IBR on the chopping block?

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theturkeyisfat
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IBR on the chopping block?

Postby theturkeyisfat » Thu Jul 28, 2011 11:16 pm

is there a chance that this program will get eliminated in the debt ceiling negotiations?

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electricfeel
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Re: IBR on the chopping block?

Postby electricfeel » Thu Jul 28, 2011 11:19 pm

theturkeyisfat wrote:is there a chance that this program will get eliminated in the debt ceiling negotiations?


dont' know but Stafford program is on the chopping block in both Dem and Rep bills

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vanwinkle
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Re: IBR on the chopping block?

Postby vanwinkle » Thu Jul 28, 2011 11:20 pm

electricfeel wrote:
theturkeyisfat wrote:is there a chance that this program will get eliminated in the debt ceiling negotiations?

dont' know but Stafford program is on the chopping block in both Dem and Rep bills

It's just the interest subsidy. The Stafford program will still exist, it'll just issue unsubsidized loans.

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NYC Law
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Re: IBR on the chopping block?

Postby NYC Law » Thu Jul 28, 2011 11:24 pm

vanwinkle wrote:
electricfeel wrote:
theturkeyisfat wrote:is there a chance that this program will get eliminated in the debt ceiling negotiations?

dont' know but Stafford program is on the chopping block in both Dem and Rep bills

It's just the interest subsidy. The Stafford program will still exist, it'll just issue unsubsidized loans.


That wouldnt affect us right? These things usually take years to implement.

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vanwinkle
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Re: IBR on the chopping block?

Postby vanwinkle » Thu Jul 28, 2011 11:25 pm

NYC Law wrote:That wouldnt affect us right? These things usually take years to implement.

Actually from what I saw, it would affect loans issued on or after July 1, 2012. So... yes, it would affect many of you.

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Grizz
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Re: IBR on the chopping block?

Postby Grizz » Thu Jul 28, 2011 11:27 pm

Maybe no subsidized Staffords will cause some people to rethink lawl school.

Oh wait it won't.

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NYC Law
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Re: IBR on the chopping block?

Postby NYC Law » Thu Jul 28, 2011 11:29 pm

That sucks. But I guess the interest on $24k while in school isn't that big of a deal compared to the rest of the debt

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buckilaw
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Re: IBR on the chopping block?

Postby buckilaw » Thu Jul 28, 2011 11:44 pm

NYC Law wrote:That sucks. But I guess the interest on $24k while in school isn't that big of a deal compared to the rest of the debt


It objectively sucks.

scammedhard
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Re: IBR on the chopping block?

Postby scammedhard » Thu Jul 28, 2011 11:54 pm

buckilaw wrote:
NYC Law wrote:That sucks. But I guess the interest on $24k while in school isn't that big of a deal compared to the rest of the debt


It objectively sucks.

You guys are worrying about chump change. The bigger issue is the very likely negative economic impact, and how it will further sour the legal market.

firemed
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Re: IBR on the chopping block?

Postby firemed » Fri Jul 29, 2011 12:06 am

If IBR isn't on the chopping block yet, I wouldn't be surprised if it is later. Most young people (including, unfortunately, a lot of students) don't vote, and by the time they do getting paid for their gout medicine will far outweigh the injustice of the extra interest on the loans they defaulted on after college.

Yes, I am feeling very pessimistic today, why do you ask?

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Grizz
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Re: IBR on the chopping block?

Postby Grizz » Fri Jul 29, 2011 12:09 am

firemed wrote:gout medicine

You listen to NPR today too?

firemed
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Re: IBR on the chopping block?

Postby firemed » Fri Jul 29, 2011 12:33 am

rad law wrote:
firemed wrote:gout medicine

You listen to NPR today too?



No! Was that actually on there? :lol: :lol:

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Grizz
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Re: IBR on the chopping block?

Postby Grizz » Fri Jul 29, 2011 8:58 am

firemed wrote:
rad law wrote:
firemed wrote:gout medicine

You listen to NPR today too?



No! Was that actually on there? :lol: :lol:

Yeah gout up 44% in the USA.

nymario
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Re: IBR on the chopping block?

Postby nymario » Fri Jul 29, 2011 9:39 am

The demand for law school is fairly inelastic in terms of cost. The subsidized Stafford and IBR affect the real cost very significant ways, but won't make the tiniest of dents in the demand.

First of all, the demand for every law school seat exceeds supply at current prices -- the demand to go to HYS at sticker far exceeds the number of seats. There is internal competition among these schools for talent: scholarships, expenditures on prestige, LARP -- and these factors will go down the line...IBR and subsidized Staffords are relatively fixed in value for the students that are in the picture here.

Step down to CCN -- CCN competes with HYS by trying to undercut them on price (more scholarships, LARP, etc...) -- They compete with each other in a similar manner. Again, IBR and subsidized Staffords will not vary among these schools -- if they go away the schools can compensate but increasing financial aid/LARP if they want to, but these are decisions made in the competitive environment of the LAW SCHOOLS deciding how to attract STUDENTS.

The important thing to remember is that the STUDENT has decided to go to law school -- the variable FA packages are offered to induce them to attend one school over another -- the issue is NOT: go to law school vs. don't go to law school.

Move down the line to a TTTT. What is on the mind of the student who got in only to Touro? Here is what a lot of people on here would cacluate:

COST of Attendance: $100,000x4=$400,000

COST of Not going to Law School/Earning Potential over years 1-20: 20x$50,000 = $1,000,000

So in Years 4-20, Our Touro grad must make $1.4 million in 17 years to make this a +EV proposition. Ignore, for now, the cost of interest and the time value differential of money earned in years 1-3 compared to years 4-20

Chance of a BigLaw job (generous estimate): 1% x $1,000,000 x 17 = $170,000
Chance of ShitLaw/PI (generous salary projection): 50% x $100,000 x 17 = $850,000
Chance of going back to the $50,000 (generous estimate) job: 49% x $50,000 x 17 = 416,500

Total EV of Law School= 1,436,500-1,400,000= +$36,500

OK, so this oversimplified "model" shows that, if you can put interest payments aside or otherwise neutralize the enormous payback cost, there are some calculations that can make you feel like it's a good decision to go a TTTT (it isn't though).

Now we "unignore" the interest costs and time value issues and (without going through the math), it becomes clear that the EV of the decision to attend Touro all of a sudden becomes -EV.

The theory goes that for THIS sort of student (AND ONLY THIS SORT OF STUDENT) -- the Federal programs will convert a -EV choice into a +EV one.

The ONLY way axing IBR will matter in a positive way (i.e. it reduces the ability of TTTTs to attract hopeless attorney and induce them into 6 figure debt that they won't be able to pay, and discourage new TTTTs from opening) is if it deters enough students that the demand of eager Touro students no longer meets the TTTTouro tuition Supply curve -- thus reducing enrollment or forcing shitty schools to stop extracting obscene rents from clueless applicants.

I do not believe that the sort of students in the position to have these changes have any real affect on their decision-making process are in a position to make the sort of intelligent calculation required for the incentive structure to modify primary behavior.

What will happen is that poor law grads who were bad at law school will be poorer, and rich law grads who are good at law school and life will pay lower taxes. In other words, a meritocracy?

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Grizz
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Re: IBR on the chopping block?

Postby Grizz » Fri Jul 29, 2011 9:44 am

teal deer

RPK34
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Re: IBR on the chopping block?

Postby RPK34 » Fri Jul 29, 2011 9:45 am

rad law wrote:Maybe no subsidized Staffords will cause some people to rethink lawl school.

Oh wait it won't.


Considering you only qualify for $8500 per year in subsidized stafford loans, it works out to $920 in interest from your 1L loan, $615 from 2L loan, and $315 for your 3L loan. It's really not that big of a deal. You'll graduate with about $1500-$2000 more in loans after law school.

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kapital98
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Re: IBR on the chopping block?

Postby kapital98 » Fri Jul 29, 2011 10:04 am

RPK34 wrote:
rad law wrote:Maybe no subsidized Staffords will cause some people to rethink lawl school.

Oh wait it won't.


Considering you only qualify for $8500 per year in subsidized stafford loans, it works out to $920 in interest from your 1L loan, $615 from 2L loan, and $315 for your 3L loan. It's really not that big of a deal. You'll graduate with about $1500-$2000 more in loans after law school.


The point of the subsidized stafford loans are to help those in financial need. It essentially gives money to the student because the interest rate is 0% and the opportunity cost, including inflation, is much higher. This is especially important in undergrad but less important in law school because the questionable positive externality creating lawyers has on our economic growth (marginal diminishing returns of higher education.)

I had no financial assistance from my parents and was able to go through a state school with only need based grants and subsidized stafford loans. They are absolutely wonderful for those who show need.

This will directly hurt me. I'm not upset that law/graduate schools cannot have access to unsubsidized loans but I am very displeased Congress would eliminate them for undergraduate students.

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kapital98
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Re: IBR on the chopping block?

Postby kapital98 » Fri Jul 29, 2011 10:06 am

P.S. IBR is completely safe. There seems to be a new thread about this every couple days. Are people genuinely concerned or is this just very effective libertarian trolling? :?

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AreJay711
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Re: IBR on the chopping block?

Postby AreJay711 » Fri Jul 29, 2011 10:16 am

kapital98 wrote:P.S. IBR is completely safe. There seems to be a new thread about this every couple days. Are people genuinely concerned or is this just very effective libertarian trolling? :?


Yeah, IBR is pretty safe -- otherwise many gov't positions would have to start taking from the bottom of the barrel and JAG for the military and stuff would be pressed to find good people. IBR isn't really a terrible thing for the gov't really since it allows people from top schools to be PD's and SA's and local positions. If the gov't had to pay market rates (or at least enough to make it affordable) it would be spending more since that would last for the person's whole career.

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Tanicius
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Re: IBR on the chopping block?

Postby Tanicius » Fri Jul 29, 2011 10:45 am

AreJay711 wrote:
kapital98 wrote:P.S. IBR is completely safe. There seems to be a new thread about this every couple days. Are people genuinely concerned or is this just very effective libertarian trolling? :?


Yeah, IBR is pretty safe -- otherwise many gov't positions would have to start taking from the bottom of the barrel and JAG for the military and stuff would be pressed to find good people. IBR isn't really a terrible thing for the gov't really since it allows people from top schools to be PD's and SA's and local positions. If the gov't had to pay market rates (or at least enough to make it affordable) it would be spending more since that would last for the person's whole career.


I highly, highly doubt the crazy Tea Party people are going to care about how cutting IBR would affect public interest jobs. All they care about when it comes to tax-funded programs is whether they reduce or increase the debt, and whether it costs tax payers more than it would cost them for the program to not exist. The only argument IBR has going for it, from that perspective at least, is that it is more financially advantageous than forcing the government to pay the same loans back plus tons more interest in years later when students continue to fail to be able to make payment. As I understand it, IBR helps the government because it has to eat the cost before years' more of interest can accrue.

albanach
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Re: IBR on the chopping block?

Postby albanach » Fri Jul 29, 2011 10:55 am

firemed wrote:If IBR isn't on the chopping block yet, I wouldn't be surprised if it is later. Most young people (including, unfortunately, a lot of students) don't vote, and by the time they do getting paid for their gout medicine will far outweigh the injustice of the extra interest on the loans they defaulted on after college.

Yes, I am feeling very pessimistic today, why do you ask?


I don't think it will be on the block anytime soon. It's new. Only created in 2009, it's not writing anyone's debt off for another eight years. Remember, the student loan debt at the moment is technically an asset for the US gov't, not a liability. They can sell that debt to the markets. It's probably more valuable as a commodity when it has fewer borrowers in default.

Without IBR, courts might also become more willing to discharge crazy amounts of debt based on undue hardship. That wouldn't help the Feds.

If they abolished it, more voters would go into default and the debt would be sold to collection agencies for pennies on the dollar. They're almost certainly collecting more in payments from poor borrowers using IBR than they would be getting by selling low quality debt to collection agencies.
Last edited by albanach on Fri Jul 29, 2011 10:58 am, edited 1 time in total.

luthersloan
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Re: IBR on the chopping block?

Postby luthersloan » Fri Jul 29, 2011 10:55 am

kapital98 wrote:
RPK34 wrote:
rad law wrote:Maybe no subsidized Staffords will cause some people to rethink lawl school.

Oh wait it won't.


Considering you only qualify for $8500 per year in subsidized stafford loans, it works out to $920 in interest from your 1L loan, $615 from 2L loan, and $315 for your 3L loan. It's really not that big of a deal. You'll graduate with about $1500-$2000 more in loans after law school.


The point of the subsidized stafford loans are to help those in financial need. It essentially gives money to the student because the interest rate is 0% and the opportunity cost, including inflation, is much higher. This is especially important in undergrad but less important in law school because the questionable positive externality creating lawyers has on our economic growth (marginal diminishing returns of higher education.)

I had no financial assistance from my parents and was able to go through a state school with only need based grants and subsidized stafford loans. They are absolutely wonderful for those who show need.

This will directly hurt me. I'm not upset that law/graduate schools cannot have access to unsubsidized loans but I am very displeased Congress would eliminate them for undergraduate students.


Truth is, we are probably past the net postive point as far as the subsidies to college are concerned as well.

luthersloan
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Re: IBR on the chopping block?

Postby luthersloan » Fri Jul 29, 2011 10:57 am

albanach wrote:
firemed wrote:If IBR isn't on the chopping block yet, I wouldn't be surprised if it is later. Most young people (including, unfortunately, a lot of students) don't vote, and by the time they do getting paid for their gout medicine will far outweigh the injustice of the extra interest on the loans they defaulted on after college.

Yes, I am feeling very pessimistic today, why do you ask?


I don't think it will be on the block anytime soon. It's new. Only created in 2009, it's not writing anyone's debt off for another eight years. Remember, the student loan debt at the moment is technically an asset for the US gov't, not a liability. They can sell that debt to the markets. It's probably more valuable as a commodity when it has fewer borrowers in default.


They could sell it, of course subprime mortgages look like great investments compared to the piss poor quality of student debt.

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kapital98
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Re: IBR on the chopping block?

Postby kapital98 » Fri Jul 29, 2011 2:39 pm

luthersloan wrote:Truth is, we are probably past the net postive point as far as the subsidies to college are concerned as well.


That's a valid argument. It really depends on the particular field. It's very easy to say the government, and thereby the taxpayers, are losing money subsidizing artists and soft scientists. However, it would be easier to defend subsidies of the hard sciences.

This is an ongoing academic debate. Very smart people on both sides of the aisle would argue almost the complete spectrum of whether we should subsidize college or not from both a positive and normative perspective.

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Borhas
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Re: IBR on the chopping block?

Postby Borhas » Sun Jul 31, 2011 2:14 pm

rad law wrote:teal deer


I think you mean tall doctor




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