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Biden launches ‘most affordable ever’ student loan repayment plan
(www.theguardian.com)
To me, the biggest wins is that interest cannot overcome your payment. So many people have loans that are more than they started with. Holding steady isn't great, but it's still a massive step forward. The forgiveness rules do mean that effectively some people have to pay until death. There's no upper limit for forgiveness. More loans means longer payments. I was hoping for a cap help cool the cost of college because lenders would think twice with the interest cap and a known end of life.
Luckily there's no payments until death in this plan, except for people with short lifespans I suppose. If you make minimum payments for twenty years, and the loans aren't paid off yet, any remaining balance is forgiven. That includes zero dollar payments if your minimum payment is 0 because of low income. If you apply for forgiveness under public service loan forgiveness it's shortened to 10 years of minimum payments. Prior payments under other repayment plans should count toward forgiveness too, clock isn't suddenly resetting to twenty years for everyone.
Unfortunately Biden is not able to change the interest rate. Even though the law clearly grants him the power to forgive or modify many loan terms, it does not grant him the power to change the interest rates, which are set by statute. And even though the law clearly granted him forgiveness powers we all know how that went with the supreme court. So I don't see them changing interest rates unless democrats get back the house and find a way to overcome a filibuster in the senate.
Wait $0 payments still count? Then I'm like 9 years from forgiveness. Thank you
Yes, if you were getting zero dollar minimum payments under an income based payment plan (not deferrment or delinquent), then that does count toward forgiveness, which is any balance remaining after twenty years of payments for undergrad and twenty five years for graduate loans under the new terms. Ten years of payments under income based for public service loan forgiveness. Also forbearance zero dollar payments during covid counts towards both too.
The program, named Save (Saving on A Valuable Education), will replace the Revised Pay As You Earn (Repaye) plan, lowering the minimum amount due on student loans for borrowers who enroll in an income-driven repayment (IDR) plan.
Under the old rules, borrowers enrolled in this plan were required to pay at least 10% of their discretionary income, or the difference between their adjusted gross income (AGI) and 150% of the federally designated poverty line. Now, borrowers only have to pay the difference between their income and 225% of the poverty line.
poverty line is such a joke now, just like the inflation numbers. they have to double and triple it to get to a more realistic figure.
The .gov page has a pretty extensive FAQ.
Do you still pay interest on those loans with low monthly payments? Because that will just make the problem worse in the long run.
Yes, but the interest charged per month can't be higher than what you pay, so your balance can never increase if you're making payments.
Also there is a forgiveness period after 10+X years for $12+X thousand in subsidized loans (as I understand it).
This is great, but they should just have one gigantic green square that covers everybody.
It would be simpler, but then we would be subsidizing the 1% student loans. We already have that problem with social security: giving out massive payments to rich people while the program slowly runs out of money.
The 1% pays more in taxes, presumably, but their cost of education is not higher than anyone else. So who is subsidizing whom?
Who cares? This is how they fuck us. We can't help anyone because someone who doesn't need help can get it? Life is unfair you don't make it less fair by making us all suffer.
The vaccine is available for free to everyone, as a result people who wanted it got it. That means the homeless and billionaires.
Whenever a politician says the word affordable in quotes, I get nervous.
Biden also launched a significant increase to both interest rates and payments. His plan is worse than how things were when he took office.
This actually seems quite managable. ICR loans are used for student debt in the UK too.
Anyone know how this affects a homemaker that still has student loans. Is the income based on the household income or the loan holder whose current income is 0?
Edit:
From a nerdwallet article I found this:
Benefits for some married borrowers. Spousal income for borrowers who are married and file taxes separately will be excluded from IDR payment calculations; spouses no longer required to co-sign your IDR application.
So it looks like maybe filing separate can be a possibility though have to research any other tax implications.
this post was submitted on 23 Aug 2023
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