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All-TigerNet [11626]
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Student Loan pause....again
Apr 7, 2022, 8:03 AM
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So I was reading this NPR article, and this paragraph was shocking to me:
The loan repayment freeze began in March 2020, at the beginning of the pandemic, and will now last at least two and a half years – an unprecedented respite in the financial lives of tens of millions of borrowers. According to the latest department data, 500,000 federal student loan borrowers – out of more than 43 million – have been repaying their loans during the pause.
So the loans have basically been interest free for over 2 years, and only 1.2% of borrowers are making payments. That's ####### terrible. Letting those 42.5 Million not make payments is just another reason inflation will soon be over 10%.
https://www.npr.org/2022/04/06/1091018301/student-loan-pause-extended?fbclid=IwAR3s5sBADU8IxS8u7kiKyLDIVCx1R4-pfcT1L4E8B6soGhH7UGdozoEsSTY
Out of curiosity, I went looking at American debt. Looks like all student loan debt ($1.61 Trillion) is 7% of GDP ($23 Trillion in 2021). That works out to about $37,500 per borrower. Amazingly, the average new car loan is just under $40,000 with a total auto loan debt of $1.46 Trillion. Not sure how student loan debt can be crippling while it’s less than the average car loan.
Total mortgage debt is $10.7 Trillion (Sept. 2021) for comparison. Kind of shocked looking at the numbers. I’d figure the two would be much further apart. Our local news (WSB-Atlanta) was interviewing students at GT yesterday. Most of them don't plan on making payments ever and are just waiting for Biden to outright cancel their debt. They actively taking out loans while expecting it to be cancelled. JFC.
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All-In [46800]
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Paused until August. Just in time to pause it again
Apr 7, 2022, 8:05 AM
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for mid-terms
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All-TigerNet [11626]
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I'm guessing the tactic here is to keep pausing it...
Apr 7, 2022, 8:07 AM
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and then eventually 'cancel' it leaving the taxpayers a $1.6 Trillion bill.
Although not sure it will work after the red wave in November.
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All-In [46800]
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It's the new political third rail
Apr 7, 2022, 8:14 AM
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They will never cancel it because Nelnet etc have their hands around our congressmen (and women's) balls.
So they keep passing it along until somebody finally makes people start paying again and ruin their political career.
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Oculus Spirit [97665]
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All-TigerNet [13008]
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Re: Student Loan pause....again
Apr 7, 2022, 8:13 AM
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The liberal mindset in a nutshell:
"Most of them don't plan on making payments ever and are just waiting for Biden to outright cancel their debt. They actively taking out loans while expecting it to be cancelled."
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All-In [31366]
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Re: Student Loan pause....again
Apr 7, 2022, 8:36 AM
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I graduated medical school with about $230,000 in loans, 0 from undergrad. Quarter million dollars for the privilege of spending over a decade of my life training to do a job. I did a 5 year residency and 1 year fellowship, and with a family, mortgage, etc, I put my loans in forbearance for that time period, with about 7% interest that capitalized annually. Finishing training, that 230k had become 320k. The last 18 months of that time though, the interest accrual was paused, a move that I calculated will save me about $55,000 in additional interest when all is said and done.
I refinanced my loans in January to a third party and started making payments. Apparently I’m in the minority. I guess I’m going to end up looking pretty stupid if all federally held student debt ends up being cancelled…. But I see the odds of that actually happening at least for people like me at about 0.0%, regardless of which party is in power.
I don’t see a pause in interest accrual or payments being a net harm to anyone or having any victims. It may just be delaying the inevitable, but I have to say, policy wise I think it was a nice move.
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All-TigerNet [10853]
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Student loan refinance question...
Apr 7, 2022, 8:56 AM
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I took out loans while my daughter was at UGA. She was on scholarship so I kept it as a cushion...repaid each semester...rinse and repeat.
She graduated debt free.
You mentioned you refinanced your student loan. I get many offers to do the same even though I no longer have any loans.
IF the government were to forgive the student loan debt. Will that include the people who have refinanced? You officially paid off your student loan when you refinanced. You basically now have a bill consolidation loan, not a student loan...or do they still consider it a student loan?
Often wondered how that would be handled.
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All-In [31366]
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Re: Student loan refinance question...
Apr 7, 2022, 9:11 AM
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My understanding is once you have refinanced and FedLoan has been paid, that debt is no longer subject to any federal pauses or potential forgiveness.
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All-In [31853]
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the pause in collection and interest accrual...
Apr 7, 2022, 9:32 AM
[ in reply to Re: Student Loan pause....again ] |
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does impact the federal budget/deficit/debt, so the victim is the taxpayer.
If the loans are forgiven, they don't just disappear. The flip sides on the balance sheet and instead of just the borrowers paying them, all of the taxpayers get that honor.
The real issue, that few seem to be willing to discuss, is student loans, but the underlying problem of the cost of higher education. It has been out of control for decades and nothing is being done to curb it.
Just look at Clemson. Look at the change in the quality of life of students over the past 30 yrs. They aren't learning any more...they just get to live in style doing it.
Then factor in the exploding administration costs, the ever expanding scope of the university, all of the new buildings, and on and on.
And a graduate in electrical engineering in 2022 doesn't come out having any better of an education than the same graduate did in 1994. The only real difference is most of them come out with crushing levels of debt, an inability to communicate in person, and an unrealistic expectation of what they "deserve".
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All-In [31366]
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Re: the pause in collection and interest accrual...
Apr 7, 2022, 9:35 AM
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Is the taxpayer “owed” that interest though, or are they “owed” the principal? If I pay off my loan faster and cut down the interest paid, am I taking that from the taxpayer? I don’t know the right answers, but I don’t really feel as though the taxpayer (myself) has been done a disservice with the pause of interest accrual. Loan forgiveness? Absolutely yes, that’s obvious.
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All-In [31853]
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well...
Apr 7, 2022, 9:42 AM
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I typed that first part while doing 3 other things and I may not have been thinking it through correctly.
Let's see....
You would have a loan for Med School under the Plus loan program, right? That means the federal gov was the lender via the Dept of Education.
The money has been dispersed and the cost of loaning that cash out is costing the government the interest it's paying on debt. So if the money isn't being paid back and interest isn't accruing, then the government has costs that aren't currently being covered.
Does that sound correct?
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All-In [31366]
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Re: well...
Apr 7, 2022, 9:59 AM
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Does dispersing the loan have a cost though? Like the entire premise of banking, the lender makes a profit off the loan right? The DoE posted $70.3B in revenues in FY2019 off their loan portfolio. So is the deferral of interest & payments a cost, or is it deferred earnings?
I guess I look at it like, either the govt will make x profit off my loan, or y profit if interest accrual is paused… at the end of the day y may be lower than x, but it is still profit, not a net cost.
I’m no economist and I can’t do math that has letters in it, so this is more a philosophical question than me making any real argument.
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Lot o points [155633]
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Your assumption only works if the government has a big
Apr 7, 2022, 10:04 AM
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pot of loan money sitting around that they weren't going to be doing anything with anyway. Unfortunately, they don't, and, as flow said, they're paying interest on the money that they've floated to you and others that they're not collecting interest on.
Exaggerated example: Imagine a loan shark (shark 1) loaning money to a guy with a 15% vig. That borrower (shark 2) decides he wants to be a loan shark too, so he loans the money he borrowed out at a 20% vig. Now suddenly, the 20% borrower is not required to make his payments to shark 2, while shark 2 is still fully expected to be paying back shark 1. Math doesn't work in anyone's favor but shark 1 (the countries that buy our debt) and the final borrower (the students), while shark 2 (the US taxpayer) is getting bent over.
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All-In [31853]
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What Obed said, plus...
Apr 7, 2022, 10:09 AM
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a reduction in expected profit is a cost.
I don't know what the overhead costs of loaning the money is either. Between interest on the money lent out that the gov pays, the default level, and overhead on lending, I'm not sure if the government actually "makes money" on these loans. My guess is that it is not a source of net revenue.
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Lot o points [155633]
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yes, to use my brutally simple analogy.
Apr 7, 2022, 10:12 AM
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I suspect in reality, Shark 2 (US Gov) is charging less interest to the final borrower than their actual costs to Shark 1, so it's probably subsidized. Net effect similar though, as ultimately it's money lost due to expenses being greater than intended or expected.
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All-In [31366]
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All-TigerNet [12233]
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The "resort living" college experience combined with
Apr 7, 2022, 10:45 AM
[ in reply to the pause in collection and interest accrual... ] |
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the explosion in college administrative overhead, an overabundance of worthless majors, and expansive "student services" has made the costs of most colleges simply ridiculous. What makes the problem even worse is there is a constant drone that everyone must get a 4 year college degree while devaluing "work" and the technical trade skills. The bottom line is that over the last 15 years or so the US college education ecosystem greatly expanded to accommodate people that really had no business getting a 4 year degree and by doing so created this student loan problem we see today.
The result is we have a generation of young adults up to their eyeballs in debt with many having degrees that will never pay for the college bills they have incurred. At the same time, finding a skilled worker to fix a plumbing or electrical issue is becoming ever more difficult.
There is a whole bunch of politicians (mostly on the left) that just love to drag CEO's, and corporations over the coals regarding their salaries and profits. Yet you never see these same politicians drag the Universities and Colleges over the coals for the astronomical increases in education costs. Nope... Academia is part of the "protected class" and as such they are never questioned or forced to justify their salaries, profits, or costs...
Back when I was in High School it was understood that 4 year college degrees were not meant for everyone. That fact was not a bad thing and the folks that were not on a 4 year college degree track were instead taking courses to provide them skills for good paying jobs just the same. Many of my High School classmates went on to trade schools and made a bunch of money as automotive/truck mechanics, welders, plumbers, electricians, electronic techs, computer techs, radiology techs, etc... Many of them ended up owning their own businesses and today can practically write their own paychecks because too many of today's youth have bought into the lie of "must have a 4 year college degree" and left the nation with a deficit of skilled workers.
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All-In [26888]
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All-In [31366]
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Re: Are you not doing PSLF?
Apr 7, 2022, 9:54 AM
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Rejection rate for MD’s applying for pslf is about 95%. I also didn’t qualify for it for one strange specific reason, so I didn’t even try. Too many people are banking on that hope very unrealistically, that was made for social workers with 10k in debt, not for doctors with good cash flow and hundreds of thousands of dollars that they’ll almost universally be able to pay off.
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All-In [46800]
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Same for TLF***
Apr 7, 2022, 9:55 AM
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All-TigerNet [13008]
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Rock Defender [53]
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All-In [31853]
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The idea of continuing the pause brought on by COVID....
Apr 7, 2022, 9:44 AM
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is nuts at this point. We're essentially at full employment and GDP has been booming.
Anyone that wants a job has a job.
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All-TigerNet [11626]
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Biden is talking out of both sides of his mouth...
Apr 7, 2022, 10:09 AM
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Regarding student loans...
"We are still recovering from the pandemic and the unprecedented economic disruption it caused,” Biden said, in a statement.
Also Biden...
“Our economy grew at a rate of 5.7% last year, the strongest growth in nearly 40 years.”
“Our economy created over 6.5. million new jobs just last year, more jobs created in one year than ever before in the history of America.”
So which is it? Still fragile and recovering, or booming?
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Lot o points [155633]
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It's really no different from us still having to
Apr 7, 2022, 10:21 AM
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wear masks the minute we enter an airport for pandemic "safety", while we're cool with ending title 42 illegal immigrant deportations because the coast is clear now with the pandemic.
This administration is a study in oxymorons.
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Hall of Famer [24687]
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Oxycontin Morons... Upright but in a daze...***
Apr 7, 2022, 11:27 PM
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All-TigerNet [10853]
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Re: Biden is talking out of both sides of his mouth...
Apr 7, 2022, 11:23 AM
[ in reply to Biden is talking out of both sides of his mouth... ] |
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Dems control the white house, congress and the senate.
Restarting student loan payments will have to wait until each side is able to point their finger at the other side. Can't do that just yet.
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