112th Congress Proposes Relief for Student Loan Borrowers

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romothesavior
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby romothesavior » Wed Jun 22, 2011 11:44 am


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NYC Law
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby NYC Law » Wed Jun 22, 2011 11:47 am

romothesavior wrote:

This is good.

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AreJay711
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby AreJay711 » Wed Jun 22, 2011 11:47 am

Idk it will only make the interest rate on private student loans increase.

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sambeber
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby sambeber » Wed Jun 22, 2011 11:48 am

NYC Law wrote:
romothesavior wrote:

This is good.

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bjsesq
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby bjsesq » Wed Jun 22, 2011 11:49 am

Immediate self-interest aside, why is this good? I mean, on a large scale. Why is this good policy?

ToTransferOrNot
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby ToTransferOrNot » Wed Jun 22, 2011 11:54 am

The only possible result here will be that the rates on private loans will go up significantly, which will eliminate the only benefit (potentially lower rates) private student loans have. Result = private lenders will be driven completely from the market, and all student lending will be federalized. Then we'll all be on the hook for defaults, to the extent they happen (yes, the government can garnish whatever paychecks you're getting, etc., but time value of money + relatively low garnishment amounts = lost funds).

This is incredibly stupid on a forward-looking basis.

Backward-looking, people without fixed-rate student loans are going to see uptick in rates (even if they aren't in a bankruptcy-eligible circumstance). I haven't read the proposed bills, so I don't know whether this will be retroactive to loans issued in 2005 - present, but if it is, that is sketchy in the extreme.

Also it will get fillibustered to hell and back, so meh.

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D-hops
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby D-hops » Wed Jun 22, 2011 11:56 am

I would much rather they take a harder stance against the accreditation entities that continue to allow the number of students and cost of attendance to skyrocket despite slumping job markets than allow the students to discharge the debt.
Last edited by D-hops on Wed Jun 22, 2011 12:03 pm, edited 1 time in total.

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Verity
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby Verity » Wed Jun 22, 2011 11:56 am

Better if they do something to alleviate the debt before it gets to the point of bankruptcy.

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NYC Law
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby NYC Law » Wed Jun 22, 2011 11:56 am

bjsesq wrote:Immediate self-interest aside, why is this good? I mean, on a large scale. Why is this good policy?


I just don't think we should scare people out of investing in education when there are so many other things to invest in that are much more detrimental to society and yet remain dischargeable.

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sambeber
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby sambeber » Wed Jun 22, 2011 11:57 am

It would be better if in some way they tied ability to repay loans after school to a school's elibility to receive federal loan funding, like they recently did to for-profit institutions. But this is a step in the right direction.

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The Gentleman
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby The Gentleman » Wed Jun 22, 2011 11:58 am

So people who borrow 200k from private lenders will receive a safety net by being able to discharge their debt in bankruptcy while people in 200k of GRADPlus loan debt will still be screwed? Nice move Congress. Way to devalue federal student loans relative to private ones.

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bjsesq
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby bjsesq » Wed Jun 22, 2011 11:59 am

NYC Law wrote:
bjsesq wrote:Immediate self-interest aside, why is this good? I mean, on a large scale. Why is this good policy?


I just don't think we should scare people out of investing in education when there are so many other things to invest in that are much more detrimental to society and yet remain dischargeable.


Considering the positive outcomes of continuing education are growing smaller and smaller by the day, why not scare some people out of it?

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sambeber
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby sambeber » Wed Jun 22, 2011 11:59 am

This should lead to an increase in interest rates, which will probably drive many to federal loans.

09042014
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby 09042014 » Wed Jun 22, 2011 12:00 pm

The Gentleman wrote:So people who borrow 200k from private lenders will receive a safety net by being able to discharge their debt in bankruptcy while people in 200k of GRADPlus loan debt will still be screwed? Nice move Congress. Way to devalue federal student loans relative to private ones.


Do they allow people to consolidate into private?

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Gecko of Doom
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby Gecko of Doom » Wed Jun 22, 2011 12:00 pm

AreJay711 wrote:Idk it will only make the interest rate on private student loans increase.

This. Also, it will contribute to the continuing artificial inflation of the education bubble. The more the government subsidizes/incentivizes educational borrowing, the more we'll see tuition continue to skyrocket.

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Verity
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby Verity » Wed Jun 22, 2011 12:01 pm

The Gentleman wrote:So people who borrow 200k from private lenders will receive a safety net by being able to discharge their debt in bankruptcy while people in 200k of GRADPlus loan debt will still be screwed? Nice move Congress. Way to devalue federal student loans relative to private ones.


It's not like anyone takes bankruptcy lightly. Anyway, federal loans are much more lenient with repayment and even forgiveness, in some cases.

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NYC Law
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby NYC Law » Wed Jun 22, 2011 12:05 pm

bjsesq wrote:
NYC Law wrote:
bjsesq wrote:Immediate self-interest aside, why is this good? I mean, on a large scale. Why is this good policy?


I just don't think we should scare people out of investing in education when there are so many other things to invest in that are much more detrimental to society and yet remain dischargeable.


Considering the positive outcomes of continuing education are growing smaller and smaller by the day, why not scare some people out of it?


That would just be detrimental on a societal level for various reasons. One being the income/class gaps. The poor would be most affected and unlikely to borrow for school while the rich would, thus widening the income disparity. Plus if you have more people in higher ed, you're more likely to tap into intellectual resources that might otherwise go unnoticed.
But I think the greater issue here is tuition outpacing inflation and rising at rapid rates. Education shouldn't be as subjected to market pressures and a greater public system would help control prices a bit.

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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby ToTransferOrNot » Wed Jun 22, 2011 12:07 pm

Verity wrote:
The Gentleman wrote:So people who borrow 200k from private lenders will receive a safety net by being able to discharge their debt in bankruptcy while people in 200k of GRADPlus loan debt will still be screwed? Nice move Congress. Way to devalue federal student loans relative to private ones.


It's not like anyone takes bankruptcy lightly. Anyway, federal loans are much more lenient with repayment and even forgiveness, in some cases.


No.

I mean, the 10-year public interest forgiveness is one thing. The 25-year forgiveness comes with discharge of indebtedness income: you basically convert your student loans into a freaking IRS tax lien (that is also dischargeable - and the IRS is far more... demanding... of their money).

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Verity
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby Verity » Wed Jun 22, 2011 12:09 pm

NYC Law wrote:Education shouldn't be as subjected to market pressures and a greater public system would help control prices a bit.


Thomas Sowell disagrees.

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Verity
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby Verity » Wed Jun 22, 2011 12:14 pm

ToTransferOrNot wrote:
Verity wrote:
The Gentleman wrote:So people who borrow 200k from private lenders will receive a safety net by being able to discharge their debt in bankruptcy while people in 200k of GRADPlus loan debt will still be screwed? Nice move Congress. Way to devalue federal student loans relative to private ones.


It's not like anyone takes bankruptcy lightly. Anyway, federal loans are much more lenient with repayment and even forgiveness, in some cases.


No.

I mean, the 10-year public interest forgiveness is one thing. The 25-year forgiveness comes with discharge of indebtedness income: you basically convert your student loans into a freaking IRS tax lien (that is also dischargeable - and the IRS is far more... demanding... of their money).


From the article:

"Bankruptcy protection is particularly important when it comes to private and commercial student loans because these loans are not eligible for the repayment assistance, forgiveness, and relief programs that accompany federal student loans. For example, neither the Income-Based Repayment plan nor the Public Service Loan Forgiveness program is available for commercial loans. Access to these and other forgiveness programs is a significant factor to consider when choosing which types of student loans you should borrow to help finance your higher education."

Public loans are by and large easier to keep out of bankruptcy. As far as leniency goes, you won't find the rough acceleration clauses that lurk in some private loans.

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D-hops
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby D-hops » Wed Jun 22, 2011 12:17 pm

Verity wrote:
ToTransferOrNot wrote:
Verity wrote:
The Gentleman wrote:So people who borrow 200k from private lenders will receive a safety net by being able to discharge their debt in bankruptcy while people in 200k of GRADPlus loan debt will still be screwed? Nice move Congress. Way to devalue federal student loans relative to private ones.


It's not like anyone takes bankruptcy lightly. Anyway, federal loans are much more lenient with repayment and even forgiveness, in some cases.


No.

I mean, the 10-year public interest forgiveness is one thing. The 25-year forgiveness comes with discharge of indebtedness income: you basically convert your student loans into a freaking IRS tax lien (that is also dischargeable - and the IRS is far more... demanding... of their money).


From the article:

"Bankruptcy protection is particularly important when it comes to private and commercial student loans because these loans are not eligible for the repayment assistance, forgiveness, and relief programs that accompany federal student loans. For example, neither the Income-Based Repayment plan nor the Public Service Loan Forgiveness program is available for commercial loans. Access to these and other forgiveness programs is a significant factor to consider when choosing which types of student loans you should borrow to help finance your higher education."

Public loans are by and large easier to keep out of bankruptcy. As far as leniency goes, you won't find the rough acceleration clauses that lurk in some private loans.


You missed his point. He was talking about how forgiveness is not really forgiveness because of the huge income you have to report creating a big tax liability after the 25-year discharge of debt.

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bjsesq
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby bjsesq » Wed Jun 22, 2011 12:17 pm

NYC Law wrote:
bjsesq wrote:
NYC Law wrote:
bjsesq wrote:Immediate self-interest aside, why is this good? I mean, on a large scale. Why is this good policy?


I just don't think we should scare people out of investing in education when there are so many other things to invest in that are much more detrimental to society and yet remain dischargeable.


Considering the positive outcomes of continuing education are growing smaller and smaller by the day, why not scare some people out of it?


That would just be detrimental on a societal level for various reasons. One being the income/class gaps. The poor would be most affected and unlikely to borrow for school while the rich would, thus widening the income disparity. Plus if you have more people in higher ed, you're more likely to tap into intellectual resources that might otherwise go unnoticed.
But I think the greater issue here is tuition outpacing inflation and rising at rapid rates. Education shouldn't be as subjected to market pressures and a greater public system would help control prices a bit.


Sounds a lot like the argument the University of Phoenix makes. I'll respond to you the same way I respond to them: most never graduate. many of those that do end up unable to pay off the debt to to poor job prospects. The poor will always lose. Always.

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Verity
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby Verity » Wed Jun 22, 2011 12:23 pm

D-hops wrote:You missed his point. He was talking about how forgiveness is not really forgiveness because of the huge income you have to report creating a big tax liability after the 25-year discharge of debt.


I get it, but as long as you're not a total fuckhead, there are many more ways to avoid getting to that point. Take advantage of the loan repayment plans, defer due to hardship and look for a job, consider working for a non-profit so the loan will be forgiven, etc.
Last edited by Verity on Wed Jun 22, 2011 12:23 pm, edited 1 time in total.

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NYC Law
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Re: 112th Congress Proposes Relief for Student Loan Borrowers

Postby NYC Law » Wed Jun 22, 2011 12:23 pm

bjsesq wrote:Sounds a lot like the argument the University of Phoenix makes. I'll respond to you the same way I respond to them: most never graduate. many of those that do end up unable to pay off the debt to to poor job prospects. The poor will always lose. Always.


Haha thanks for the laugh. And you're probably right in many instances, my own perspective may be slightly skewed since I come from a single parent household that was greatly altered by higher education (a community college education for that parent, but it still made the difference in income between living below the poverty line to living roughly middle class).




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