Student loan debt forgiveness for $10,000 or $50,000?

[NurseJackie]

https://www.cnet.com/personal-finance/student-loan-debt-forgiveness-for-10000-or-50000-important-details-to-know/

Right now in the US, students have an accumulated total of $1.71 trillion in loan debt, making it second in consumer debt behind home mortgages. Biden made canceling $10,000 of loan debt per student a part of his election campaign, but some members of Congress say that isn't enough and want him to forgive $50,000 per student. "Today we're calling on President Biden to use his authority to forgive up to $50,000 in student loan debt," Sen. Bob Menendez said during a press conference Monday.

(...)

During his presidential campaign, Biden called for forgiving $10,000 of federal student loan debt per person. He also laid out additional plans for college students in the Biden Plan for Education Beyond High School, such as free tuition and more money for federal grants.


In Biden's American Rescue Plan, a provision removed any tax penalty if student loans are forgiven. The IRS treats debt discharged for less than what's owed as taxable income. This would apply to both government and private loans. The forgiveness provision lasts until Dec. 25, 2025. However, as president, Biden has yet to formally forgive any student loan debt.

https://www.cnn.com/2021/02/16/politics/student-loan-forgiveness-biden/index.html

Does Biden have the authority to forgive $50,000 in student loan debt?

During a CNN town hall back in February, an audience member asked if Biden would cancel $50,000 of student loan debt.

"I'm prepared to write off a $10,000 debt, but not 50" thousand, Biden said. "Because I don't think I have the authority to do it by signing [with] the pen."

It appears Biden may have changed his sentiment. On April 1, he asked Education Secretary Miguel Cardona if it's within the president's powers to cancel $50,000 in student loan debt. The department has yet to announce its findings.

[marble falls]

1. As much as possible.

[Voltaire2]

2. Go big or go home.

$32,731: Average Student Loan Debt in The United States. The average college debt among student loan borrowers in America is $32,731, according to the Federal Reserve. This is an increase of approximately 20% from 2015-2016. Most borrowers have between $25,000 and $50,000 outstanding in student loan debt

https://www.valuepenguin.com/average-student-loan-debt#:~:text=Average%20Student%20Loan%20Debt%20in%20The%20United%20States,outstanding%20in%20student%20loan%20debt.

[JT45242]

3. Senator Warren on TV last night talked about tying the max amount to income

I favor this sort of hybrid approach.

For example, a surgeon making $250K per year has a greater ability to pay back money than either someone who did not graduate or is in lower income jobs like teacher, social worker, etc.

I was a teacher for a long time. I was required to get a masters degree to renew my license, but would never make a high salary towards those $25,000 in student loans to gte my masters at a state school. I know other teachers who did not live close enough to a public school so they did either on line or private school.

Should the line be $10K, $25K, or $50 K -- I am not sure -- but I would say that Senator Warren probably has a well researched plan for that so I would defer to her and the experts that she and the Biden administration approach.

Of course, I would also go very strongly after the for profit colleges for the predatory lending that led to huge debts for literally millions of folks who never got a degree -- so all the debt without the increased earning potential.

As she said last night -- a 2% tax on wealth over $50 million would easily pay for this, infrastructure, and a lot of other programs.

[Johnny2X2X]

4. Change PAYE from 10% to 5% of income!

It’s what was on Bidens campaign website as part of his plan. The Pay as You Earn option is currently 10% of adjusted income. Change that to 5% and you’ve halved the worst off borrowers payments. Can be done administratively. No law needed.

[NurseJackie]

6. That makes good sense to me.

[Johnny2X2X]

8. YEs, I bring it up in every thread

It was Biden's campaign plan.

What they now have is 10% of adjusted gross income, and that adjustment is 1.5 times the poverty rate income. So right now, if you're making $100K and are single, you're paying 10% of $83K or $8300 a year. $691.67 a month. Now making it 5% would halve it to $345 a month, basically a car payment. The current system offers forgiveness after 20 years for undergrad and 25 years for grad.

Now Biden's plan mentioned increasing the adjustment, if it went to twice poverty income, you'd be talking just over $300 a month.

These are the people in the most trouble, people with $700 a month payments that could be reduced to $350 a month. That's a huge deal.

[Celerity]

28. Would interest either stopped being charged or dramtically cut to near zero?

If not, you are simply increasing the amount of time to pay it all back, and thus the increase in compounded interest will be massively more.

Look at a 30 year mortgage (at a 7% rate) total payout verus a 15 year year total payout at the same 7% rate. Its a huge difference.

[Claire Oh Nette]

5. $50,000

The UC system was tuition free until Ronald Reagan *punished* the 18-24 college set for voting against him and protesting Viet nam and other unpopular Right Wing fascism.

Oh noes! But a high earner might get all that debt wiped out, the doctors, the lawyers....

Four years as an undergrad and another 3 to get a law degree, or another 4+ in medical school? Yeah, that $50,000 loan forgiveness will totally take care of all that debt. It's not uncommon for students to graduate with $80K of debt, easy.

I borrowed $5,000 over two years for an undergrad degree in the late 80s. Paid it back. I borrowed another $10,000 for an MA & teaching certificate in 98-99, because tuition had gone way TF up. Paid all that off according to schedule, and when we refinanced.

I borrowed one lump of $20,000 for a two year MS in Education in 2010-12, and put it in an interest earning account to cover the whole program, rather than take out multiple loans. I think we've almost paid that one back.

Lo and behold, it's a new decade, and I'm thinking about another degree....

It's an investment in Human Resources. The reality is that even at a public state university tuition is high and wages are low. For Profit colleges hard sold at risk students huge loans for questionable degrees many could not finish, but boy they were aces at getting that federal aid.

I'm an idealist, but I'm of the opinion education should be free to the learner, and part of the services our taxes provide for everyone. It's a matter of priorities.

[brooklynite]

9. Um who gets a Law AND a Medical degree?

[Claire Oh Nette]

10. My gynecologist, for one

No, really...

but I meant those as separate categories of high earners.

Doctors or lawyers will make bank. Those professions, dentists, pharmacists, require 7+ years of education. The average debt load is between $40K-60K, much of that for undergraduate studies. It's a scare designed to make the non-college educated rubes resent those who achieved more education.

I'm in favor of removing the private banking sector from student loans. They're a middle man, as the Federal Government backs those loans.

[Backseat Driver]

20. Medico-legal claim investigators

For a short time, I was a HS-educated secretary/receptionist for a VP in this founder's medical malpractice insurance firm once upon a time in another life that never quite recovered its youthful mojo but inspired me make a concerted effort toward being a debt-free holder of a degree in what TPTB said was one of the fastest-growing career fields, Medical Records--all those medical/financial source documents. That job was a heady experience, to be sure. I attended this man's retirement event (he walked through my space every day) and left chocolates on my desk); the very next day following his "party"; I moved far and away, but it moved the dream ahead or so we thought; DH had at last found a job-I could go to school; and lightening speaking "nothing personal, just business" would not ever make multiple strikes on the same people, right????

https://www.cleveland.com/obituaries/2010/12/aaron_jacobson_was_an_innovato.html

[xmas74]

31. Brad Bradshaw

Is an attorney in Missouri who also graduated from med school. I met him a few years back when he was working on medical marijuana laws in Missouri.

[MichMan]

11. It has been 45 years since Reagan left office as California governor

Every other governor since then could have reinstated free tuition to state colleges.

[Claire Oh Nette]

14. Reagan is not an American Hero

He charged tuition and moved college education out of reach for entire swaths of the population, mostly dark and poor. Others followed, and it was good for the GOP.

Reagan went after the Air Traffic controllers and began the assault on the unions as president. Others followed. Wages stagnated, and it was good for the GOP.

Loss of unions helped facilitate the bait and switch that was 401(k) for pension. And it was good for the GOP.

Tax cuts, tax cuts, tax cuts, and it was good for the GOP.

Lack of educational opportunities, lack of funding for schools, implementation of testing to prop up property values and punish poor neighborhoods for being poor leads to narrow curriculum and a dumbing down. And it was good for the GOP.

He played an amiable character, and delivered his lines well, but Reagan began this 50+ year period of Reactionary politics. I'm hoping Biden drives a stake through the Reagan doctrine permanently and puts an end to the whole trickle down supply side disaster we've been under for most of my life.

[BGBD]

32. That doesn't

change their point.

In the following 45 years why wasn't it put back in?

[Claire Oh Nette]

34. Because the GOP hates public education

GOP tax policies underfund schools at all levels and their corporate tax policies enabling multinationals to pay zero further undercut funding for public education. It's been part of the GOP long game along with union busting shitty minimum wage.

45 years ago was prop 13, and Brown was governor. Reagan instituted tuition at CSU and UCs in the 60s.

Educated people tend to be more liberal.

[MichMan]

35. Didn't realize that the Republicans ruled California

[Claire Oh Nette]

39. Well, in 1967, or now?

Because there have been zero Republican Governors in California??

Ill just deal with my lifetime:

Ronald Reagan (1967-1975) R

Edmund G. "Jerry" Brown (1975-1983) D

George Deukmejian (1983-1991) R

Pete Wilson (1991-1999) R

Gray Davis (1999-2003) D

Arnold Schwarzenegger (2003-2011) R

Edmund G. "Jerry" Brown (2011-2019) D

Gavin Newsom (2019-Present) D

1983-1999 is a whole lot of Republican Governors. I left California in 2012. From 1967 to 2011, 32 yeas of Republican Governors and 12 years of Democratic governors.

Newsom and Brown's second stint, and it's still 32-20, R Govs. in the last half decade. Earl Warren? also Republican in the 40s and early 50s.

Southeast LA county and Orange County where I grew up was very conservative in the 80s--if you lived behind the Orange Curtain, it was a whole different California.

YMMV


The notion that California is a solid sea of democratic support is not accurate and never was. Proposition 13 is a very conservative tax policy and it's ruled California Education funding since i was in 2nd grade.

I'll stand by The GOP hates education and wouldn't fund any of it. Reagan started the increase in tuition out of spite for kids who voted against him, a la the former guy.

[WhiskeyGrinder]

7. All of it.

[Celerity]

12. He expanded it in April 2020 (CNET tweet's in March) to ALL undergrad student loan debt forgiven for

people earning under 125K usd per year and who went to a 2 or 4 year public school, HBCU, or a minority focused school.


Biden's New Student Loan Cancellation Plan

April 10, 2020

https://www.insidehighered.com/quicktakes/2020/04/10/bidens-new-student-loan-cancellation-plan

Joe Biden on Thursday announced a plan to cancel student loan debt for low- and middle-income borrowers who attended a public college or private historically black institution.

The former vice president and Democratic presidential nominee's proposal, announced in a Medium post, moves him somewhat closer to the debt cancellation plan from Senator Bernie Sanders, who dropped out of the presidential race earlier this week and had said he would seek to cancel all student debt as president.

Biden's plan would forgive all undergraduate tuition-related federal student debt for borrowers who earn up to $125,000 a year and who attended community college or four-year public colleges and universities.

The federal government would cover monthly payments for borrowers until the forgivable amount was paid off under his proposal, which would apply to borrowers who attended private HBCUs or minority-serving institutions

Now, that all said, his 10K usd maybe be only referring to an EXECUTIVE ORDER, and he wants the rest forgiven via legislation. That would make sense, although it is harder to do with Manchin and Sinema (or others even) ready to pounce possibly from any angle that is not to their liking.

The 50K usd question President Biden asked (in regards to his authority to go that high via an EO) gives me hope. I am deffo going to wait and watch before any sort of judgment comes feom my end. It is all so very fluid and Biden deserves patience from all. He is doing a bang up job so far.

[MichMan]

19. So nothing to anyone that attended a private college, unless it is a private HBCU ?

[Celerity]

21. I have not found any info on that, you would think there would be some amount tossed to them as well

I am fairly straightforward on it all.

erase all student loan debt for those under 125K per year income (a mirror of Biden's plan in terms of what schools qualify)

Make a formula for private school debt

and also make all but non HBCU/non minority-serving private schools tuition free (so all public schools are tuition free, plus the HBCU's/minority-focused schools are tuition free as well)

plus extend some sort of subsidy for the private school's tuition that doesn't make it free to go there, but helps those under 125K per year income

it would not be fair to make ALL private schools tuition free, there has to be a line drawn somewhere I feel, plus poorer students are already paying so, so much less than rich ones at elite private schools anyway

put a cap on time to earn your degrees no matter where you go (in terms of tuition waiver or aid) with a multi-stage formula for post bachelors degrees (so adults with a bachelors who want to earn a masters or higher can go back later and do it, if they take a break and work after the bachelors)

BAN these diploma mill for profit private school rip-offs

outrageous they were ever allowed to start up

as of 2017 or 2018 or so, it now costs (total expenses, not just tuition) over 100,000 usd for a 4 year public school bachelors degree on average

that is criminal IMHO

[MichMan]

22. Nothing you posted does anything to make college costs go down

Why is it so expensive in the 1st place?

With free college, does the government pay whatever amount schools charge?

For example, in a relatively close geographical area, University of Michigan, Eastern Michigan Univ and Washtenaw Community College all serve students. U of M is $16k per year tuition, Eastern Mich $14k per year and Washtenaw CC $4k per year. Since the cost to the student is now zero, what would prevent Univ of Michigan from raising their tuition to $20k per year and Eastern matching it? Students no longer care, because they aren't paying any of it. In fact, might be the opposite; the higher the tuition is, students and parents would think they were getting even more for "free"

So, just how would the Federal government control the costs at State universities ? While they are public universities, and do receive some state monies, they are not run by the government, nor are their faculty and staff government employees.

[Celerity]

25. Set a formula to determine what can be charged. Just like we do here in Sweden where all tertiary

education, whether public or private is tuition free and in some cases (PhD programmes usually) pays the student.

Obviously cost containment has to be part of the overarching superstructure in the US higher education system. The rates of increase have been insane for the past several decades. Same goes for healthcare and pharmaceutical costs.

Something needs to dramatically change or eventually you are going to have systemic breakdown in multiple interlocking sectors. The current rates of growth in terms of cost basis cannot be sustained.

[BannonsLiver]

13. 25k seems pretty generous.

[NurseJackie]

17. Yes it does.

[Amishman]

15. 10k and PAYE to 5%

And probably something for those who managed to pay theirs off already. Mine are paid off and it took a lot of thrift to do it. Still working on my wife's.

[Baked Potato]

16. At least $30,000.

[WarGamer]

18. Better not give cash to one but not another.

Will create huge anger if no compensation for those who paid cash for college, worked hard for scholarships or attended CC or State College because they couldn't afford BigCollege.

You pay off ONE 50k loan you better compensate everyone.

Be creative. Maybe a 50k credit applied to your Social Security or a tax credit... or something

22 is coming.

[Hekate]

23. Cancel all accrued interest. The amount of debt former students carry is criminal, especially...

...as a lot of it is compounded interest. If interest must be charged, it should be exceptionally low.

[Celerity]

27. Hypothetical question involving interest.

This will not be the typical example but I want to see the limits.

Let's posit that a person has taken out 40,000 usd in student loans ages ago, has made very little to no payments for years, makes too little to pay much back, and yet the interest has compounded to the point where they now owe 80,000 usd in toto (principal plus accrued interest).

IF there is a 40K (for example) erasure, does that apply to the principal (40K) and then all the interest is thus wiped out too, OR is just 40K taken from the 80K, leaving 40K still owed (and presumably still under the cosh of compounded interest, and that 40K, if still not paid on, could potentially end up at 80K again)?

I have been asked this in real life by American mates, plus I have read horror stories about seniors still having massive student loan balances that they likely will never come close to paying off.

TIA

[Hekate]

29. I really don't know. But I would refer you to Senator Elizabeth Warren, who has spoken & written...

...extensively and cogently on the subject. It should be fairly easy to find out.

[Celerity]

30. I emailed her, I hope her staff replies!

thanks

[Hekate]

33. I hope so, too. She's an economist -- I'm just a person who is appalled.

[ecstatic]

24. Well hurry up. I'm trying to drag out my final payments

I only have $3,700 left. I don't want to pay it off in a lump sum and then find out that everything is forgiven the next day. lol.

[OhioChick]

26. $50K would be nice for my kids

But I'm not holding my breath on that.

[USALiberal]

36. I feel bad for the people who busted their ass working two jobs paying it off, they get nothing. nt

[NurseJackie]

37. Agreed. I think that "easing the burden" would be a better solution...

... lower the interest rate, reduce the pay-as-you-earn percentage, forgive or refund penalties, etc.

[USALiberal]

38. I agree! Nt