PAYE Legislation Thread- Pepper Anus Yuppie Eleemosynaries

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Stinson
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Re: PAYE Legislation Thread

Postby Stinson » Wed Mar 05, 2014 8:46 pm

For the people who were asking, PAYE (or the new "improved" shitty PAYE) would be the only income-based program available to those originating their first loan on or after January 1, 2015.

"Students who borrowed their first loans prior to July 1, 2015, would continue to be able to select among the
existing repayment plans (for plans for which they now qualify and for loans originated through
their current course of study), in addition to the modified PAYE."

Of course, that doesn't tell us much about PSLF, which is not a repayment plan. In other thoughts, the Obama budget is currently DOA on Capitol Hill and a fantasy, so while the worry is justified because of the stakes involved, I wouldn't go breaking out the nooses just yet. Though getting that kind of screwed by a Democrat never feels good.

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jn7
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Re: PAYE Legislation Thread

Postby jn7 » Wed Mar 05, 2014 8:51 pm

Sorry if redundant but i just saw the Post article on the PAYE expansion (http://www.washingtonpost.com/local/edu ... story.html)

"The budget also calls for an expansion of the “Pay As You Earn” (PAYE) repayment options to all student borrowers. That program caps the repayment of federal student loans at a percentage of income once a student graduates and enters the workforce."

So is it as "simple" as if they pass this budget, PAYE is expanded? I feel like there would have to be some sort of additional legislation to change it.

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kay2016
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Re: PAYE Legislation Thread

Postby kay2016 » Wed Mar 05, 2014 8:54 pm

Stinson wrote:For the people who were asking, PAYE (or the new "improved" shitty PAYE) would be the only income-based program available to those originating their first loan on or after January 1, 2015.

"Students who borrowed their first loans prior to July 1, 2015, would continue to be able to select among the
existing repayment plans (for plans for which they now qualify and for loans originated through
their current course of study), in addition to the modified PAYE."

Of course, that doesn't tell us much about PSLF, which is not a repayment plan. In other thoughts, the Obama budget is currently DOA on Capitol Hill and a fantasy, so while the worry is justified because of the stakes involved, I wouldn't go breaking out the nooses just yet. Though getting that kind of screwed by a Democrat never feels good.


This budget most certainly will fail, but it is scary that if this is the White House's plan… the House Budget could be even scarier. While PAYE expansion will help, making PSLF last for the entire 25 years is going to discourage a LOT of people from going into the work.

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Bikeflip
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Re: PAYE Legislation Thread

Postby Bikeflip » Wed Mar 05, 2014 8:57 pm

Stinson wrote:In other thoughts, the Obama budget is currently DOA on Capitol Hill and a fantasy, so while the worry is justified because of the stakes involved, I wouldn't go breaking out the nooses just yet. Though getting that kind of screwed by a Democrat never feels good.



Right, but if this is where current budget negotiations are, then we're boned.

Nomo
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Re: PAYE Legislation Thread

Postby Nomo » Wed Mar 05, 2014 8:59 pm

The budget as a whole might be a pipe dream that the republicans will never go for. But, I bet they will sign off on capping public interest forgiveness in a heartbeat. Though it does seem like it would take additional legislation to end public interest forgiveness. Still, if Obama and the republicans can agree on capping it then who is going stop this legislation?

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SemperLegal
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Re: PAYE Legislation Thread

Postby SemperLegal » Wed Mar 05, 2014 9:01 pm

kay2016 wrote:
Stinson wrote:For the people who were asking, PAYE (or the new "improved" shitty PAYE) would be the only income-based program available to those originating their first loan on or after January 1, 2015.

"Students who borrowed their first loans prior to July 1, 2015, would continue to be able to select among the
existing repayment plans (for plans for which they now qualify and for loans originated through
their current course of study), in addition to the modified PAYE."

Of course, that doesn't tell us much about PSLF, which is not a repayment plan. In other thoughts, the Obama budget is currently DOA on Capitol Hill and a fantasy, so while the worry is justified because of the stakes involved, I wouldn't go breaking out the nooses just yet. Though getting that kind of screwed by a Democrat never feels good.


This budget most certainly will fail, but it is scary that if this is the White House's plan… the House Budget could be even scarier. While PAYE expansion will help, making PSLF last for the entire 25 years is going to discourage a LOT of people from going into the work.


I feel shitty bringing this up, because so many people that are important to me rely on IBR. But, honestly, how could PAYE without a cap on forgiveness ever make any policy sense?

The $57k cap seems just about right, (though I would prefer that PI seeking students just sign a contractual obligation to work in PI or pay a huge contingent repayment [~50%] for every dollar above $60k, and in return be given a $50k scholly up front).

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kay2016
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Re: PAYE Legislation Thread

Postby kay2016 » Wed Mar 05, 2014 9:05 pm

Nomo wrote:The budget as a whole might be a pipe dream that the republicans will never go for. But, I bet they will sign off on capping public interest forgiveness in a heartbeat. Though it does seem like it would take additional legislation to end public interest forgiveness. Still, if Obama and the republicans can agree on capping it then who is going stop this legislation?


There doesn't need to be more legislation in order for it to happen, unfortunately..

And a cap is fine, but there's a difference between forgiving up to the cap or none at all if you're over and all that isn't addressed by the budget..

And the biggest fear, IMO, as someone who wants to go into a PSLF type job, is that the cap can always be changed in the next 12 years AND if they apply this retroactively, no one will be able to count on the program AT ALL because it is always so far out. And carrying that much debt into your early/mid 50s with no hope of paying it off is terrible.

ETA: this could also expand the tax bomb to PSLF, the preventing interest from ballooning the loan would make this more manageable but nonetheless, it seems that all preference for those wanting to go into public service is out the window and we're basically just giving them a 50k scholarship 10 years too late that has caused them to accrue even more interest.

Jchance
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Re: PAYE Legislation Thread

Postby Jchance » Wed Mar 05, 2014 9:16 pm

If this is true, I feel bad for the PI ppl. But looking from the glass is half full, this new proposal would substantial lower the law school matriculation--now ppl would only attend schools that they can afford (aka schools giving out hefty discount) without relying on PI as backup plan, and many will not consider law school as a viable option anymore.

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A. Nony Mouse
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Re: PAYE Legislation Thread

Postby A. Nony Mouse » Wed Mar 05, 2014 9:26 pm

SemperLegal wrote:I feel shitty bringing this up, because so many people that are important to me rely on IBR. But, honestly, how could PAYE without a cap on forgiveness ever make any policy sense?

The $57k cap seems just about right, (though I would prefer that PI seeking students just sign a contractual obligation to work in PI or pay a huge contingent repayment [~50%] for every dollar above $60k, and in return be given a $50k scholly up front).

I can see some kind of cap on forgiveness, and I understand the concern about people in high-income jobs using PAYE that I think the proposal is addressing. But I don't think capping PSLF at $57K works - at least, not for law students or med students. For teachers/social workers/etc., sure. But the only med/law students who can go into public service with a $57K cap are people who could go into it without PSLF - people who can afford to pay full tuition, or people who get a full ride (and I think essentially requiring people to get a free ride to go into public service has a lot of perverse incentives).

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kay2016
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Re: PAYE Legislation Thread

Postby kay2016 » Wed Mar 05, 2014 9:30 pm

Bikeflip wrote:
Note the underlined and the Campos quote of $57,500. The two are probably the same: http://studentaid.ed.gov/types/loans/su ... subsidized

Subsidized and Unsubsidized Aggregate Loan Limit for Independent Students wrote:$57,500 for undergraduates—No more than $23,000 of this amount may be in subsidized loans.

$138,500 for graduate or professional students—No more than $65,500 of this amount may be in subsidized loans. The graduate aggregate limit includes all federal loans received for undergraduate study.


Also I misspoke before. Under the proposal, PAYE may be extended to pre-2007 loans. What I meant to say is that I don't see anything to remove DAT TAXBOMB.



So it may be this 138,500 number.. But I haven't seen that for sure anywhere.. Which would be much more realistic given potential UG + LS debt for PSLF peeps. But.. I would really like some more answers about the budget

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Bikeflip
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Re: PAYE Legislation Thread

Postby Bikeflip » Wed Mar 05, 2014 9:42 pm

kay2016 wrote:
Bikeflip wrote:
Note the underlined and the Campos quote of $57,500. The two are probably the same: http://studentaid.ed.gov/types/loans/su ... subsidized

Subsidized and Unsubsidized Aggregate Loan Limit for Independent Students wrote:$57,500 for undergraduates—No more than $23,000 of this amount may be in subsidized loans.

$138,500 for graduate or professional students—No more than $65,500 of this amount may be in subsidized loans. The graduate aggregate limit includes all federal loans received for undergraduate study.


Also I misspoke before. Under the proposal, PAYE may be extended to pre-2007 loans. What I meant to say is that I don't see anything to remove DAT TAXBOMB.



So it may be this 138,500 number.. But I haven't seen that for sure anywhere.. Which would be much more realistic given potential UG + LS debt for PSLF peeps. But.. I would really like some more answers about the budget



That number was just for comparison. The language in the proposal is still "capping Public Sector Loan Forgiveness (PSLF) at the aggregate loan limit for independent undergraduate students to protect against institutional practices that may further increase student indebtedness, while ensuring the program provides sufficient relief for students committed to public service."

We'll have to wait and see if the proposal will have different PSLF limits for ugrads and grads. As written, I think all students, grads and ugrads, are subject to the $57,500 rule.

Stinson
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Re: PAYE Legislation Thread

Postby Stinson » Wed Mar 05, 2014 10:01 pm

Anyone have hopes for Senate Dems/the higher education lobby to drop the hammer on this? It seems like the proposal takes several steps aimed at reigning in the growing cost of education. (Not saying I agree, just that that seems to be the aim.) In the long run, we want education costs to be lower. In the short run, though, if I'm a democratic senator (or even a Republican one for that matter) don't I want the kool-aid to keep on flowing, even if it bones costs in the long term? And doesn't the higher ed lobby want to make a vague statement about working to control costs but keep the federal spigot wide open?

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SemperLegal
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Re: PAYE Legislation Thread

Postby SemperLegal » Wed Mar 05, 2014 10:29 pm

A. Nony Mouse wrote:
SemperLegal wrote:I feel shitty bringing this up, because so many people that are important to me rely on IBR. But, honestly, how could PAYE without a cap on forgiveness ever make any policy sense?

The $57k cap seems just about right, (though I would prefer that PI seeking students just sign a contractual obligation to work in PI or pay a huge contingent repayment [~50%] for every dollar above $60k, and in return be given a $50k scholly up front).

I can see some kind of cap on forgiveness, and I understand the concern about people in high-income jobs using PAYE that I think the proposal is addressing. But I don't think capping PSLF at $57K works - at least, not for law students or med students. For teachers/social workers/etc., sure. But the only med/law students who can go into public service with a $57K cap are people who could go into it without PSLF - people who can afford to pay full tuition, or people who get a full ride (and I think essentially requiring people to get a free ride to go into public service has a lot of perverse incentives).



I agree that it PI shouldn't be restricted to the ultra rich (and, anecdotally, that already seems to be happening), nor should there be a two-tiered system where only firms can afford the smartest lawyers who go to the best schools, but I don't think it would be horrible for society if PI people had to be either be willing to biglaw or go to a lower school with better FA to get their debt-$57k<0 If PI can gov still want to only hire top-rated law students from top schools, let them pay an inflated wage to make up for their snubbing of smart graduates who made responsible choices (or make due with the few rich, t14, PI-minded, capable JD's that graduate each year.

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kay2016
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Re: PAYE Legislation Thread

Postby kay2016 » Wed Mar 05, 2014 10:36 pm

57k may work for some people, but law school living expenses and minimal tuition over three years with a good scholarship is going to be about that for a lot of people... And that's assuming no UG debt. Add in the average 20k in UG debt, and that leave 12k a year in living expenses in loans..

Then add in 10 years of interest, (assuming, say that interest is allowed to go so far above the principle, 150% for example)...

Then you're easily over the limit.


even though I'm PI, I'm not against a cap.. But this seems especially harsh for those who have already taken out loans. But it is what it is.

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Sgt Brody.
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Re: PAYE Legislation Thread

Postby Sgt Brody. » Wed Mar 05, 2014 10:56 pm

So, say you earn more than 100,000, but have financial hardship, as you are supporting your parent, who is also your dependent, can u be eligible, and how much will the monthly payment be if have like 200,000 in debt?

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haus
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Re: PAYE Legislation Thread

Postby haus » Wed Mar 05, 2014 11:04 pm

Sgt Brody. wrote:So, say you earn more than 100,000, but have financial hardship, as you are supporting your parent, who is also your dependent, can u be eligible, and how much will the monthly payment be if have like 200,000 in debt?

You might want to take a look at this PAYE calculator.

http://www.finaid.org/calculators/ibr10.phtml

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A. Nony Mouse
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Re: PAYE Legislation Thread

Postby A. Nony Mouse » Wed Mar 05, 2014 11:06 pm

The financial hardship is based on the ratio between your income and your debt - it's not really based on your expenses (like taking care of dependents), except to the extent the number of your dependents figures into your tax and reduces your adjusted gross income.

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FKASunny
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Re: PAYE Legislation Thread

Postby FKASunny » Thu Mar 06, 2014 2:03 am

This would be horrendous. Do you think there'd be some kind of phase-out? It seems a bit cruel to do this to students who accepted higher tuition schools with the understanding that they could go into PI.

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Tanicius
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Re: PAYE Legislation Thread

Postby Tanicius » Thu Mar 06, 2014 4:06 am

SemperLegal wrote:
kay2016 wrote:
Stinson wrote:For the people who were asking, PAYE (or the new "improved" shitty PAYE) would be the only income-based program available to those originating their first loan on or after January 1, 2015.

"Students who borrowed their first loans prior to July 1, 2015, would continue to be able to select among the
existing repayment plans (for plans for which they now qualify and for loans originated through
their current course of study), in addition to the modified PAYE."

Of course, that doesn't tell us much about PSLF, which is not a repayment plan. In other thoughts, the Obama budget is currently DOA on Capitol Hill and a fantasy, so while the worry is justified because of the stakes involved, I wouldn't go breaking out the nooses just yet. Though getting that kind of screwed by a Democrat never feels good.


This budget most certainly will fail, but it is scary that if this is the White House's plan… the House Budget could be even scarier. While PAYE expansion will help, making PSLF last for the entire 25 years is going to discourage a LOT of people from going into the work.


I feel shitty bringing this up, because so many people that are important to me rely on IBR. But, honestly, how could PAYE without a cap on forgiveness ever make any policy sense?

The $57k cap seems just about right, (though I would prefer that PI seeking students just sign a contractual obligation to work in PI or pay a huge contingent repayment [~50%] for every dollar above $60k, and in return be given a $50k scholly up front).


Yeah that's all well and good WHEN YOU HAVEN'T TAKEN OUT THE LOANS YET. If this affects people who have ALREADY taken out their loans, then seriously, fuck Obama, because I will be broke for the rest of my life.

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newyorker88
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Re: PAYE Legislation Thread

Postby newyorker88 » Thu Mar 06, 2014 11:00 am

Jchance wrote:If this is true, I feel bad for the PI ppl. But looking from the glass is half full, this new proposal would substantial lower the law school matriculation--now ppl would only attend schools that they can afford (aka schools giving out hefty discount) without relying on PI as backup plan, and many will not consider law school as a viable option anymore.


That's a huge assumption. How do you know 0Ls are aware of PAYE? and will take it in to consideration when deciding to go to law school or not. I know a lot of law school grads who don't even know what IBR is.

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2807
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Re: PAYE Legislation Thread

Postby 2807 » Thu Mar 06, 2014 8:03 pm

Sorry, but reading through this I am confused:

Is there an actual cap of 57k for the forgiveness portion? Or is this just conjecture?

My loan servicer made no mention of a cap, and told me:
I qualify and..

1. Term: 10 year or 20 year if not qualifying PI
2. ... and payment is 10% of adjusted gross income divide by 12= monthly payment
3. ... with interest rolling over-- but forgiven if you continue to qualify the entire term. (first 3 years of interest covered by Govt)
4. Qualify if: 10 year fixed rate payment is higher than this PAYE 10% adjusted gross income calculation

So, as long as 10% of adjusted gross income (divided by 12) is LESS than your 10 year fixed loan monthly payment, you qualify?

Yes, eventual "forgiven" part can be income for taxation purposes someday.

Still, it sounds too good to be true.
What am I missing?

Thank you for any help/clarity

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SemperLegal
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Re: PAYE Legislation Thread

Postby SemperLegal » Thu Mar 06, 2014 8:08 pm

2807 wrote:Sorry, but reading through this I am confused:

Is there an actual cap of 57k for the forgiveness portion? Or is this just conjecture?

My loan servicer made no mention of a cap, and told me:
I qualify and..

1. Term: 10 year or 20 year if not qualifying PI
2. ... and payment is 10% of adjusted gross income divide by 12= monthly payment
3. ... with interest rolling over-- but forgiven if you continue to qualify the entire term. (first 3 years of interest covered by Govt)
4. Qualify if: 10 year fixed rate payment is higher than this PAYE 10% adjusted gross income calculation

So, as long as 10% of adjusted gross income (divided by 12) is LESS than your 10 year fixed loan monthly payment, you qualify?



Still, it sounds too good to be true.
What am I missing?

Thank you for any help/clarity


That's generally the rules now, this proposal would change them.

Also, just to clarify
Yes, eventual "forgiven" part can be income for taxation purposes someday.


is a very critical thing. Under some not entirely fantastical cases, it could mean owing the IRS $30,000+ one year. Thats a non-trival amount to have to pay. True the IRS does offer payment plans, but being free and clear in 10 years is very different then still being subject to a $30,000 priority loan

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2807
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Re: PAYE Legislation Thread

Postby 2807 » Thu Mar 06, 2014 8:14 pm

SemperLegal wrote:
2807 wrote:Sorry, but reading through this I am confused:

Is there an actual cap of 57k for the forgiveness portion? Or is this just conjecture?

My loan servicer made no mention of a cap, and told me:
I qualify and..

1. Term: 10 year or 20 year if not qualifying PI
2. ... and payment is 10% of adjusted gross income divide by 12= monthly payment
3. ... with interest rolling over-- but forgiven if you continue to qualify the entire term. (first 3 years of interest covered by Govt)
4. Qualify if: 10 year fixed rate payment is higher than this PAYE 10% adjusted gross income calculation

So, as long as 10% of adjusted gross income (divided by 12) is LESS than your 10 year fixed loan monthly payment, you qualify?



Still, it sounds too good to be true.
What am I missing?

Thank you for any help/clarity


That's generally the rules now, this proposal would change them.

Also, just to clarify
Yes, eventual "forgiven" part can be income for taxation purposes someday.


is a very critical thing. Under some not entirely fantastical cases, it could mean owing the IRS $30,000+ one year. Thats a non-trival amount to have to pay. True the IRS does offer payment plans, but being free and clear in 10 years is very different then still being subject to a $30,000 priority loan



Thank you, BUT--

What are you referring to when you say "this proposal would change them"

Where is this new proposal? And is that the issue with a "cap" ?
Is Obama's "new" plan the "new proposal" or is his concept/plan the original way I lay out above?

Thanks.

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A. Nony Mouse
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Re: PAYE Legislation Thread

Postby A. Nony Mouse » Thu Mar 06, 2014 8:19 pm

There's a budget proposal circulating that proposes adding the cap (and other changes). It's Obama's "new" plan because the current program is as you described it. There are a number of people saying the proposal is merely aspirational and extremely unlikely to take effect in it's current form, but it at least suggests that PSLF and PAYE are targets. The link to the proposal should be earlier in this thread (see also the "new proposal would screw people going into PI" thread, which is probably on the first page of the forum - twenty started the thread).

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TheWeeIceMon
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Re: PAYE Legislation Thread

Postby TheWeeIceMon » Thu Mar 06, 2014 8:23 pm

I've been told that the proposal includes elimination of the "tax bomb." If it's true, I don't know how I managed to miss that part.




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