments inflationary? Probably, yeah. Is forgiving the debt inflationary? Very hard case to make for that.
However, there are two very major reasons that none of that matters:
First, with the American system the way it is, Biden has unusual discretionary authority over student loans that he just doesn't have over the whole of tertiary education. Even if the Democrats had massive majorities in both the house and the senate, there would still be a lot of stuff at state level. So he has done what can be done with his executive authority. It's a good start!
Of course, a more thorough reform would be better. Of course it would be fairer to help people who already paid off their debt or are just starting college. But Joe Biden cannot do those things! (and the changes to IBR actually do make things a lot better for future borrowers as well)
Second, and far more importantly, this is what he ran on. If people voted for him they either believed: "he said he will do this specific thing" or "I know he is lying about this thing but I will vote for him anyway". The second is bad because it's not a good recipe for long term voter engagement. The first means that people voted, having already heard (or had the opportunity to hear) the economic arguments against this as a policy.
You can't campaign on something, have economists say at the time that this is flawed policy, win the election and then "discover" what the economists have been saying! That's bullshit. This is what people voted for. Maybe next time he can campaign on a more thorough policy and win on that basis and then people can have that one as well.
It is a big deal, to just... do what you said you would do because it's dynamite in future elections. "I said X and then I did it, now I am saying Y, vote for me and I will do that as well". Arguments that it is badly formulated policy don't really make sense in that political context. I think people are so used to politicians just not doing anything they said they would that we don't even know how to think about a case where they just do it.
posted by atrazine at 1:07 AM on August 25, 2022 [15 favorites]
Also, gonna need a lot more of those "I did that" stickers. Maybe the Dark Brandon laser-eyes ones for extra crunch.
posted by atrazine at 1:12 AM on August 25, 2022 [6 favorites]
posted by atrazine at 1:12 AM on August 25, 2022 [6 favorites]
This Washington Post Article (Who qualifies for Biden’s plan to cancel $10,000 in student debt?) goes into more detail than many sources.
Of particular note:
Are graduate student loans eligible for forgiveness?
Yes. Under the new policy, graduate student loans are eligible for up to $10,000 in debt forgiveness. They are not eligible for the additional $10,000 offered to Pell Grant recipients.
Are Parent Plus loans eligible?
Yes. Parent Plus loans — federal loans taken out by parents to pay for their children’s education — are eligible for the $10,000 in cancellation under the White House plan, subject to the income thresholds.
posted by oceano at 1:49 AM on August 25, 2022 [5 favorites]
Of particular note:
Are graduate student loans eligible for forgiveness?
Yes. Under the new policy, graduate student loans are eligible for up to $10,000 in debt forgiveness. They are not eligible for the additional $10,000 offered to Pell Grant recipients.
Are Parent Plus loans eligible?
Yes. Parent Plus loans — federal loans taken out by parents to pay for their children’s education — are eligible for the $10,000 in cancellation under the White House plan, subject to the income thresholds.
posted by oceano at 1:49 AM on August 25, 2022 [5 favorites]
atrazine, some of the people who are being helped are fairly poor.
I don't think the regressive/not regressive split really covers the situation. Very poor people generally aren't being helped by student loan forgiveness. However, people who aren't very well off are being helped more than people who are solidly well off.
posted by Nancy Lebovitz at 3:24 AM on August 25, 2022 [3 favorites]
I don't think the regressive/not regressive split really covers the situation. Very poor people generally aren't being helped by student loan forgiveness. However, people who aren't very well off are being helped more than people who are solidly well off.
posted by Nancy Lebovitz at 3:24 AM on August 25, 2022 [3 favorites]
IME it is more common for adult parents in the upper middle class who have money to help out in other ways, rather than assume student loan debt
Agreed--despite being of extremely modest means myself I know a lot of upper middle class people either through work or volunteering, and most of those who had any debt:
- took it out for professional school at prestigious private institutions (e.g., law school)
- subsequently were gifted large lump sums for most or all of their loan amounts by their parents. Some of these are theoretically interest-free "loans" from the parents to the kid, but of course in reality they may or may not actually wind up paying these back, with...significantly fewer repercussions if they fail to do so vs if they were held by their original lenders.
In answer to Bugbread's question, I'm not sure why the parents chose to do this rather than having financed their children's education directly, but suspect it has to do with timing vis a vis retirement: a lot of my cohort (30-40 years old) went to grad/professional school during or shortly after the 2008 financial crisis, when a lot of otherwise comfortable people suddenly saw their retirement savings threatened or even reduced. Lots of people at the top of the UMC category have now largely recovered and are thus secure enough to give their kids money they maybe didn't feel safe enough to put down in 2008-2011.
posted by TinyChicken at 3:40 AM on August 25, 2022 [2 favorites]
Agreed--despite being of extremely modest means myself I know a lot of upper middle class people either through work or volunteering, and most of those who had any debt:
- took it out for professional school at prestigious private institutions (e.g., law school)
- subsequently were gifted large lump sums for most or all of their loan amounts by their parents. Some of these are theoretically interest-free "loans" from the parents to the kid, but of course in reality they may or may not actually wind up paying these back, with...significantly fewer repercussions if they fail to do so vs if they were held by their original lenders.
In answer to Bugbread's question, I'm not sure why the parents chose to do this rather than having financed their children's education directly, but suspect it has to do with timing vis a vis retirement: a lot of my cohort (30-40 years old) went to grad/professional school during or shortly after the 2008 financial crisis, when a lot of otherwise comfortable people suddenly saw their retirement savings threatened or even reduced. Lots of people at the top of the UMC category have now largely recovered and are thus secure enough to give their kids money they maybe didn't feel safe enough to put down in 2008-2011.
posted by TinyChicken at 3:40 AM on August 25, 2022 [2 favorites]
Part of the situation is a government which doesn't seem to have enough administrative capacity to deal with the situation. Some universities were outright frauds. Some universities were lying about the chances of getting well-paid jobs with at least some of their degrees.
Ideally, those universities would be identified, punished, and loans for their degrees forgiven, but that isn't feasible. Some degree of loan forgiveness in general may be the best alternative.
posted by Nancy Lebovitz at 3:54 AM on August 25, 2022 [1 favorite]
Ideally, those universities would be identified, punished, and loans for their degrees forgiven, but that isn't feasible. Some degree of loan forgiveness in general may be the best alternative.
posted by Nancy Lebovitz at 3:54 AM on August 25, 2022 [1 favorite]
Thanks for all of your answers. It's been a while since I've had culture shock about what is ostensibly my own culture. Maybe not "shock" so much as "culture surprise," discovering that something is a huge part of my culture and has been for years and years and I just never knew. Luckily I can't recall ever having said anything really stupid or insensitive based on my misunderstanding, so I'm thanking my lucky stars.
posted by Bugbread at 3:59 AM on August 25, 2022 [1 favorite]
posted by Bugbread at 3:59 AM on August 25, 2022 [1 favorite]
Second, yes it isn't fair to give a bunch of money to the middle-middle class at the expense of poorer people without college debt.
How would it be at their expense in the US? Poorer people pay very little federal income tax, and other federal taxes like social security or gas are heavily earmarked for purposes other than higher ed.
posted by GCU Sweet and Full of Grace at 4:16 AM on August 25, 2022 [7 favorites]
How would it be at their expense in the US? Poorer people pay very little federal income tax, and other federal taxes like social security or gas are heavily earmarked for purposes other than higher ed.
posted by GCU Sweet and Full of Grace at 4:16 AM on August 25, 2022 [7 favorites]
Hearty agreement to everyone who is celebrating this, and celebrating the enormous amount of work and vision that it took to make this happen. I know some folks who have been working and pushing for years on student loan reform advocacy, and they are THRILLED at this win.
Also, remember that even incremental wins like this help shift the Overton window. In another year or two when we're fighting for full loan forgiveness or a bigger overhaul to the whole system, these changes will have taken root as the new baseline and it'll be easier to get more changes done.
posted by aka burlap at 4:17 AM on August 25, 2022 [8 favorites]
Also, remember that even incremental wins like this help shift the Overton window. In another year or two when we're fighting for full loan forgiveness or a bigger overhaul to the whole system, these changes will have taken root as the new baseline and it'll be easier to get more changes done.
posted by aka burlap at 4:17 AM on August 25, 2022 [8 favorites]
This is really good for a president from Delaware, Mr credit card.
Happy Howard Zinn day, and onward to jubilee!
posted by eustatic at 4:26 AM on August 25, 2022 [6 favorites]
Happy Howard Zinn day, and onward to jubilee!
posted by eustatic at 4:26 AM on August 25, 2022 [6 favorites]
I have five figures of student loan debt from grad school, and if nothing changes it'll be forgiven via PSLF within a year or so (or, to put that another way, before the 2024 elections).
This forgiveness will help me, and I'm happy about that, but it will be a bigger help for a lot of people who haven't had either the advantages or the educational achievement that I have, and I think that's wonderful.
posted by box at 4:40 AM on August 25, 2022 [5 favorites]
This forgiveness will help me, and I'm happy about that, but it will be a bigger help for a lot of people who haven't had either the advantages or the educational achievement that I have, and I think that's wonderful.
posted by box at 4:40 AM on August 25, 2022 [5 favorites]
I'm a bit blown away by people (outside of this thread) who make $150K a year wailing about the unfairness of not getting $10K. They make more than that in a month!
Recently I finished paying my mortgage. It was a surreal experience to find out that I could suddenly live within my income without stressing about side gigs to just get by. Imagine the millions of people who yesterday were struggling for years with a few thousand in school loans that kept them from ever being able to buy a house (or a car, or marry, start a business, have children, or save for retirement). When you earn $30K or less, that's a real burden that can hold you back for decades. This is life-changing for them.
posted by Miss Cellania at 5:12 AM on August 25, 2022 [25 favorites]
Recently I finished paying my mortgage. It was a surreal experience to find out that I could suddenly live within my income without stressing about side gigs to just get by. Imagine the millions of people who yesterday were struggling for years with a few thousand in school loans that kept them from ever being able to buy a house (or a car, or marry, start a business, have children, or save for retirement). When you earn $30K or less, that's a real burden that can hold you back for decades. This is life-changing for them.
posted by Miss Cellania at 5:12 AM on August 25, 2022 [25 favorites]
Spotted earlier this morning on Twitter, I can't find it to link:
"I wonder how many of the people complaining about people getting student loans waived also complained when Brent Kavanaugh got HIS debt waived?"
posted by EmpressCallipygos at 6:15 AM on August 25, 2022 [10 favorites]
"I wonder how many of the people complaining about people getting student loans waived also complained when Brent Kavanaugh got HIS debt waived?"
posted by EmpressCallipygos at 6:15 AM on August 25, 2022 [10 favorites]
This is really helpful for me personally, and many people I know. I'm feeling excited and upbeat for the first time in a while.
The loan pause allowed me to start my own business. This cancellation will allow me to get either the vehicle I've been needing to get, or healthcare, and either of those would be huge. When payments restarted, I wouldn't have been able to afford both the payments and one of the above. I continued to make payments on my parent plus loan because my parent demanded it.
My parents were solidly middle class and college was the expectation. I even got help in the form of a year of GI bill and a few hundred dollar cash injections in my undergrad years. I got scholarships, some of them fairly large (oof, did not like being the dog in the dog and pony show that was, but I needed the money) as well as working every summer and holidays/breaks as I could. I also paid cash for an associate's degree and transferred to an inexpensive state school, saving a year of tuition and living expenses that way.
I still graduated with oodles of debt and have been slogging through it while more fortunate (and more free-spirited) friends have moved on to having kids, buying houses, investing their time and money into interesting things, etc... I'll admit some of them do have big loans and are just more comfortable with defaulting on them or stringing them out paying as little as possible. I don't begrudge them these things, I just have to live my life differently.
My conservative family is set on convincing me that this isn't actually good for me, or for the economy, and that any benefit is transitory, and that they hope my taxes get raised. That I should feel bad about this and that I'm skipping out on my accountability for paying for my education.
It's taking a lot of effort, but instead of getting wrapped up trying to rebut them, I'm just going to enjoy this win at face value. I feel like the government has done something that actually benefits me for once.
I'm thankful for everyone that did the work of keeping pressure on the administration to actually follow through on this promise.
I'm thankful I never succumbed to parental pressure to refinance my loans into private ones.
I'm thankful this helps my public servant sisters see the light at the end of the tunnel on their debt.
I'm thankful for all the people that paid off their loans recently and feel burned by this but instead of spreading that miasma have shown up to be happy for the people who are being helped.
I'm thankful that the interest and IBR changes are going to make things less burdensome for students going forward.
I know it doesn't fix system issues with our education system, but I'm going to appreciate what I can here.
posted by jellywerker at 6:16 AM on August 25, 2022 [22 favorites]
The loan pause allowed me to start my own business. This cancellation will allow me to get either the vehicle I've been needing to get, or healthcare, and either of those would be huge. When payments restarted, I wouldn't have been able to afford both the payments and one of the above. I continued to make payments on my parent plus loan because my parent demanded it.
My parents were solidly middle class and college was the expectation. I even got help in the form of a year of GI bill and a few hundred dollar cash injections in my undergrad years. I got scholarships, some of them fairly large (oof, did not like being the dog in the dog and pony show that was, but I needed the money) as well as working every summer and holidays/breaks as I could. I also paid cash for an associate's degree and transferred to an inexpensive state school, saving a year of tuition and living expenses that way.
I still graduated with oodles of debt and have been slogging through it while more fortunate (and more free-spirited) friends have moved on to having kids, buying houses, investing their time and money into interesting things, etc... I'll admit some of them do have big loans and are just more comfortable with defaulting on them or stringing them out paying as little as possible. I don't begrudge them these things, I just have to live my life differently.
My conservative family is set on convincing me that this isn't actually good for me, or for the economy, and that any benefit is transitory, and that they hope my taxes get raised. That I should feel bad about this and that I'm skipping out on my accountability for paying for my education.
It's taking a lot of effort, but instead of getting wrapped up trying to rebut them, I'm just going to enjoy this win at face value. I feel like the government has done something that actually benefits me for once.
I'm thankful for everyone that did the work of keeping pressure on the administration to actually follow through on this promise.
I'm thankful I never succumbed to parental pressure to refinance my loans into private ones.
I'm thankful this helps my public servant sisters see the light at the end of the tunnel on their debt.
I'm thankful for all the people that paid off their loans recently and feel burned by this but instead of spreading that miasma have shown up to be happy for the people who are being helped.
I'm thankful that the interest and IBR changes are going to make things less burdensome for students going forward.
I know it doesn't fix system issues with our education system, but I'm going to appreciate what I can here.
posted by jellywerker at 6:16 AM on August 25, 2022 [22 favorites]
My conservative family is set on convincing me that this isn't actually good for me, or for the economy, and that any benefit is transitory, and that they hope my taxes get raised.
I'm really, really sorry to hear that this has been their reaction, jellywerker. Friends with student debt and conservative relatives are reporting extremely similar conversations, generally initiated by said relatives (as in, they spontaneously brought it up with their kids/grandkids/niblings with no prompting from the latter), which (apologies for badmouthing jellywerker's family in front of them), I find absolutely pathetic in its obsessive meanspiritedness. I have relatives like this, though I'm not close with them, and it really does seem like the only emotion they're able to feel after all these years of unhinged talk radio/cable news messaging is screeching, miserable spite.
It also demonstrates that such people are reacting to modest relief in exactly the same way they would to an all-out debt jubilee, so we might as well keep pushing to go all the fuckin way.
posted by TinyChicken at 6:36 AM on August 25, 2022 [13 favorites]
I'm really, really sorry to hear that this has been their reaction, jellywerker. Friends with student debt and conservative relatives are reporting extremely similar conversations, generally initiated by said relatives (as in, they spontaneously brought it up with their kids/grandkids/niblings with no prompting from the latter), which (apologies for badmouthing jellywerker's family in front of them), I find absolutely pathetic in its obsessive meanspiritedness. I have relatives like this, though I'm not close with them, and it really does seem like the only emotion they're able to feel after all these years of unhinged talk radio/cable news messaging is screeching, miserable spite.
It also demonstrates that such people are reacting to modest relief in exactly the same way they would to an all-out debt jubilee, so we might as well keep pushing to go all the fuckin way.
posted by TinyChicken at 6:36 AM on August 25, 2022 [13 favorites]
A high school friend (a largely liberal dude who now lives in Atlanta) suggests another way to respond to those objecting to the relief: ask if they feel the same about how a person can write off the ENTIRE cost of a private jet (14-40M purchase price, 2.5M annually for maintenance, staff, etc) as long as they claim to use said jet "mostly for business purposes".
posted by EmpressCallipygos at 6:44 AM on August 25, 2022 [7 favorites]
posted by EmpressCallipygos at 6:44 AM on August 25, 2022 [7 favorites]
Just got off the phone with my loan servicer Great Lakes to talk about the refund Nelson mentioned above for the payments I made to fully pay off my loan during the covid pause (one hour call, 45min on hold). The nice lady was unsure at first ("we're still waiting for clear guidance on some things) but then verified the following:
1. The payments I made during the covid pause (March 13, 2020 to when I paid off the loan a few months ago) are indeed fully refundable as the total is under $10,000.
2. They have to re-open the loan to refund the money, which should hit my bank account within 30-45 days.
3. Once Great Lakes gets their debt relief money from the feds they'll close the loan and send me a notice that it is once again closed. She was not sure when that would happen and gave more "Things are still in flux we're waiting on specific guidance" talk, which is understandable but the uncertainty is a bit unsettling.
4. If there's a gap between re-opening the loan and the feds sending Great Lakes the relief money, I won't have to make payments until Jan 1st.
5. I had previously been ahead on my payments by many months. In the event that the government doesn't send Great Lakes the money before the pause ends on Jan 1,2023, the nice lady was unsure if I'd still be considered ahead on my payments, but thought it was likely. Hopefully it won't come to that.
If other folks in a similar situation have spoken with their loan servicer, I'd love to hear what you were told.
Thanks again to Nelson for alerting me to this unexpected windfall. Even before I knew about it, I was delighted to see the relief for others and had zero resentment about paying off my loan earlier this year, but this has certainly made my week. I hesitated before re-opening the loan since I'm generally wary of bureaucracy and this involves two of them, but I'm trusting that things will work out. If they don't, I imagine the worst that will be needed is that I'll have to pay back the refund, so I'm not gonna touch any refund I may receive until I get notice that the loan is again closed.
posted by mediareport at 6:55 AM on August 25, 2022 [13 favorites]
1. The payments I made during the covid pause (March 13, 2020 to when I paid off the loan a few months ago) are indeed fully refundable as the total is under $10,000.
2. They have to re-open the loan to refund the money, which should hit my bank account within 30-45 days.
3. Once Great Lakes gets their debt relief money from the feds they'll close the loan and send me a notice that it is once again closed. She was not sure when that would happen and gave more "Things are still in flux we're waiting on specific guidance" talk, which is understandable but the uncertainty is a bit unsettling.
4. If there's a gap between re-opening the loan and the feds sending Great Lakes the relief money, I won't have to make payments until Jan 1st.
5. I had previously been ahead on my payments by many months. In the event that the government doesn't send Great Lakes the money before the pause ends on Jan 1,2023, the nice lady was unsure if I'd still be considered ahead on my payments, but thought it was likely. Hopefully it won't come to that.
If other folks in a similar situation have spoken with their loan servicer, I'd love to hear what you were told.
Thanks again to Nelson for alerting me to this unexpected windfall. Even before I knew about it, I was delighted to see the relief for others and had zero resentment about paying off my loan earlier this year, but this has certainly made my week. I hesitated before re-opening the loan since I'm generally wary of bureaucracy and this involves two of them, but I'm trusting that things will work out. If they don't, I imagine the worst that will be needed is that I'll have to pay back the refund, so I'm not gonna touch any refund I may receive until I get notice that the loan is again closed.
posted by mediareport at 6:55 AM on August 25, 2022 [13 favorites]
So like, if you consolidated undergrad and grad loans together... what happens? I definitely have 10 years of payments. Do I just say "prove it's grad debt?" Ugh.
posted by rhymedirective at 7:21 AM on August 25, 2022
posted by rhymedirective at 7:21 AM on August 25, 2022
yes it isn't fair to give a bunch of money to the middle-middle class at the expense of poorer people without college debt
Can we stop repeating this talking point, please? It's been established that the people with the absolute worst economic outcomes from taking loans for college are the poor ones who got hustled into predatory for-profit schools or were unable to finish (or both!), who ended up with a low-value credential or none at all. Their absolute debt might be low, but if your earnings potential is also very low, the burden can be completely crushing. This is not a tiny group, and $10K forgiveness will have a huge impact on them.
posted by praemunire at 7:22 AM on August 25, 2022 [34 favorites]
Can we stop repeating this talking point, please? It's been established that the people with the absolute worst economic outcomes from taking loans for college are the poor ones who got hustled into predatory for-profit schools or were unable to finish (or both!), who ended up with a low-value credential or none at all. Their absolute debt might be low, but if your earnings potential is also very low, the burden can be completely crushing. This is not a tiny group, and $10K forgiveness will have a huge impact on them.
posted by praemunire at 7:22 AM on August 25, 2022 [34 favorites]
Of course that's true but a perfectly progressive plan would give those people more relief and of course would also transfer wealth to the very poorest who don't have degrees or part-degrees at all. I think this is a great step forward overall but it isn't true that there's no conceivable progressive criticism on an equity basis.
Any transfer which isn't exactly calibrated to wealth is going to have some "off-target" effects like this. That's not a reason not to do it, especially given the constraints of Biden's discretionary power. The Democrats have frequently been criticised and rightly so for taking an attitude of "we cannot do the perfect thing, therefore we will do... nothing" and it is great to see them charging ahead with action. That doesn't mean that it's illegitimate to point out ways in which this good and correct action isn't a perfect one.
posted by atrazine at 7:53 AM on August 25, 2022 [4 favorites]
Any transfer which isn't exactly calibrated to wealth is going to have some "off-target" effects like this. That's not a reason not to do it, especially given the constraints of Biden's discretionary power. The Democrats have frequently been criticised and rightly so for taking an attitude of "we cannot do the perfect thing, therefore we will do... nothing" and it is great to see them charging ahead with action. That doesn't mean that it's illegitimate to point out ways in which this good and correct action isn't a perfect one.
posted by atrazine at 7:53 AM on August 25, 2022 [4 favorites]
Thanks for that writeup, mediareport! I hope the refund works out for you. It seems like good policy to me.
Now that we've had a day to celebrate the jubilee I'm back to pessimism, wondering if it will actually get implemented. And when; it seems possible it will get mired in lawsuits. The Biden administration put some thought into legal justification so it's not just a random executive decree. The NYTimes this morning editorializes:
Now that we've had a day to celebrate the jubilee I'm back to pessimism, wondering if it will actually get implemented. And when; it seems possible it will get mired in lawsuits. The Biden administration put some thought into legal justification so it's not just a random executive decree. The NYTimes this morning editorializes:
There is still some uncertainty about whether the plan will be implemented. Biden is enacting it through executive action because it seems to lack the support to pass in Congress, and opponents may challenge it in court.posted by Nelson at 8:14 AM on August 25, 2022 [1 favorite]
“Let the lawsuits begin over presidential authority,” Robert Kelchen of the University of Tennessee predicted. “I wouldn’t count on forgiveness happening for a while, and it may go to the Supreme Court.”
Personally, I am just so freaking happy to see this. There are ways in which it's less than ideal, but on the whole, it's sending a bunch of money to generally the right place. It's a huge relief after the years of tax cuts and PPP funding that went upwards only, which was just revolting to see. My money stats put me in the top few percent, so this *is* my money going places, and I care about where it goes. So, so happy to read the stories today.
My biggest "but" is as I wrote above, the structural problems with higher-ed funding that mean this problem starts over again immediately. I've been in higher ed all my adult life, and it's just been stunning to watch the evolution from expensive-but-within-reach numbers to utterly unimaginable "costs" that are dealt by stunning, crippling debt, over my lifetime. And this is without considering the evolution of the separate branch of "higher ed" that really is only just predatory, like ITT.
I ran up some loans in the mid-90s, but was able to pay them off back when the combination of {rent, life cost, grad student /postdoc paycheck} still came out do-able. It's just not now.
So, so glad to see this. We'll look back in 5 years on this as a landmark event, I really think. There were ways I wasn't a big fan of Biden (cough, cough, Anita Hill) but he's come through, solidly.
posted by Dashy at 8:30 AM on August 25, 2022 [5 favorites]
My biggest "but" is as I wrote above, the structural problems with higher-ed funding that mean this problem starts over again immediately. I've been in higher ed all my adult life, and it's just been stunning to watch the evolution from expensive-but-within-reach numbers to utterly unimaginable "costs" that are dealt by stunning, crippling debt, over my lifetime. And this is without considering the evolution of the separate branch of "higher ed" that really is only just predatory, like ITT.
I ran up some loans in the mid-90s, but was able to pay them off back when the combination of {rent, life cost, grad student /postdoc paycheck} still came out do-able. It's just not now.
So, so glad to see this. We'll look back in 5 years on this as a landmark event, I really think. There were ways I wasn't a big fan of Biden (cough, cough, Anita Hill) but he's come through, solidly.
posted by Dashy at 8:30 AM on August 25, 2022 [5 favorites]
There are two kinds of people who are upset about this, and ranting about "unfairness" and "unconstitutionality" and "deadbeats" on social media:
1) Those who seethe when a dime of government money goes to anyone who isn't specifically them, but whose wrath redoubles when it goes to people whom they have deemed Particularly Not Worthy of such aid.
2) Those who seethe when they are reminded that the government has a single dime to spend on anything.
There is no making either group happy, so objections noted and discarded.
The "deadbeat" label angers me, as it ignores the fact that many people worked their fingers to the bone AND took out loans up the ying-yang to afford modern tuition rates. Also, that it's coming from devout fans of an orange blob notorious for never paying out on any obligations unless at metaphorical gunpoint, and who's a familiar face in bankruptcy courts.
posted by delfin at 8:34 AM on August 25, 2022 [10 favorites]
1) Those who seethe when a dime of government money goes to anyone who isn't specifically them, but whose wrath redoubles when it goes to people whom they have deemed Particularly Not Worthy of such aid.
2) Those who seethe when they are reminded that the government has a single dime to spend on anything.
There is no making either group happy, so objections noted and discarded.
The "deadbeat" label angers me, as it ignores the fact that many people worked their fingers to the bone AND took out loans up the ying-yang to afford modern tuition rates. Also, that it's coming from devout fans of an orange blob notorious for never paying out on any obligations unless at metaphorical gunpoint, and who's a familiar face in bankruptcy courts.
posted by delfin at 8:34 AM on August 25, 2022 [10 favorites]
This forum is sure a lot different than my other daily haunt.
Over there they are crying little baby tears about how plumbers will be forced to shoulder the "burden" of this plan. They're also saying it will supercharge inflation and bankrupt the government.
I tried pointing out to them what my 23-year old daughter told me: "We've gone 2 years without making any payments on our loans and it's not as if the government is falling apart because of it."
I also pointed out that whenever we increase military spending we don't hear these endless choruses about "HOW ARE WE GONNA PAY FOR IT??"
posted by drstrangelove at 8:45 AM on August 25, 2022 [19 favorites]
Over there they are crying little baby tears about how plumbers will be forced to shoulder the "burden" of this plan. They're also saying it will supercharge inflation and bankrupt the government.
I tried pointing out to them what my 23-year old daughter told me: "We've gone 2 years without making any payments on our loans and it's not as if the government is falling apart because of it."
I also pointed out that whenever we increase military spending we don't hear these endless choruses about "HOW ARE WE GONNA PAY FOR IT??"
posted by drstrangelove at 8:45 AM on August 25, 2022 [19 favorites]
My husbands loans are runaway (or, maybe, were runaway? Depending on the specifics of how they are changing interest charged on the loans?) and we owe something like half a million bucks for his law degree and owe more every year despite paying monthly. (He makes less as an attorney than I do as a secretary so we are well within the cutoff - we'd be within the cutoff if it was $125k for the household). So it'll never be paid off, so we just don't worry about it and just make the minimum payment. That payment going down to some weighted average between his undergrad and grad-level loans will help us out a bit. Maybe we'll be able to afford a second car, or pay more towards retirement (which we are very behind on). The big boon for our house is one of our housemates, a public school teacher for special needs children, will probably be able to discharge all of her debt now.
posted by joannemerriam at 8:50 AM on August 25, 2022 [9 favorites]
posted by joannemerriam at 8:50 AM on August 25, 2022 [9 favorites]
Are Parent Plus loans eligible?
Yes. Parent Plus loans — federal loans taken out by parents to pay for their children’s education — are eligible for the $10,000 in cancellation under the White House plan, subject to the income thresholds.
posted by oceano at 1:49 AM on August 25
There is (or was as of late last night on the west coast) some confusion on this, even apparently within the Washington Post who was/is the only outlet reporting on this. This comment thread from a Washington Post social media person on r/StudentLoans seems to indicate that at least some reporter at the Washington Post believes that graduate student loans are eligible for the extra $10k forgiveness from having Pell Grants in college. There is also this tweet from one of the authors of the Washington Post article you quoted.
posted by flamk at 9:13 AM on August 25, 2022
Yes. Parent Plus loans — federal loans taken out by parents to pay for their children’s education — are eligible for the $10,000 in cancellation under the White House plan, subject to the income thresholds.
posted by oceano at 1:49 AM on August 25
There is (or was as of late last night on the west coast) some confusion on this, even apparently within the Washington Post who was/is the only outlet reporting on this. This comment thread from a Washington Post social media person on r/StudentLoans seems to indicate that at least some reporter at the Washington Post believes that graduate student loans are eligible for the extra $10k forgiveness from having Pell Grants in college. There is also this tweet from one of the authors of the Washington Post article you quoted.
posted by flamk at 9:13 AM on August 25, 2022
yes it isn't fair to give a bunch of money to the middle-middle class at the expense of poorer people without college debt
I don't even know what this is supposed to mean. The poor aren't being taxed more because of this. Their services aren't being cut. Nothing's changing. How is this at their expense, in any sense?
posted by Pater Aletheias at 9:18 AM on August 25, 2022 [19 favorites]
I don't even know what this is supposed to mean. The poor aren't being taxed more because of this. Their services aren't being cut. Nothing's changing. How is this at their expense, in any sense?
posted by Pater Aletheias at 9:18 AM on August 25, 2022 [19 favorites]
Oops. In my comment above I copied and pasted the paragraph on Parent Plus loans but instead meant to copy the paragraph on graduate student loans... Hope Im not sowing confusion out there! My apologies!
posted by flamk at 9:21 AM on August 25, 2022
posted by flamk at 9:21 AM on August 25, 2022
Katelyn Burns Twitter:
if you have a problem with the student loan cancellation because you already paid off your loans, just pretend its a tax cut for the rich that you also never got but mysteriously didn't complain about.
posted by soundguy99 at 10:33 AM on August 25, 2022 [35 favorites]
if you have a problem with the student loan cancellation because you already paid off your loans, just pretend its a tax cut for the rich that you also never got but mysteriously didn't complain about.
posted by soundguy99 at 10:33 AM on August 25, 2022 [35 favorites]
A remarkably bad take response from Congresman Jim Banks of Indiana
Student loan forgiveness undermines one of our military’s greatest recruitment tools at a time of dangerously low enlistments.Also this 1970 quote from Roger Freeman, a Hoover Institute economist and Nixon advisor, is making the rounds
We are in danger of producing an educated proletariat. That’s dynamite! We have to be selective on who we allow to go through higher education.posted by Nelson at 11:33 AM on August 25, 2022 [19 favorites]
An actual argument against forgiveness from a GOP representative:
posted by NoxAeternum at 11:37 AM on August 25, 2022 [9 favorites]
Student loan forgiveness undermines one of our military’s greatest recruitment tools at a time of dangerously low enlistments.Just revolting.
posted by NoxAeternum at 11:37 AM on August 25, 2022 [9 favorites]
I don't even know what this is supposed to mean. The poor aren't being taxed more because of this. Their services aren't being cut. Nothing's changing. How is this at their expense, in any sense?
Pretend for a minute that the federal budget is zero sum: any money we give to one person is money we can't give to another. So if we weren't handing out debt relief to the educated, we'd have money available to fix urban schools,bomb rebuild Afghanistan, fight inflation, or whatever policy you think is more deserving.
Thats the sense in which it is said to be at the expense of the poor: an expectation that this money could have gone to them instead.
posted by pwnguin at 11:44 AM on August 25, 2022 [1 favorite]
Pretend for a minute that the federal budget is zero sum: any money we give to one person is money we can't give to another. So if we weren't handing out debt relief to the educated, we'd have money available to fix urban schools,
Thats the sense in which it is said to be at the expense of the poor: an expectation that this money could have gone to them instead.
posted by pwnguin at 11:44 AM on August 25, 2022 [1 favorite]
PPP funding that went upwards only
I get that a lot of PPP money went to shit purposes and outright fraud, but I know a fair number of people for whom it was a necessary lifeline for themselves and their employees. But then I know a fair few people with undercapitalized businesses that would have been completely fucked seeing their income going to zero for several months.
posted by wierdo at 11:54 AM on August 25, 2022 [6 favorites]
I get that a lot of PPP money went to shit purposes and outright fraud, but I know a fair number of people for whom it was a necessary lifeline for themselves and their employees. But then I know a fair few people with undercapitalized businesses that would have been completely fucked seeing their income going to zero for several months.
posted by wierdo at 11:54 AM on August 25, 2022 [6 favorites]
Pretend for a minute that the federal budget is zero sum: any money we give to one person is money we can't give to another. So if we weren't handing out debt relief to the educated, we'd have money available to fix urban schools, bomb rebuild Afghanistan, fight inflation, or whatever policy you think is more deserving.
Thats the sense in which it is said to be at the expense of the poor: an expectation that this money could have gone to them instead.
I'm glad you started your comment the way you did. This is indeed nothing more than a game of pretend.
posted by Artifice_Eternity at 12:07 PM on August 25, 2022 [15 favorites]
Thats the sense in which it is said to be at the expense of the poor: an expectation that this money could have gone to them instead.
I'm glad you started your comment the way you did. This is indeed nothing more than a game of pretend.
posted by Artifice_Eternity at 12:07 PM on August 25, 2022 [15 favorites]
Pretend for a minute that the federal budget is zero sum: any money we give to one person is money we can't give to another.
To what end? When, in reality, if the government needs more money to spend it simply adjusts a spreadsheet and 'creates' it by one mechanism or another.
posted by snuffleupagus at 12:29 PM on August 25, 2022
To what end? When, in reality, if the government needs more money to spend it simply adjusts a spreadsheet and 'creates' it by one mechanism or another.
posted by snuffleupagus at 12:29 PM on August 25, 2022
NoxAeternum, I know a soldier who gets downright irritable at the idea of a poverty draft. The volunteer army is picky about who it accepts, and it's mostly middle class people.
posted by Nancy Lebovitz at 12:52 PM on August 25, 2022
posted by Nancy Lebovitz at 12:52 PM on August 25, 2022
if you have a problem with the student loan cancellation because you already paid off your loans, just pretend its a tax cut for the rich that you also never got but mysteriously didn't complain about.
My version of this is that if you have paid off your loans you're either rich or you didn't live almost all of your life during the current ongoing post-millennial apocalyptic shitshow we have gifted the current crop of young adults with. So you already got much bigger gifts than $10-20K and some interest payment relief.
posted by srboisvert at 1:32 PM on August 25, 2022 [4 favorites]
My version of this is that if you have paid off your loans you're either rich or you didn't live almost all of your life during the current ongoing post-millennial apocalyptic shitshow we have gifted the current crop of young adults with. So you already got much bigger gifts than $10-20K and some interest payment relief.
posted by srboisvert at 1:32 PM on August 25, 2022 [4 favorites]
Do they understand how damaging it would have been for Biden to break this campaign promise?
***
Second, and far more importantly, this is what he ran on. If people voted for him they either believed: "he said he will do this specific thing" or "I know he is lying about this thing but I will vote for him anyway". The second is bad because it's not a good recipe for long term voter engagement. The first means that people voted, having already heard (or had the opportunity to hear) the economic arguments against this as a policy.
You can't campaign on something, have economists say at the time that this is flawed policy, win the election and then "discover" what the economists have been saying! That's bullshit. This is what people voted for. Maybe next time he can campaign on a more thorough policy and win on that basis and then people can have that one as well.
To be clear, this is not what Biden ran on. He ran on, among other things, forgiving "all undergraduate tuition-related federal student debt from two- and four year public colleges and universities and private HBCUs and MSIS for debt-holders earning up to $125,000."
This is much, much, much better than nothing, but it is not what he promised to do.
posted by Gadarene at 2:04 PM on August 25, 2022 [2 favorites]
***
Second, and far more importantly, this is what he ran on. If people voted for him they either believed: "he said he will do this specific thing" or "I know he is lying about this thing but I will vote for him anyway". The second is bad because it's not a good recipe for long term voter engagement. The first means that people voted, having already heard (or had the opportunity to hear) the economic arguments against this as a policy.
You can't campaign on something, have economists say at the time that this is flawed policy, win the election and then "discover" what the economists have been saying! That's bullshit. This is what people voted for. Maybe next time he can campaign on a more thorough policy and win on that basis and then people can have that one as well.
To be clear, this is not what Biden ran on. He ran on, among other things, forgiving "all undergraduate tuition-related federal student debt from two- and four year public colleges and universities and private HBCUs and MSIS for debt-holders earning up to $125,000."
This is much, much, much better than nothing, but it is not what he promised to do.
posted by Gadarene at 2:04 PM on August 25, 2022 [2 favorites]
The best response responses to those crying "inflation" include this (via Heather Cox Richardson):
White House National Economic Council Director Bharat Ramamurti told reporters today that “87% of the dollars…are going to people making under $75,000 a year, and 0 dollars, 0%, are going to anybody making over $125,000 in individual income.” He told them it was “instructive” to compare this plan “to what the Republican tax bill did in 2017. It’s basically the reverse. Fifteen percent of the benefits went to people making under $75,000 a year, and 85% went to people making over $75,000 a year. And if you zoom in even more on that, people making over $250,000 a year got nearly half of the benefits of the GOP tax bill and are getting 0 dollars under our [plan].”posted by CheeseDigestsAll at 2:17 PM on August 25, 2022 [18 favorites]
White House Twitter going after the fascists.
I don’t care if it changes anything, I’m just happy they’re punching back for once.
posted by curious nu at 3:31 PM on August 25, 2022 [33 favorites]
I don’t care if it changes anything, I’m just happy they’re punching back for once.
posted by curious nu at 3:31 PM on August 25, 2022 [33 favorites]
I’m just happy they’re punching back for once
More of this, please.
posted by They sucked his brains out! at 4:26 PM on August 25, 2022 [9 favorites]
More of this, please.
posted by They sucked his brains out! at 4:26 PM on August 25, 2022 [9 favorites]
So when are the people actually responsible for the predatory pricing, predatory lending and fraud, at a massive scale, endemic in higher ed, going to prison? They just get to walk away?
posted by nfultz at 5:42 PM on August 25, 2022 [3 favorites]
posted by nfultz at 5:42 PM on August 25, 2022 [3 favorites]
Anecdata: I paid off my student loans a couple decades ago, and it was absolutely a hardship. I am absolutely thrilled that at least some people won't have to go through what I went through!
posted by Greg_Ace at 9:03 PM on August 25, 2022 [3 favorites]
posted by Greg_Ace at 9:03 PM on August 25, 2022 [3 favorites]
So when are the people actually responsible for the predatory pricing, predatory lending and fraud, at a massive scale, endemic in higher ed, going to prison
You mean the political appointees running the public universities? Pretty much never. Only time I can recall prison time was the Penn State fiasco.
posted by pwnguin at 9:09 PM on August 25, 2022 [1 favorite]
You mean the political appointees running the public universities? Pretty much never. Only time I can recall prison time was the Penn State fiasco.
posted by pwnguin at 9:09 PM on August 25, 2022 [1 favorite]
The inflation thing is largely stupid anyway. This isn't going to drive inflation any more than the pause on payments has, at least in the short term. And over recent months inflation has been easing, both due to the easing of supply chain issues and the (probably slightly excessive) increases in the federal funds rate.
It's just yet another example of right wingers being completely disingenuous, even leaving aside the (also infuriating) hypocrisy.
posted by wierdo at 9:12 PM on August 25, 2022 [3 favorites]
It's just yet another example of right wingers being completely disingenuous, even leaving aside the (also infuriating) hypocrisy.
posted by wierdo at 9:12 PM on August 25, 2022 [3 favorites]
The White House Twitter responses are a balm to my soul. Of course, seek by how much money members of Congress got away with from PPP is utterly infuriating. Their income was under no threat, and had the program been anything other than the naked grifting opportunity it was (and yes, upthread, it was mentioned there were *some* people it genuinely helped), there would be some way to charge them with something, anything. Absolutely utter horseshit that Madge got $186k tax free, then complains that some people might receive life changing loan forgiveness.
But hey, that’s the thing, they don’t want people’s lives changing for the better unless it’s their people.
posted by Ghidorah at 10:56 PM on August 25, 2022 [5 favorites]
But hey, that’s the thing, they don’t want people’s lives changing for the better unless it’s their people.
posted by Ghidorah at 10:56 PM on August 25, 2022 [5 favorites]
Only time I can recall prison time was the Penn State fiasco.
Several of the folks from Michigan State also got some prison time, until a reactionary appeals judge was horrified at the idea that her social peers would be held accountable and tossed the convictions.
posted by NoxAeternum at 1:42 AM on August 26, 2022 [2 favorites]
Several of the folks from Michigan State also got some prison time, until a reactionary appeals judge was horrified at the idea that her social peers would be held accountable and tossed the convictions.
posted by NoxAeternum at 1:42 AM on August 26, 2022 [2 favorites]
Also be sure not to miss the awesome “Freedom Dreams” documentary that dropped yesterday about Black women’s leadership in the fight for debt cancellation
Yes, wonderful work they've done. A comprehensive reparations program for black descendants of people who endured slavery and Jim Crow in the United States should be the next focus in the fight for racial equity. This program should receive trillions of dollars in federal funds (at least), and of course, should directly benefit only those Americans who are black and whose ancestors were racially oppressed within the borders of the United States.
Let's honor black women leaders.
posted by cinchona at 7:31 AM on August 26, 2022 [2 favorites]
Yes, wonderful work they've done. A comprehensive reparations program for black descendants of people who endured slavery and Jim Crow in the United States should be the next focus in the fight for racial equity. This program should receive trillions of dollars in federal funds (at least), and of course, should directly benefit only those Americans who are black and whose ancestors were racially oppressed within the borders of the United States.
Let's honor black women leaders.
posted by cinchona at 7:31 AM on August 26, 2022 [2 favorites]
For those who don't read Twitter posts or missed curious nu's link above, here's a recap of Republican Congressional Representatives who got hundreds of thousands - or millions - of dollars of PPP loan forgiveness, from Heather Cox Richardson's Letters from an American:
posted by kristi at 10:22 AM on August 26, 2022 [4 favorites]
... after a day of Republican congress members railing against yesterday’s educational loan forgiveness of up to $20,000 for Pell Grant recipients and $10,000 for others, the White House tweeted a thread of those members alongside the amount of Paycheck Protection Program (PPP) money those individuals were forgiven.I didn't even know until today that actual Congresspersons got PPP loans forgiven. Those gigantic amounts are amazing.
Representative Marjorie Taylor Greene (R-GA) said: “For our government just to say ok your debt is completely forgiven.. it’s completely unfair.” Greene had $183,504 in PPP loans forgiven.
Representative Vern Buchanan (R-FL) said: “Biden’s reckless, unilateral student loan giveaway is unfair to the 87 percent of Americans without student loan debt and those who played by the rules.” Buchanan had more than $2.3 million in PPP loans forgiven.
Representative Markwayne Mullin (R-OK) said: “We do not need farmers and ranchers, small business owners, and teachers in Oklahoma paying the debts of Ivy League lawyers and doctors across the U.S.” Mullin had more than $1.4 million in PPP loans forgiven.
Representative Kevin Hern (R-OK) said: “To recap, in the last two weeks, the ‘Party of the People’ has supercharged the IRS to go after working-class Americans, raised their taxes, and forced them to pay for other people's college degrees.” Hern had more than $1 million in PPP loans forgiven.
Representative Mike Kelly (R-PA) said: “Asking plumbers and carpenters to pay off the loans of Wall Street advisors and lawyers isn’t just unfair. It’s also bad policy.” Kelly had $987,237 in PPP loans forgiven.
Representative Matt Gaetz (R-FL) said: Everyone knows that in a $60 Billion+ European land war, it's always the last $3 Billion that kicks in the door….” Gaetz had $482,321 in PPP loans forgiven.
posted by kristi at 10:22 AM on August 26, 2022 [4 favorites]
A Tweet I saw said that comparing PPP loans and student debt was like apples and oranges because "PPP loans were issued following the pandemic, which was a natural disaster - so this was more like disaster relief".
I retorted that "people who are working for someone else to pay off student loans can now start businesses of their own - so the student loan forgiveness is more like small business investment."
To date there has been no response.
posted by EmpressCallipygos at 10:42 AM on August 26, 2022 [8 favorites]
I retorted that "people who are working for someone else to pay off student loans can now start businesses of their own - so the student loan forgiveness is more like small business investment."
To date there has been no response.
posted by EmpressCallipygos at 10:42 AM on August 26, 2022 [8 favorites]
I didn't even know until today that actual Congresspersons got PPP loans forgiven.
I didn't know Congresspersons got PPP loans. The public should know who did, not just who got them forgiven.
posted by Gelatin at 10:45 AM on August 26, 2022 [2 favorites]
I didn't know Congresspersons got PPP loans. The public should know who did, not just who got them forgiven.
posted by Gelatin at 10:45 AM on August 26, 2022 [2 favorites]
PPP loan information is public. Also worth noting these loans probably paid for employees of businesses, rent on offices and storefronts, etc. It's not like Gaetz personally used the $482,321 to pay off teenage girls. (Well, probably not.)
It's still a loan that was forgiven and these Republican whiners are hypocrites and it's delightful seeing White House go hard on social media.
posted by Nelson at 11:03 AM on August 26, 2022 [3 favorites]
It's still a loan that was forgiven and these Republican whiners are hypocrites and it's delightful seeing White House go hard on social media.
posted by Nelson at 11:03 AM on August 26, 2022 [3 favorites]
It's not like Gaetz personally used the $482,321 to pay off teenage girls.
As Lionel said in the insane Peter Jackson movie Brain Dead / Dead Alive, "not all of it!"
posted by Gelatin at 11:39 AM on August 26, 2022 [2 favorites]
As Lionel said in the insane Peter Jackson movie Brain Dead / Dead Alive, "not all of it!"
posted by Gelatin at 11:39 AM on August 26, 2022 [2 favorites]
Also worth noting these loans probably paid for employees of businesses, rent on offices and storefronts, etc.
I mean, I'm sure that's how they reported it. But I really doubt it (for most of the dough), especially with these folks.
posted by Glinn at 11:47 AM on August 26, 2022 [2 favorites]
I mean, I'm sure that's how they reported it. But I really doubt it (for most of the dough), especially with these folks.
posted by Glinn at 11:47 AM on August 26, 2022 [2 favorites]
PPP loan information is public. Also worth noting these loans probably paid for employees of businesses, rent on offices and storefronts, etc. It's not like Gaetz personally used the $482,321 to pay off teenage girls. (Well, probably not.)
Most Of The $800 Billion In PPP Loans Did Not Go To Workers, New Study Finds
A new National Bureau of Economic Research study found that 66% to 77% of the money from the program did not go to paychecks. Instead, most of money ended up in the hands of business owners and shareholders.
posted by ActingTheGoat at 12:05 PM on August 26, 2022 [13 favorites]
Most Of The $800 Billion In PPP Loans Did Not Go To Workers, New Study Finds
A new National Bureau of Economic Research study found that 66% to 77% of the money from the program did not go to paychecks. Instead, most of money ended up in the hands of business owners and shareholders.
posted by ActingTheGoat at 12:05 PM on August 26, 2022 [13 favorites]
As much as the usual bad-faith suspects are trying to stoke class envy about the loan forgiveness, the increasingly obvious fact that the wealthy just helped themselves to yet another taxpayer-funded bailout makes me feel like a sucker for playing by the rules and not holding my hand out too.
Which is, of course, part of the point -- Republicans insist on a world with one set of rules and standards for the rich (and white, and christian) and one for everyone else.
But they still aren't brave enough to say so explicitly, because they know they can't sell it.
posted by Gelatin at 12:15 PM on August 26, 2022 [3 favorites]
Which is, of course, part of the point -- Republicans insist on a world with one set of rules and standards for the rich (and white, and christian) and one for everyone else.
But they still aren't brave enough to say so explicitly, because they know they can't sell it.
posted by Gelatin at 12:15 PM on August 26, 2022 [3 favorites]
Conservative media: Biden just announced debt relief for a core demo! We must demonize this.
Graphic designer with $20K in student loans: Say no more, fam
posted by Rhaomi at 12:24 PM on August 26, 2022 [3 favorites]
Graphic designer with $20K in student loans: Say no more, fam
posted by Rhaomi at 12:24 PM on August 26, 2022 [3 favorites]
But they still aren't brave enough to say so explicitly, because they know they can't sell it.
On the other side, there are lessons here from repeated — failed — attempts by Republicans to gut the ACA, if Dems are brave enough to learn them. Tuition forgiveness and rate hike limits could be like that, if codified into thoughtful laws.
posted by They sucked his brains out! at 12:54 PM on August 26, 2022 [3 favorites]
On the other side, there are lessons here from repeated — failed — attempts by Republicans to gut the ACA, if Dems are brave enough to learn them. Tuition forgiveness and rate hike limits could be like that, if codified into thoughtful laws.
posted by They sucked his brains out! at 12:54 PM on August 26, 2022 [3 favorites]
Has this been posted yet? List of schools whose loans are being completely cancelled: twitter image.
posted by curious nu at 1:15 PM on August 26, 2022 [3 favorites]
posted by curious nu at 1:15 PM on August 26, 2022 [3 favorites]
curious nu, my jaw just hit the floor. That’s a long list, but browsing it I saw several handfuls of names I recognize from teevee ads in the 80s and 90s. W O R D
posted by rrrrrrrrrt at 7:02 PM on August 26, 2022 [3 favorites]
posted by rrrrrrrrrt at 7:02 PM on August 26, 2022 [3 favorites]
Some details on how this is going to be implemented: Student loan forgiveness application coming in October, White House says
posted by Nelson at 1:29 PM on August 27, 2022 [3 favorites]
Speaking to reporters, White House National Economic Council deputy director Bharat Ramamurti said the Education Department will release the application for President Biden’s loan forgiveness program in early October. After making successful applications, borrowers should expect to have their loan balances reduced or in some cases fully erased in a month or so. ...So far I've seen no reporting on a serious effort to undermine the policy with a lawsuit. So maybe my pessimism above was unwarranted. I hope so!
Roughly 8 million borrowers, whose income is already on file at the department, will have their loans automatically forgiven without having to apply
posted by Nelson at 1:29 PM on August 27, 2022 [3 favorites]
What If You Just Paid Off Your Federal Student Loans? Or Paid Them Down? Some details on refunds for payments made after March 2020.
But what we do not know yet is how Biden’s student debt relief plan will impact those payments made during COVID. Buchanan said the date that the government chooses to look at loan balances for the forgiveness plan could potentially impact whether or not requesting that refund could maximize any loan forgiveness if you are eligible for one.posted by Nelson at 2:00 PM on August 27, 2022 [1 favorite]
I have seen explainers about Baumol's price disease, or administrative bloat, or regulatory burden, just to name the factors I remember reading about. But I haven't seen any about how those factors could be reduced. I haven't seen anyone try to campaign on reducing the cost of college. It just hasn't been part of the conversation, as far as I can tell, for the past ten years.
I'm pretty interested/concerned about what the long-term plan is, as well, although I'm pleased the Democrats have finally managed to actually do something that's likely to visibly improve life for some of their constituents in the meantime.
I'm hopeful that the debt relief will help move the conversation on controlling college costs forward. Because, yeah, there does seem to be a risk that writing off $10k of debt, if the Federal government signals that it might do so in the future, will just cause shitbag colleges to raise tuition even higher, figuring students will be more willing to take on additional debt if there's a chance it'll be forgiven later. That's not a reason not to do it now, but it's a risk of doing it more than just a handful of very unpredictable times, ever.
If it became a repeated thing, and did start to lead to that sort of expectation, as a voter I'd probably start to get a bit salty. Hard to get enthused about a money pump that sends $500M or so in tax revenue to the higher ed industry every time you spin the wheel. And I doubt I'm alone in that feeling, which is why I hope the Democrats are smart enough not to do it, and the pressure will mount for real changes that produce long-term cost control.
My personal feeling is that eventually we'll have to tie access to Federal loan dollars (at least at preferential interest rates like 0%) to longitudinal job and salary data. This will probably displease quite a few people, and it's likely to cause real pain to fields that have (knowingly or not) benefited from students' overvaluation and the resulting supply glut. Some oxen are going to get gored. We should do it fairly, but do it anyway.
(The fairest way I've come up with, would be to separate schools (maybe programs) up into groups by clear factors like total cost, accreditor, and type of degree granted—e.g. "High-Cost, MSCHE, Baccalaureate-granting" or "Low-Cost, SACSCOC, Associate-granting"—and then set the student loan interest rate based on the repayment rate of loans previously issued to that group's students. Schools with low repayment rates would lead to higher interest rates for their type of school, and probably get significant pressure from peer institutions and accreditors to stop pissing in the bathtub.)
posted by Kadin2048 at 9:09 PM on August 29, 2022 [1 favorite]
I'm pretty interested/concerned about what the long-term plan is, as well, although I'm pleased the Democrats have finally managed to actually do something that's likely to visibly improve life for some of their constituents in the meantime.
I'm hopeful that the debt relief will help move the conversation on controlling college costs forward. Because, yeah, there does seem to be a risk that writing off $10k of debt, if the Federal government signals that it might do so in the future, will just cause shitbag colleges to raise tuition even higher, figuring students will be more willing to take on additional debt if there's a chance it'll be forgiven later. That's not a reason not to do it now, but it's a risk of doing it more than just a handful of very unpredictable times, ever.
If it became a repeated thing, and did start to lead to that sort of expectation, as a voter I'd probably start to get a bit salty. Hard to get enthused about a money pump that sends $500M or so in tax revenue to the higher ed industry every time you spin the wheel. And I doubt I'm alone in that feeling, which is why I hope the Democrats are smart enough not to do it, and the pressure will mount for real changes that produce long-term cost control.
My personal feeling is that eventually we'll have to tie access to Federal loan dollars (at least at preferential interest rates like 0%) to longitudinal job and salary data. This will probably displease quite a few people, and it's likely to cause real pain to fields that have (knowingly or not) benefited from students' overvaluation and the resulting supply glut. Some oxen are going to get gored. We should do it fairly, but do it anyway.
(The fairest way I've come up with, would be to separate schools (maybe programs) up into groups by clear factors like total cost, accreditor, and type of degree granted—e.g. "High-Cost, MSCHE, Baccalaureate-granting" or "Low-Cost, SACSCOC, Associate-granting"—and then set the student loan interest rate based on the repayment rate of loans previously issued to that group's students. Schools with low repayment rates would lead to higher interest rates for their type of school, and probably get significant pressure from peer institutions and accreditors to stop pissing in the bathtub.)
posted by Kadin2048 at 9:09 PM on August 29, 2022 [1 favorite]
* $500 billion, not million. (But what's a couple of orders of magnitude between friends.)
posted by Kadin2048 at 9:21 PM on August 29, 2022
posted by Kadin2048 at 9:21 PM on August 29, 2022
I have seen explainers about Baumol's price disease, or administrative bloat, or regulatory burden, just to name the factors I remember reading about. But I haven't seen any about how those factors could be reduced.
I did a brief, unscientific survey of flagship state schools' cost of attendance pages, the common thread is that 30 percent of the cost is rent. When I last worked for a uni, I recall them advising students consider commuting in from another town because in town vacancy rates were approaching 0 percent. So that's one angle, but given that most students register to vote at their parent's place, and the undersupply benefits land owners who do register to vote, it's not likely to be solved at the local level.
For Baumol, it's about applying technology to increase the performer:audience ratio. Many cherish the small classroom style, but those classes with a couple hundred students in a lecture hall (calculus, psychology, chemistry) are where service departments balance their budget. It's not clear to me that anyone would notice a difference between a 300 student Calc I lecture and a 1000 student one, unless you don't have seating for it. This is basically what those the MOOC startups were about, after all.
Similarly, for administrative bloat, some (much?) of that is fixed costs, so growing the attendance spreads the cost across more credit hours. Challenge here is that many college administrators self-evaluate based on rankings, and the easiest ranking metric to influence is selectivity -- the percentage of applicants you admit. This is a recipe for a high cost, low attendance academia: you process more and more applications, and use the increased ranking to raise prices. To get an idea of how important selectivity is, consider how many people leave associate's degrees off their resume. Community colleges have a "make education affordable" mission and nobody wants to admit going there.
Caveat: I left working for a uni long before COVID so presumably that is driving many many changes out of necessity. It remains to be seen how many changes stick around however.
I haven't seen anyone try to campaign on reducing the cost of college.
In the same way the medical industry lobbies against affordable health care, academia has it's own preferences. You don't win many Democratic primaries promising to reduce headcount, and you don't get superdelegates by cutting the number of university presidents. Which means finding a version of "affordable" that is not low cost.
posted by pwnguin at 9:41 AM on August 30, 2022 [3 favorites]
I did a brief, unscientific survey of flagship state schools' cost of attendance pages, the common thread is that 30 percent of the cost is rent. When I last worked for a uni, I recall them advising students consider commuting in from another town because in town vacancy rates were approaching 0 percent. So that's one angle, but given that most students register to vote at their parent's place, and the undersupply benefits land owners who do register to vote, it's not likely to be solved at the local level.
For Baumol, it's about applying technology to increase the performer:audience ratio. Many cherish the small classroom style, but those classes with a couple hundred students in a lecture hall (calculus, psychology, chemistry) are where service departments balance their budget. It's not clear to me that anyone would notice a difference between a 300 student Calc I lecture and a 1000 student one, unless you don't have seating for it. This is basically what those the MOOC startups were about, after all.
Similarly, for administrative bloat, some (much?) of that is fixed costs, so growing the attendance spreads the cost across more credit hours. Challenge here is that many college administrators self-evaluate based on rankings, and the easiest ranking metric to influence is selectivity -- the percentage of applicants you admit. This is a recipe for a high cost, low attendance academia: you process more and more applications, and use the increased ranking to raise prices. To get an idea of how important selectivity is, consider how many people leave associate's degrees off their resume. Community colleges have a "make education affordable" mission and nobody wants to admit going there.
Caveat: I left working for a uni long before COVID so presumably that is driving many many changes out of necessity. It remains to be seen how many changes stick around however.
I haven't seen anyone try to campaign on reducing the cost of college.
In the same way the medical industry lobbies against affordable health care, academia has it's own preferences. You don't win many Democratic primaries promising to reduce headcount, and you don't get superdelegates by cutting the number of university presidents. Which means finding a version of "affordable" that is not low cost.
posted by pwnguin at 9:41 AM on August 30, 2022 [3 favorites]
Conservative media: Biden just announced debt relief for a core demo! We must demonize this.
Graphic designer with $20K in student loans: Say no more, fam
They keep trying to strike Dark Brandon down, and in the process make him more powerful than they can possibly imagine.
posted by Artifice_Eternity at 2:51 PM on August 31, 2022 [2 favorites]
Graphic designer with $20K in student loans: Say no more, fam
They keep trying to strike Dark Brandon down, and in the process make him more powerful than they can possibly imagine.
posted by Artifice_Eternity at 2:51 PM on August 31, 2022 [2 favorites]
And Mississippi becomes the first GOP-led state to shit in the punch bowl:
posted by NoxAeternum at 8:02 PM on August 31, 2022 [5 favorites]
Mississippi is planning to tax residents' forgiven student loan debt as income, its Department of Revenue confirmed to Bloomberg on Tuesday.Assholes can't provide for their citizens, but they'll happily hurt them.
posted by NoxAeternum at 8:02 PM on August 31, 2022 [5 favorites]
Ugh. Taxing forgiven debt as income is not uncommon but creates a big problem: people with no money suddenly get a big tax bill due on cash they never actually see. Federal law treats student loans specially though, not sure of details but it wouldn't surprise me if forgiveness was already untaxed without any extra laws.
In other punchbowl shit news: Republicans are readying lawsuits to block Biden’s student debt plan.
posted by Nelson at 7:26 AM on September 1, 2022 [1 favorite]
In other punchbowl shit news: Republicans are readying lawsuits to block Biden’s student debt plan.
a number of GOP attorneys general from states including Arizona, Missouri and Texas have met privately to discuss a strategy that could see multiple cases filed in different courts around the country ...All the Republicans need for a political win is to delay the forgiveness and create some political chaos. "See, the Democrats can't do nothing right!" is a cynically easy message to fabricate. I imagine this article is a trial balloon to try to weigh how big the negative blowback would be from doing it.
All of the sources cautioned that no decisions have been made — and as of Thursday morning, no lawsuits appeared to have been filed.
posted by Nelson at 7:26 AM on September 1, 2022 [1 favorite]
If I were Biden, my response to the lawsuits would be to extend the pause out to 2100 or so.
posted by mittens at 8:41 AM on September 1, 2022 [4 favorites]
posted by mittens at 8:41 AM on September 1, 2022 [4 favorites]
“Federal law treats student loans specially though, not sure of details but it wouldn't surprise me if forgiveness was already untaxed without any extra laws.”
I've seen varying info, from an older tax code change that exempts many forgiven student loans from federal taxation, to a more recent limited executive order that exempts forgiven loans due to permanent disability, to an exemption for loans forgiven for public service. And I have definitely read recently that this specific Biden forgiveness will be exempt from federal taxation. I think that can be counted upon; also the public service one. The disability one was, I read, an Obama era executive order and I'm unsure of its current status.
I've been looking into this for a while now, because I'm permanently disabled but I'm unwilling to file for the forgiveness unless I'm guaranteed I won't get a tax bill I couldn't pay — which would be much worse than a student loan I can't pay. If anyone's not clear on this: you don't want to find out you owe the IRS like, say, 20% of the forgiven loan as tax on the "income", depending on your bracket. And it would be taxed as regular income.
I'm all too familar with the fact that forgiven or written-off loans are taxable income. I had a car repossessed in my twenties and didn't pay the balance, the bank wrote it off some years later, and then a couple of years after that, the IRS filed a lien. That all worked out for me okay in the end for other reasons. But it was a nasty surprise. People should know that forgiven/written-off loans are taxable income. Most don't.
So, to the point: individual states may see it as taxable income, regardless of whether the IRS exempts it. We should all be paying close attention to that.
posted by Ivan Fyodorovich at 12:42 PM on September 1, 2022 [4 favorites]
I've seen varying info, from an older tax code change that exempts many forgiven student loans from federal taxation, to a more recent limited executive order that exempts forgiven loans due to permanent disability, to an exemption for loans forgiven for public service. And I have definitely read recently that this specific Biden forgiveness will be exempt from federal taxation. I think that can be counted upon; also the public service one. The disability one was, I read, an Obama era executive order and I'm unsure of its current status.
I've been looking into this for a while now, because I'm permanently disabled but I'm unwilling to file for the forgiveness unless I'm guaranteed I won't get a tax bill I couldn't pay — which would be much worse than a student loan I can't pay. If anyone's not clear on this: you don't want to find out you owe the IRS like, say, 20% of the forgiven loan as tax on the "income", depending on your bracket. And it would be taxed as regular income.
I'm all too familar with the fact that forgiven or written-off loans are taxable income. I had a car repossessed in my twenties and didn't pay the balance, the bank wrote it off some years later, and then a couple of years after that, the IRS filed a lien. That all worked out for me okay in the end for other reasons. But it was a nasty surprise. People should know that forgiven/written-off loans are taxable income. Most don't.
So, to the point: individual states may see it as taxable income, regardless of whether the IRS exempts it. We should all be paying close attention to that.
posted by Ivan Fyodorovich at 12:42 PM on September 1, 2022 [4 favorites]
Federal government signals that it might do so in the future, will just cause shitbag colleges to raise tuition even higher,
Um. This has been happening for decades already.
I can only think that eventually, perhaps already, lowering the cost of college will be cheaper than Uncle Sam servicing all the debt
posted by eustatic at 7:21 PM on September 1, 2022 [2 favorites]
Um. This has been happening for decades already.
I can only think that eventually, perhaps already, lowering the cost of college will be cheaper than Uncle Sam servicing all the debt
posted by eustatic at 7:21 PM on September 1, 2022 [2 favorites]
lowering the cost of college will be cheaper than Uncle Sam servicing all the debt
At least within the public unis, the cycle goes:
0. States budget money to fund their public universities
1. A recession happens, reducing states' income, property and sales tax revenue
2. States -- often obligated by law to keep a balanced budget, and prohibited by federal law from declaring bankruptcy -- cut anything they can from the budget
3. Colleges sees two problems -- the budget cut, but also and increased enrollment as more young people stay in school instead of joining the labor market in a recession
4. Colleges respond by raising tuition, addressing both problems: they make up budget shortfalls and reduce enrollment a bit on the margins
5. (extremely optional): restore funding when the recession is over
6. go to step 1
This had been the playbook since Governor Reagan's era. Making Uncle Sam pay for state universities is basically "fixing" the situation at step 0.
posted by pwnguin at 2:28 PM on September 2, 2022 [2 favorites]
At least within the public unis, the cycle goes:
0. States budget money to fund their public universities
1. A recession happens, reducing states' income, property and sales tax revenue
2. States -- often obligated by law to keep a balanced budget, and prohibited by federal law from declaring bankruptcy -- cut anything they can from the budget
3. Colleges sees two problems -- the budget cut, but also and increased enrollment as more young people stay in school instead of joining the labor market in a recession
4. Colleges respond by raising tuition, addressing both problems: they make up budget shortfalls and reduce enrollment a bit on the margins
5. (extremely optional): restore funding when the recession is over
6. go to step 1
This had been the playbook since Governor Reagan's era. Making Uncle Sam pay for state universities is basically "fixing" the situation at step 0.
posted by pwnguin at 2:28 PM on September 2, 2022 [2 favorites]
I did a brief, unscientific survey of flagship state schools' cost of attendance pages, the common thread is that 30 percent of the cost is rent. When I last worked for a uni, I recall them advising students consider commuting in from another town because in town vacancy rates were approaching 0 percent.
Here it's about half your paycheck is rent, and the vacancy rates are usually in the 0.something percent, has been since I moved here 20+ years ago. School tells you you'll pay $12k/year to live off campus, but maybe that's an overall average for people living in large groups.
posted by jenfullmoon at 9:32 PM on September 3, 2022
Here it's about half your paycheck is rent, and the vacancy rates are usually in the 0.something percent, has been since I moved here 20+ years ago. School tells you you'll pay $12k/year to live off campus, but maybe that's an overall average for people living in large groups.
posted by jenfullmoon at 9:32 PM on September 3, 2022
Ugh, I just realized that my reading of the interest rate provision of Biden's plan was wrong, I said upthread that it would mean lots of borrowers would get an effective zero percent interest rate, which is wrong. The plan would "cover" unpaid interest for borrowers who are current with their payments, meaning that for those whose monthly payment doesn't cover their monthly accrued interest, the government will pay the balance, keeping the unpaid interest from recapitalizing. This is nice, but a much less generous provision than I had thought. Sorry if I mislead anyone.
posted by skewed at 12:33 PM on September 8, 2022 [2 favorites]
posted by skewed at 12:33 PM on September 8, 2022 [2 favorites]
Regarding the taxability of debt that's forgiven, it's worth looking at Instructions for form 982 as well as section 108(a). Both Chapter 11 and insolvency (liabilities exceeding assets) are a reason to exclude debt from income, but you have to file the return that year with form 982. This is one of the many ways people without the money to afford an accountant to advise them bear more tax burden. The more I learn about tax the more I think tax law is class warfare.
posted by BrotherCaine at 10:26 AM on September 9, 2022 [4 favorites]
posted by BrotherCaine at 10:26 AM on September 9, 2022 [4 favorites]
(A)In general
Except as provided in subparagraph (B), the reductions described in paragraph (2) shall be one dollar for each dollar excluded by subsection (a).
(B)Credit carryover reduction
The reductions described in subparagraphs (B), (C), and (G) shall be 33⅓ cents for each dollar excluded by subsection (a). The reduction described in subparagraph (F) in any passive activity credit carryover shall be 33⅓ cents for each dollar excluded by subsection (a).
from the second link posted by BrotherCaine.
This is a parody of bureaucracy? Or is just the actual thing.
Still need the accountant.
posted by Glinn at 7:18 PM on September 20, 2022 [1 favorite]
Except as provided in subparagraph (B), the reductions described in paragraph (2) shall be one dollar for each dollar excluded by subsection (a).
(B)Credit carryover reduction
The reductions described in subparagraphs (B), (C), and (G) shall be 33⅓ cents for each dollar excluded by subsection (a). The reduction described in subparagraph (F) in any passive activity credit carryover shall be 33⅓ cents for each dollar excluded by subsection (a).
from the second link posted by BrotherCaine.
This is a parody of bureaucracy? Or is just the actual thing.
Still need the accountant.
posted by Glinn at 7:18 PM on September 20, 2022 [1 favorite]
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posted by Godspeed.You!Black.Emperor.Penguin at 10:14 AM on August 24, 2022 [57 favorites]