The Obama administration, faced with an unprecedented surge in student debt, has sought to help struggling borrowers by promoting the so-called income-driven repayment programs. The plans cap borrowers’ monthly payments at 10% of their discretionary income—defined as adjusted gross income minus 150% the poverty level—and then forgive any balance after 10, 20, or 25 years, depending on several variables.
The programs will likely provide the biggest benefits to newer graduates who immediately enter into the program. Older borrowers who have been paying down their debts for years can’t retroactively apply those payments when entering into an income-driven plan, due to a quirk in the law.
The plans also provide the biggest subsidies to borrowers with the largest balances. Government data show those tend to be graduate-degree holders and high earners. Borrowers with smaller balances will often pay more than they would have under a standard 10-year plan due to interest accrual.
And in some cases, two workers doing the same job get different subsidies. For example, a nurse working for a nonprofit hospital would get potentially tens of thousands of dollars more in forgiveness than one working for a for-profit employer, because of a provision Congress created to promote work in the public sector.
That provision—known as public service loan forgiveness—forgives balances after 10 years, tax-free. Private-sector workers have balances expunged in 20 or 25 years and are taxed on the forgiven amount.
The debt-relief programs “favor groups in arbitrary ways that aren’t really reflective of service or most people’s sense of fairness,” said Alexander Holt of the left-leaning think tank New America.
!snip!
Fairness? They want fairness?
It’s their meddling that makes things unfair. Just get out of the way.
The rise in sea level will be more easily attributed to Trump draining a never ending swamp than it will be to man made climate change.
“Public service loan forgiveness”…Aw right, I’ll go pick up trash on the highway twice a week and you pay my bills…..consider it done, and I’ll provide my own trash poking tool at a fair rental charge back atcha…I have a patent pending on a pole with a nail at the end….
Those of us who scrimped and saved over our working lives in order to be able to pay for our kids’ schooling so that they would not have to be faced with the burden of years and years of paying back student loans are going to be really pissed if the Government says “Ah, forget about it”.
🙁
Student Loan forgiveness and free higher ed was the keystone of Hillary’s campaign. College students voted for her in droves. Oh, wait. They didn’t. Most of them didn’t vote at all. The entitled generation are not obligated to do anything. They are not their parent’s mindless democrats. The Dem leadership might have known that if some of them were under 70.
Why not get a little creative on some of these balances. Have an actuary determine what the persons SS benefit would be when the retire. Reduce the loan by that value for every year of SS benefits they sign away. For example if the actuary figures at age 65 they would get $12,000 per year and they sign away the first two years of benefits (at actual retirement) then reduce their current loan by $24,000 and their benefits won’t start for two years. Make a maximum of 3 or 4 years of benefits that can be converted this way and have the value insured by the student in case they die before retirement. There’s too much liability not to get a little creative.
Make them pay back every cent they borrowed! No forgiveness for any reason, period!
I’ve been saying that for years, get Teh Gooberment out of education, K-12, and college. All they do, like everything else they touch, is distort the free marketplace. They attempt to fix the very problems they themselves created……and make it worse. Repeat ad nauseam.
I try to talk to my relatives about this, they don’t understand. They think Gooberment in college is the best thing since sliced bread.
Why don’t they just shed all pretense of “fairness” and just cut to the chase: Forgive the student loan debt for Liberal Arts degrees and law degrees, and screw anyone who is actually doing something useful with their lives like engineers and doctors.
thank God I have no ‘discretionary income’
… what, with the money spent on booze, drugs, gambling & hookers I have nothing left at the end of the month
The program is Obama’s, only in the sense that he voted for it. It was passed by Congress and signed by Bush in 2007. As with any other entitlement, it is going to get very costly-very fast.
Can you say “boondoggle”?