FOT Forum
FOT Community => General Discussion => Topic started by: Jack from Arkansas on June 30, 2009, 10:34:51 PM
-
http://www.nytimes.com/2009/06/30/education/30college.html?_r=1&em [nytimes.com]
June 30, 2009
New Plan Ties Reduced College Loan Payments to Income
By JONATHAN D. GLATER
For the first time in years, there is good news for college students who borrow to pay for their education.
Starting Wednesday, the federal Education Department will begin offering a repayment plan that lets graduates reduce their loan payments, based on their income.
“We know today’s borrowers are concerned about their ability to repay student loans in the current economic environment,” Arne Duncan, the education secretary, said in a statement. “This new plan addresses the issue head-on by giving them the option of a reduced monthly payment tied to their annual income.”
Also on Wednesday, the interest rate on new federal Stafford loans, the most widely used federally guaranteed student loan, will drop to 5.6 percent, from 6 percent. By 2012, the rate will fall to 3.4 percent, under a schedule mandated by Congress.
The changes come as student borrowers face a difficult job environment and after many families have found it harder or impossible to use home equity loans to pay for college. Since the credit crisis, it has also become more difficult and more costly to obtain private student loans, which are not guaranteed by the government and which typically carry variable interest rates determined by borrowers’ credit histories.
“These benefits are guaranteed, no matter what happens in our economy, and are kicking in at exactly the right time for millions of Americans,” said Representative George Miller, Democrat of California and chairman of the House education committee.
While the interest rate cut applies to new loans, the new repayment option is available to borrowers who took out federal loans or who used a federal consolidation loan to combine their higher-education debts.
The extended payment program, called “income-based repayment,” limits what borrowers have to pay to 15 percent of the difference between their gross income and 150 percent of federal poverty guidelines. After borrowers make payments on loans for 25 years, the balance is forgiven. (The Education Department already offered an “income-contingent” repayment plan, which was similar, but less generous.)
“These programs are such an enormous victory,” said Christine Lindstrom, director of the higher-education access program at U.S. PIRG, the consumer advocacy group. “It enables all borrowers to be able to face their life circumstances and know there is some flexibility and responsiveness based on what life throws their way.”
To help borrowers understand the program, the Education Department has set up a Web site with a calculator to determine monthly payments based on income and family size.
The extended payment plan is intended to work with another program that forgives federal loans taken out by people working in public interest jobs. If borrowers make payments under the income-based plan, the balance on their loans is forgiven after 10 years.
There is a catch, though. To participate in the program, borrowers must shift their loans into the federal Direct Loan program, in which the government extends credit directly. The forgiveness is not available for loans made by banks or other loan companies, like Citigroup or Sallie Mae.
The definition of public service under the forgiveness program is broad. Jobs in government, public schools or colleges, nonprofit organizations, public interest law, early childhood education, public health or public libraries all could qualify, according to the Education Department.
The forgiveness benefit could lead to even greater interest in public service jobs, which are already drawing more applicants. For example, in the 2008-9 academic year, more people than ever applied to Teach for America — 40 percent more than the year before, said Kerci Marcello Stroud, a spokeswoman.
The earliest anyone working in public service could see any benefit from the forgiveness program is 2017, because the program began in 2007. So someone who started teaching in 2005, for example, would not get credit toward the 10-year period for working in 2005 and 2006.
Due to the length of the program, people interested in participating will have to be careful to document their public interest employment and to make sure they have the right kind of loans. Neither of the new programs help with repayment of private loans made by banks or other lenders.
-
This is a huge deal on the intentional community I'm living with now. A lot of the young people here have a lot of student loans and, with this new legislation, their loans will dissolve in ten years (since some of them technically don't have any income).
-
Crap. I consolidated my massive loans a few years back into a Sallie Mae lump of garbage that I will repay until my 50th birthday. Thus, ineligible, apparently.
Back to Plan B: faking my own death.
-
this is bullshit.
-
You should all try to make some more money, and go back in time and not run up so much debt.
I have the solutions to all life's problems! Why does everyone always hate me?
-
Most public interest lawyers like public defenders make 40k-60k, with $120k of debt. Probably good news for them.
-
this is bullshit.
Why is this bullshit, Andy? Explain yourself.
-
I can be the devil's advocate. I don't think it's bullshit, but I definitely don't want the taxpayer to end up on the hook for dumbass "degrees." I have no idea of how to define what degrees are "dumbass" without seriously offending someone (plus, I was an English major and I'm married to an MFA). I don't mean traditional, rigorous liberal arts degrees. I'm all for studying the trivium. I mean hippy shit. If people want to end up with unmarketable skills, that's great, but the government shouldn't actively encourage it.
By the way, France has nearly free higher public education and a really shitty university system, and a relatively low percentage of its population with tertiary degrees. Great high schools, though. Go figure.
-
I want to see these "dumbass degrees" enumerated to provoke rage among the holders of said degrees.
-
I want to see these "dumbass degrees" enumerated to provoke rage among the holders of said degrees.
* graphic design
* alternative comedy
* playwriting
* whatever it is that buffcoat does, managing/owning of some kind I gather
-
The article states that if one makes payments for 25 years the remainder of the loan is forgiven in the private sector. Also, if one works in a public works scenerio and makes payments for 10 years the remainder of the loan is forgiven.
This keeps people from defaulting on the loan. The majority of the time the principle will have been covered and then some within the timeframe anyway so the public isn't really eating the debt. I don't know the figures but people are defaulting like crazy and this will help stem the problem.
I think it's problematic to frown upon people pursuing liberal arts degrees. How depressing if the government only got behind healthcare and business programs. Sounds like some Lou Dobb's type situation.
-
there's no such thing as free money.
-
Argh! I would never include traditional, rigorous liberal arts degrees as dumbass. I think that the solution to "too many" students taking a degree in one topic or another is probably to make it harder. That my only objection to modern English literature programs, you don't have to know Latin and Old English anymore.
If you're calling it a "college" or a "university" it shouldn't be about job training. It's mostly courses that are semi-vocational that bug me. But that attitude doesn't fly anymore. So, if you insist on having "career" degrees, at least those should be practical.
And I think that the program in question is probably good if it requires people to pay back the principle. It's just that I used to think all higher ed should be free. I no longer think that.
Just talking undergrad here. If I had limited funds to give out for people's educations, hard sciences, engineering, and math would be first. The things China sends students to our shores for, and the programs we need more students in. Not "business" degrees by any means.
-
This is a start. Higher education shouldn't be free but it shouldn't be charged interest either.
-
I want to see these "dumbass degrees" enumerated to provoke rage among the holders of said degrees.
* graphic design
* alternative comedy
* playwriting
* whatever it is that buffcoat does, managing/owning of some kind I gather
I majored in Dumbass, so there's one right there.
-
Why should any debt that someone willingly signs up for be forgiven before it is repaid?
-
Why should any debt that someone willingly signs up for be forgiven before it is repaid?
I think the problem might be that many colleges/universities don't do a good job explaining the terms, most 18-year-olds don't understand compounding interest, and many times people sign semester to semester or year to year loans without comprehending the full cost.
None of which forgives the fact that I signed a loan agreement for the University of Dumbass and need to just deal with it. Nor that Citibank should be making high interest off people who did "what you're supposed to do" and went to college.
-
Higher education shouldn't be free but it shouldn't be charged interest either.
thats pretty much my sentiment. i also used to believe college should be free, but ive always been confused by the concept of interest anyway, college loan or otherwise.
-
Why should any debt that someone willingly signs up for be forgiven before it is repaid?
Why not?
-
Why should any debt that someone willingly signs up for be forgiven before it is repaid?
Why not?
want to loan me some money?
-
Why should any debt that someone willingly signs up for be forgiven before it is repaid?
Why not?
want to loan me some money?
Sure, if I get to just print my own or borrow it from China.
-
Why should any debt that someone willingly signs up for be forgiven before it is repaid?
Andy, you have posted multiple times about stealing a camera from work yet you act sanctimonious about a program that borrowers can use that is sensitive to their income level but ensures the government will be paid for 10 years for the public sector and 25 years for the private sector on the balance of the loan. You need to be pragmatic and consider that this might keep people from defaulting on their loan.
I don't care for your smug tone.
-
That public men publish falsehoods
Is nothing new. That America must accept
Like the historical republics corruption and empire
Has been known for years.
Be angry at the sun for setting
If these things anger you. Watch the wheel slope and turn,
They are all bound on the wheel, these people, those warriors.
This republic, Europe, Asia.
Observe them gesticulating,
Observe them going down. The gang serves lies, the passionate
Man plays his part; the cold passion for truth
Hunts in no pack.
You are not Catullus, you know,
To lampoon these crude sketches of Caesar. You are far
From Dante's feet, but even farther from his dirty
Political hatreds.
Let boys want pleasure, and men
Struggle for power, and women perhaps for fame,
And the servile to serve a Leader and the dupes to be duped.
Yours is not theirs.
-
Andy, you have posted multiple times about stealing a camera from work yet you act sanctimonious about a program that borrowers can use that is sensitive to their income level but ensures the government will be paid for 10 years for the public sector and 25 years for the private sector on the balance of the loan. You need to be pragmatic and consider that this might keep people from defaulting on their loan.
I don't care for your smug tone.
nice diversionary tactic, but I never said I was going to steal the camera. I would be using it both personally and professionally, although admittedly it would be a stretch to justify the cost to my company if I had to.
Are you now able to discharge student loans? I would benefit greatly from this measure, as I'm currently paying for $40,000 of school debt that my wife compiled throughout her undergrad (philosophy) and grad degrees (MHA). She has worked for the VA for 4 years, so we'd only be about 6 years from having her loans taken care of. I just don't think it's right, as a matter of personal responsibility. I feel like there are other measures that could/should be taken in lieu of just wiping the slate clean after a certain number of years.
But what the fuck do I know? I'm just a camera thief.
-
Why should any debt that someone willingly signs up for be forgiven before it is repaid?
Because higher education is too expensive.
-
Andy, you have posted multiple times about stealing a camera from work yet you act sanctimonious about a program that borrowers can use that is sensitive to their income level but ensures the government will be paid for 10 years for the public sector and 25 years for the private sector on the balance of the loan. You need to be pragmatic and consider that this might keep people from defaulting on their loan.
I don't care for your smug tone.
nice diversionary tactic, but I never said I was going to steal the camera. I would be using it both personally and professionally, although admittedly it would be a stretch to justify the cost to my company if I had to.
Are you now able to discharge student loans? I would benefit greatly from this measure, as I'm currently paying for $40,000 of school debt that my wife compiled throughout her undergrad (philosophy) and grad degrees (MHA). She has worked for the VA for 4 years, so we'd only be about 6 years from having her loans taken care of. I just don't think it's right, as a matter of personal responsibility. I feel like there are other measures that could/should be taken in lieu of just wiping the slate clean after a certain number of years.
But what the fuck do I know? I'm just a camera thief.
I never said you are a camera thief. I said you posted about stealing a camera and I thought it made you sound like a hypocrite talking about personal responsibilit and saying the article I posted was bullshit. I don't give a fuck what you do. You can choose to use this or not for the loans you have. I don't like you.
-
Why should any debt that someone willingly signs up for be forgiven before it is repaid?
Because higher education is too expensive.
if you feel it's too expensive, don't take the loans.
also, forgiving loans in this manner doesn't make it any less expensive, it just makes it less expensive for the person getting the debt relief.
-
The government would be justified in forgiving or reducing money owed to it if the cost outweighed the benefit. If you owe me $10, I can forgive that if you agree to do something else for me. So I don't think the public service aspects could be that objectionable; it's not like mortgage cramdowns. It's the same as paying someone to do something. It might not be the most efficient way to go about things but it's certainly reasonable.
For the non-public service aspects, young people with high indebtedness might be a drag on the economy. So the government could think it's in the public interest to cut people a break, even if they don't "deserve" it. I don't think anyone deserves anything. But it is still sometimes the best course to give people undeserved bounties.
Student loans that the government issues are already not the same as private loans. It's already a subsidy program to students and higher ed. People get low interest rates they don't "deserve", tax advantages not available with private loans, etc. So the pool has already been pissed in. This is just one more way for the government to rob Peter to pay Paul. (Federal education types often say that student loans pay for themselves, but that's horseshit, given the lost tax revenue, opportunity costs, and so on.)
In reality, there is probably little direct benefit to the program, since all these people already went to college. I assume the idea is to encourage more people to go to college. But the backlash against giving new students better deals not available to people with existing loans would be horrendous. That in itself is a reason for the government to act in ways that a bank never would. In a democracy, people can always vote themselves free money.
-
score a threadkill for higher education. the science is too tight.
-
I still like you, Andy.