112th Congress Proposes Relief for Student Loan Borrowers Forum

[KingMenes]

FYI: http://www.usnews.com/education/blogs/s ... -borrowers

[romothesavior]

FYI: http://www.usnews.com/education/blogs/s ... -borrowers

This is good.

[NYC Law]

FYI: http://www.usnews.com/education/blogs/s ... -borrowers

This is good.

[AreJay711]

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

[sambeber]

FYI: http://www.usnews.com/education/blogs/s ... -borrowers

This is good.

[bjsesq]

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

[ToTransferOrNot]

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.

[D-hops]

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.

[Verity]

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

[NYC Law]

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.

[sambeber]

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.

[The Gentleman]

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.

[bjsesq]

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?

[sambeber]

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

[09042014]

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?

[Gecko of Doom]

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.

[Verity]

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.

[NYC Law]

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.

[ToTransferOrNot]

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).

[Verity]

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

Thomas Sowell disagrees.

[Verity]

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.

[D-hops]

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.

[bjsesq]

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.

[Verity]

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.

[NYC Law]

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).