Could PAYE be repealed for current plan holders? Forum

[Anonymous User]

I'm signed up for PAYE, but was asked and subsequently worried about the possibility a future president repealing it, which is likely to happen some time in the next 20 years. Would this only apply to future loans, or could people already under PAYE get screwed? My concern is that if I could make 10-year payments living paycheck to paycheck, I'd be better off than if I have the same debt load in 10 years but made less money.

[Br3v]

I'm signed up for PAYE, but was asked and subsequently worried about the possibility a future president repealing it, which is likely to happen some time in the next 20 years. Would this only apply to future loans, or could people already under PAYE get screwed? My concern is that if I could make 10-year payments living paycheck to paycheck, I'd be better off than if I have the same debt load in 10 years but made less money.

Congress passed the law, Congress can repeal it. Is a future Congress likely to do so? Nobody knows.

As time goes on though, a large portion of the electorate will have some sort of federal subsidized repayment plan, if not PAYE itself, and you might suspect that it would be politically unlikely that Congress would take the rug out from under that many voters.

[lacrossebrother]

I'm signed up for PAYE, but was asked and subsequently worried about the possibility a future president repealing it, which is likely to happen some time in the next 20 years. Would this only apply to future loans, or could people already under PAYE get screwed? My concern is that if I could make 10-year payments living paycheck to paycheck, I'd be better off than if I have the same debt load in 10 years but made less money.

Congress passed the law, Congress can repeal it.

Actually, courts can review congressional actions. It is a fair question to ask whether the expectation of a discharge is a property interest.

[Br3v]

I'm signed up for PAYE, but was asked and subsequently worried about the possibility a future president repealing it, which is likely to happen some time in the next 20 years. Would this only apply to future loans, or could people already under PAYE get screwed? My concern is that if I could make 10-year payments living paycheck to paycheck, I'd be better off than if I have the same debt load in 10 years but made less money.

Congress passed the law, Congress can repeal it.

Actually, courts can review congressional actions. It is a fair question to ask whether the expectation of a discharge is a property interest.

OP, the poster above raises a good point that I should have clarified: Congress passes laws, the President enforces them, and the judiciary reviews them.

[lacrossebrother]

OP, the above poster is being weird. He answered your question flatly by saying "since congress passed the law they can repeal them." That's a terrible point.

[Br3v]

Sorry for the sarcasm.

Congress changes subsidies all the time. Yes theoretically the Court can reach out and claim any give action is too far, but that seems unlikely given that we are talking about discretionary spending and higher education.

[Br3v]

Regardless, we seem to agree re: the majority of my first post that you didn't quote

[krads153]

The short answer is - yes, PAYE could be repealed for current plan holders. The government can do whatever it wants.

[Anonymous User]

has it ever happened? No. Could it happen? Probably not. Once you enter into repayment you have a contract with the gov and your servicer. You and a million other loanholders would have a class action.

[bearsfan23]

The short answer is - yes, PAYE could be repealed for current plan holders. The government can do whatever it wants.

This and Brv's posts are both really dumb.

Congress can't exactly "do whatever it wants" with regards to current plan holders

[A. Nony Mouse]

I still think they could repeal it, though. Or seriously revise it.

[krads153]

I still think they could repeal it, though. Or seriously revise it.

Yep - the fine lines probably read "subject to revision/legislative changes" or something similar...

Also class actions against the government? Good luck with that.

[grand inquisitor]

the question is, would it be worth the class action charging a regulatory taking?

[PMan99]

Admittedly it's been a while since I looked at this but I believe it's a contract, no need to get into takings and property interests. And also believe the fedgov has waived immunity to contract claims. So there you go.

[bk1]

has it ever happened? No.

IBR is only 7 years old so that's a relatively short time frame for something to possibly have happened. But since that time they have created ~5 different plans (IBR, new IBR, ICR, PAYE, REPAYE... I might be forgetting some) which shows that the income-driven repayment model has been in fairly constant flux since IBR's inception.

I generally agree that the government can take it away for people already on these plans, but that it is unlikely (see, e.g., the fact that every new income-driven repayment plan has coexisted with the other plans rather than supplanted them).

[Anonymous User]

I am OP and think I did a poor job phrasing my question. I'm not concerned with whether Congress can repeal it. My concern is:

If Congress repealed it, would this effect people who are already in PAYE repayment?

[Br3v]

I am OP and think I did a poor job phrasing my question. I'm not concerned with whether Congress can repeal it. My concern is:

If Congress repealed it, would this effect people who are already in PAYE repayment?

It can. It depends how they repeal it.

[bk1]

I am OP and think I did a poor job phrasing my question. I'm not concerned with whether Congress can repeal it. My concern is:

If Congress repealed it, would this effect people who are already in PAYE repayment?

What Br3v said. Your use of the word "repeal" is what makes this confusing. The government (both legislative and executive, iirc, because at least some of the income-based plans were created by executive order) can either: (1) disallow current loanholders on regular payment plans to switch to an income-based plan going forward (which would preserve it for people currently on an income-based plan), or (2) disallow current loanholders from using an income-based plan whether they are currently on one or not (which would force current income-based plan users onto a regular plan). Whether you want to call either of those a "repeal," is irrelevant.

[lawschoolftw]

OP, it sounds like you're asking if there is any law that would prevent the government from taking away IBR eligibility to those who previously qualified, but no longer do, because the program has been repeated or otherwise altered. The answer to that question, I believe, is no. As others have pointed out, the federal government could decide that the program doesn't exist without making any kind of exception for current enrollees. While I think it's not likely, it's my completely implausible. I have many colleagues and friends (mostly conservative) who view these programs as an entitlement or a hand out. I don't think it would be as politically unpopular as some have suggested.

[lacrossebrother]

This seems relevant:
https://en.wikipedia.org/wiki/Flemming_v._Nestor

[Danger Zone]

IT: law students/lawyers quibble over minor discrepancies in each other's posts

Lub the law

[Anonymous User]

Repeal is a bad word, but what I was trying to say is let's pretend there's a girl named Sarah:

Sarah has $300,000 in debt. Sarah makes $178,000 per year every year. If Sarah does PAYE she pays $16,000 per year. If she does 10 year repayment she pays $42,000 per year. With the interest rates, $16,000 barely cuts into the principle and she has a contract to make these payments for 20 years but then have it forgiven.

10 years in, Sarah has paid $160,000 but accumulated another $140,000 in interest. Now PAYE is gone, and her contract ripped up. Can the government demand Sarah make those huge payments again and that she still has $280,000 in debt?

Basically, is making PAYE payments reckless because the government could essentially be like the mafia and simply change their mind, and strong arm you if you say "but constitution....?"

I don't care about preciseness or grammar or any little detail. You're all smart and special and deserve lots of love. Please only answer if you know but if you know please answer: in practical reality, not some science fiction hypo but in real life on Planet Earth, can Sarah make her little PAYE payments each month and hold up her end of the bargain but get royally fucked?

[lacrossebrother]

IT: law students/lawyers quibble over minor discrepancies in each other's posts

Lub the law

I mean the dude wanted a legal analysis and instead he got "congress can do whatever it wants."

[Anonymous User]

I really just want a yes/no on the hypo posited above. Just the one question. No quibbles back and forth with each other, please. Just one little yes/no answer.

[DELG]

Anyone who says they know the answer to that is lying.