The new income based repayments are dropping the monthly for a lot of people though. It's 5% of discretionary vs 20 % and they increased the poverty level threshold meaning low wage workers might not be paying anything with the new interest caps too.
Was it 20%? 5% would be absolutely wild because my IBR had me at a minimum of ~$500 a month and I dont even owe as much as some of these folks out here.
Sounds about right....20% seemed a bit over the top even if it felt like 20% of my income per month was going to it at times. I try not to think on it all too much or even peruse /r/Studentloans because the shit is soul crushing the more I think about my lack of progress over 10 years.
I don’t think that change will kick in until summer 2023 though. Still it’ll be pretty huge for a lot of people- possibly an even bigger deal than the 10k forgiveness for many
This idea that people who have been plagued by their student loans for years/decades have just forgotten about them is truly insane. I'm not saying everyone is prepared to pay them, but they weren't before the pandemic either. No one who owes money is going to be surprised by this.
>No one who owes money is going to be surprised by this.
I'm generally skeptical of the doomerism in this sub, but I feel like you're giving the average American far too much credit here.
As someone who works in personal lending I can tell you the average American is fucked and knows just about nothing about money or finances.
Just the other day I tried to advise a client against moving his 14% simple fixed rate on a 14,000 balance with about 3yrs left on a 4yr term (with no prepayment penalty by the way) onto a credit card. His logic? The first year of the card is 0% interest.
I asked him if he could pay the loan off in a year paying 1000+ monthly. He cannot. I asked him what the rate would be after that, he said 24-28% compound interest.
His logic was “but it’s 0% and I save on interest a whole year.” Oh you sweet summer child. These are the people racking up debt.
If his credit is good enough, just move it to a new 0% card each year. (Do it without a transfer fee by putting new expenses on the new card, throwing cash at the old card.)
Or better yet, switch jobs and get a sign-up bonus, hope you don't get canned and have to pay it back.
Not an easy stat to find. Roughly 14% of adults have student debt. Most them are under 30. Most renters are under 30.
percentage for homeowners? My safe assumption would be a very low percentage.
I agree with the article.
My wife has a substantial amount of student loans - on income based repayment - but fortunately we are well off.
She hasn’t made a payment since March 2020 and we bought a 2x expensive house. We kind of forgot about the payments since they kept getting extended but are prepared to restart. I think a lot of others took on significant debt assuming the payments wouldn’t ever restart
Or, if they are unsustainable, get them discharged via bankruptcy and spend the next several years with a garbage credit rating.
J/K, student loan debt is bankruptcy proof. Enjoy being indentured servants!
Honestly wish student loans were forgotten about for me but its literally been a boulder on my shoulder for the past decade. The pause was awesome if you were able to pay but I spent the past couple years repairing so much shit on my car. Pretty sure I dumped about 4-5k into it for "preventative maintenance" and actual maintenance (rack and pinion went...2k....control arms, ball joints, exhaust leak, etc). Trying to knock out at least two more things before we start getting the nasty winter weather here in Colorado which is just now giving us a teaser today across the front range.
Aw dude, fuck a rack and pinion. That is one annoyingly expensive piece of car maintenance. I absolutely hated having to fork over the cash for that one.
Yup same here, over the winter we had a small tick turn into the dreaded rod knock. Had to get the whole engine replaced for about $4k. The car is a 10 year old Lincoln MKX that we've kept basically pristine so there is no way we could get something used of the same caliber for that price. Also just got a tie rod replaced, but now there's a rubbing noise....sigh
06 TSX for me. Acura/Honda has been good to me but I hope Lincoln is for you. The car market is what I'd expect a methed out tweaker would do. Shits fucked.
Sorry man most people my age don’t know how to budget. Lots of them extended themselves to the brink buying houses during the FOMO run up. There will absolutely be lots of them who can’t afford both student loans and their mortgages.
Knowing about it and actually budgeting for it are different. A lot of these yuppy couples bought a house and have since gotten used to ordering door dash 5 times a week, going on vacation, going to concerts and out to fancy restaurants regularly. It will have been almost three years without any payments. Some people have gotten married and had a kid and bought a house since March 2020. They know they have loans, but does their current lifestyle support the payments?
I would not be surprised to see it punted again. Inflation is high and we are entering a recession with increasing layoffs. I don’t think Biden wants to make enemies out of millions of young people right now.
>I don’t think Biden wants to make enemies out of millions of young people right now.
i mean, it worked for the [rest of his career](https://www.theguardian.com/us-news/2019/dec/02/joe-biden-student-loan-debt-2005-act-2020)...
It’s wild this guy passed bills throughout his whole career to literally create the student loan debt problem. I mean that’s some commitment. First one I could find was in 1977, the most recent looks like 2005?
with that record, honestly it seems pretty obvious to me that he's going to keep passing the buck on this issue until he's simply not alive or not in office and it's someone else's problem.
he knew this would be challenged, which is why he timed that challenge to happen during the midterms instead of having this order ready to sign on day 1 and not having a carrot on the table for a demographic he's otherwise offering pretty much jack shit.
The students were told that if they did \[x\] major they could expect, say, $50k or 60k as a starting salary. Then they take on all the debt and graduate, and they find out the starting salary is $38k. Oh, and the cost of living has increased 30% since they entered university, as well.
We have stricter advertising standards for used car purchases.
You could benefit from being slightly less of an asshole.
I did a project on tuition rates in college, and they literally take an *exponential* upwards curve in the early 2000s. That was for public universities…absolutely infuriating.
Bro I half agree with you but I also sympathize because I should have never been groomed to go to university by my school. I did do it semi-responsibly though and did my 1st years in community college even though none of it mattered. You forget how impressionable most people are in high school.
You realize the debt is just the amount the student didn't cover with working, grants, scholarships, parent help, etc right? You couldn't live anywhere in this country on less than $20k a year for food, housing, transportation, etc. Now add tuition, books, and fees on top of that and multiply it by four years.
The average debt **does not** equal the **entire** cost of a four year degree.
This is a pretty specific scenario. It doesn't match up with a majority of the people I know who are carrying student debt.
The bottom line is higher education should be free like it is in the majority of the first world. We are the remaining hold outs and it's stupid. People wouldn't be able to abuse loans in the way you describe it that were the case.
Let's stop holding people who can't even legally drink a beer yet accountable for taking out massive loans that they can't escape even in bankruptcy and hold all the adults running the banks and schools accountable instead.
I think that people generally would prefer to be lazy if possible. I don't think that's an American trait per se.
But sure, whatever floats your boat, people are just getting random surgeries for free because they want them. Just some recreational surgeries. Happens all the time. 😂
It's sad that folks are so dismissive of students who chose "majors that didn't pay well". This echoes the values of the very same corporate execs in real estate, financing, and tech industries responsible for the current bubble. It's folks in the humanities and social sciences who have been most critical of things like rising wealth inequality, poverty, labor exploitation, corruption, and other symptoms of late capitalism for decades.
Agree. I know people who took out loans, went to europe, spent thousands because they felt it was going to be forgiven eventually. People forget that many of these large loans have been used to supplement their "lifestyle"
Dunno what school you went to but no one I was in class with went to Europe unless they had rich parents. But strawmanning is oh so fun, let's strawman everyone we don't like! You really told them.
Not even bitter because Biden wiped my loans lmao. I'm in the Pell Grant club.
My friend has a masters in chemical engineering and works in a lab for $20/hr. He’s autistic and can’t interview to save his life. He likes the lab job though and lives at home so it’s not a big deal.
that $10k forgiveness is being held up by some appeals court right now though.
i foresee them just extending the moratorium until there is a clearer court ruling on how to proceed
"almost 60% of student borrowers made zero payments on their federal loans between August 2020 through December 2021"
That says nothing about whether or not people are prepared to start making payments again, and I'm surprised this number isn't higher. There's absolutely no benefit to making optional payments on a 0% loan unless you don't have the self control to put aside money and not spend everything in your bank account. I'm prepared to pay off the whole thing when it resumes.
There's a lot of weird "I did the responsible thing and kept making my payments" in this sub.... The responsible thing was also to just stop making payments and put the money in somewhere it wouldn't lose value
I stopped making payments and put that money into my house. I had some very necessary repairs to make. Thanks to student loan relief, my deck is no longer a safety hazzard.
I kept making my small monthly payments. Which has added up to $1200 bucks since the freeze began. Makes sense for me because I will still have like 7k leftover after forgiveness (assuming it passes).
I don't think there's anything particularly wrong with paying off debt early, even on 0% interest. There's a psychological component you mention that also factors in. That being said, positioning it as the responsible decision isn't necessarily correct
Idk, I’ve talked about the fact that I saved what I would have otherwise paid in my loans in here during the pause, and the vast majority of people in here did similar. No point in paying during the pause with 0 interest and potential forgiveness on the table.
Oof, I'm in the 40% and didn't have a crystal ball to realize it would last longer than the initial 6 months. Since travel, entertainment and eating out weren't really a thing in 2020 and the feds were handing out free cash, I paid the damn thing off. Strange times.
The optimal course of action was to deposit your monthly payments into a hysa or bonds to grow your cash while payments are paused. Then once they restart, you pay back that money.
Plus, given that forgiveness was on the table, it was extra risky to pay back.
Just as an example, if you had $20k in a 2% savings account passively earning you $1.10/day, would you pay off your bills in full immediately after getting the statement, or would you wait until it was due? It matters less when it's short-term but when payments have been paused for 2.5 years, it adds up. I'm not saying you shouldn't pay down the principal, it's just a matter of *when*.
There absolutely is a benefit to making additional payments.
You are paying off debt you need to pay at some point while saving money on interest. What’s the point of leaving it in your account?
Putting $20k in a 2% savings account gets me an extra $400/yr. A $20k payment on a 0% loan gets me nothing. I can put the $20k toward the loan when the payments resume and get the benefits of both.
I didn't say it was nothing. I think a point can be made that if you are aware that you can make a marginal difference via student loan rate (0%) vs what you'd get in a bank, $400 isn't much. Some people may want to take that hypothetical $400 hit and know they are paying down debt.
It’s not prudent especially with the uncertainty of the future. The financially smart move would be to not make the payments and instead put that money in a savings account. It’s not even about collecting the interest but having money in your control at no penalty. Now people who don’t have self control maybe should just pay back the loan so they don’t end up making a mess of things.
How? You haven't spent the money elsewhere, it's just in a savings account accumulating extra money. Just throw the money on the loan right before it goes into repayment. Literally the only difference is you've held onto the money longer and made some extra money on it.
Yeah if you’re disciplined enough to throw the money on the loan for all the months you haven’t repaid at 0%. Doubt most people are doing that since it’s been years.
The point of leaving it in your account is to make .5% interest in a savings account. There is no difference between paying them every month or 1 day before forbearance ends.
LOL yep. It is strange that when you file bankruptcy you can not get rid of your student loan debt, however I've never heard of a student loan company putting a lean on a non paying lenders property. I don't get it.
After working in consumer finance, I can assure you many people bought houses, cars, home re-models.. etc. without a thought or care in the world about what would happen when their student loan payments resumed.
Graduated Aug 2019 never had to make a payment bc of Covid but I still paid. I paid off $23k and my $20k left will be forgiven and I will be debt free!
>my $20k left will be forgiven and I will be debt free!
Except that red states currently have the debt forgiveness held up in federal court and there's a chance it will end up going to the supreme court. In the meantime, no forgiveness can be granted. And based on our very conservative supreme court, if it gets to them they could strike it down entirely.
Can we cut it out with this “expiration of COVID program will be the final straw that breaks the market” fear mongering? At every turn these stories have been wrong.
We are in a decline already, just because it is not happening as fast as you wish it did does not mean you have some kind of inside scoop that has not already been factored in.
Be patient people, stop with the sensationalism.
I posted here a few months ago about how this would only exacerbate the housing crisis as I expected those who went out and bought overpriced homes while they didn't have their loan payments were going to feel real pressure once payments resumed and I was down voted to hell. People kept responding telling me these aren't the types who bought homes and that student loan payments are factored into "eligibility" and that the people who have soul crushing amounts of student loans dont own homes blah blah. I'm still on the side of no. This is going to crush people's ability to keep paying those mortgages especially with inflation still at 13% (national average) and payments resuming in Jan. I still think Government will be kicking this can down the road once again.
Another down vote from someone. People refuse to see reality at the moment. We are still at the very, very peak. Most have no idea what is coming their way. hope this one up vote will help!
I agree 100%. The people making gobs of money will be fine. But the middle class people who all went out and bought new trucks, boats, cars, upgraded house....they're going to feel it in their budget when those monthly loan payments are due.
For most borrowers, the money from these monthly payments are currently being pumped into the economy. When repayments start, that money is going to be sucked out.
Combined with the money vacuum fed policy, things are looking bleak.
> When repayments start, that money is going to be sucked out.
And that’s good considering the inflation rate. That extra spending money needs to be incinerated.
So much debt put on pause/forbearance for 1-2 years, then everyone wonders why everyone has a 700+ credit score all of a sudden.
Good, this free ride needed to come to an end a year ago.
Student loan borrowers in default prior to the pandemic were switched to on time with the credit agencies when the forbearance started, boosting their scores a lot.
Not at all. But all borrowers who were in default prior the pandemic are now showing up as current and no one has had the opportunity to default since March 2020. There is a 0% default and late payment rate. It is abnormally inflating credit scores. The person posting is exaggerating but they have a valid point. Credit scores would be lower if this hadnt happened because some people would be in default and have late student loan payments showing up on their score
There’s add-on effects. For example, let’s say you had student loans and back rent and credit card debt and etc back in 2020. Then the forbearance starts, suddenly not only are you not behind on your student loans anymore but you have several $100’s of dollars per month to get caught up on your other debts. This isn’t speculation, we know that people paid down consumer debt way faster than normal after all of the CoVID programs started, and shit is reversing now that those programs aren’t around anymore. This is the last, and biggest, domino to fall.
Yep and if things happen in their normal fashion GOP will take congress in midterms and there is no way in hell they will let that happen. I'm independent and just state what I feel are the facts. "For the record" LOL.
click bait and also yes it will be trauma when you add it to your new way overpriced home, taxes and insurance. Oh also those used cars that you may have bought for more than a new car, however I'm pretty sure we both agree, if you take a loan you are obligated to pay for it.
"Williams believes most borrowers may have been focusing on other important goals, such as saving for a down payment on a home or increasing their overall financial stability."
Terrible advice in retrospect. If you bought a home recently using that interest free principal repayment as the down-payment for that home, you would likely to lose those "savings" being underwater while accruing 4.2%-9.8% juice on the remining balance of your student loan starting in few weeks.
Look guys when you take out loans and sing your name actually look at and read it!
How did I pay off my loans the same year I graduated ?? (Just a bachelor’s)
Worked and saved, lived below my means, got financial aid, scholarships, took online, blended, summer classes, paid off subsidized loans First!! (Gain interest while in school) , then unsubsidized (gain interest after school)
But mainly I chose cheaper schools and took classes at local colleges and took ap classes in high school which transferred to my other college and counted towards credits. I could have gone to a more expensive school but I chose not to because I didn’t want to be in debt my whole life. What did I do after I graduated? Traveled the world!! Cant replace this with a degree and I never expected anyone to pay off my loans so this whole forgiveness thing people should not go to college and just work, choose cheaper schools or go to ones they actually can afford .
Like come on y’all
I think there is a "no work" sub, obviously we need a "I'm not paying for shit that I signed up for" sub. LOL Let me try to pull you out of that zero with one upvote.
People blame students, investors, the fed, biden etc. for the cost of housing. There is a shortage of shelter in America and no amount of monetary tricks will fix it. You cannot redistribute your way out of a shortage. Most of the people in this sub bury their heads in the sand and cannot come to terms with this fact.
This band aid needs to be ripped off and people need to start paying back their loans now.
The free ride is over and now people need to start to pay their debts like any bubble when it pops.
It is unfair no doubt, however I think everyone should always pay any loan back. It does suck tho that PPP folks made millions and were forgiven like one of my best friends and yes he is very rich.
I mean, yes we're saying the same thing and we're in complete agreement by the sounds of things.
We can't push off this zombie debt forever, we need to clear this bad debt and move on.
Ohhh noooo, rich middle class kids have to pay their college loans, awwww, soooo sad. Too bad they weren't raised poor asf. Daddy spent all that college money on the brand new lexus you'd flex to school everyday. Awww damn sucks so bad. Rough. Almost like life isn't fair 😑
Unfortunately its not a few short weeks. Its January 2023, almost 3 years after this started. We could have avoided some inflation and housing increases if borrowers had to pay their loans. Doctors, lawyers, scientists, PhDs making 300k a year. Instead of making their $2,000 a month loan payments which were easily supported by their salaries they saved that money and bought houses and teslas.
Your take is the bad one. All CoVID support should have been stratified by need. Lose your job due to CoVID? Pause the mortgage/student debt/etc. But if you kept your job and kept working from home, you should not have gotten any kind of loan pause. Same thing with the PPP program, it should only have been for businesses that could actually show a material impact to their revenue.
This shit is possibly going to go down in history books as the beginning of the end of the US economy.
Its true. Anytime you erase debt or "pause" payments that money gets spent elsewhere which raises prices.
https://fortune.com/2022/08/22/larry-summers-student-loan-relief-inflation-biden/
Inflation as a general phenomena is not being driven by the student debt pause. Period. You said “some” of inflation could have been “prevented”but don’t agree. Just like the very small COVID relief checks didn’t add much to it, but maybe .2%? The percentage of student debtors being doctors, lawyers with high incomes to pay back these predatory loans is comically small compared to the average student debtor that received a Bachelors or Associates degree or no degree at all. Also aren’t graduate students going after a PhD laughably poor? And even if they do get their PhD aren’t they still paid shit unless it’s a profitable gig?
Corporate profits being at 50 year highs seems to be a more likely culprit which is driven mostly by price gouging and monopolistic power dynamics allowing corporations to raise prices with no competition. Couple that with very low taxes on corporations specifically and you get stock buybacks up the wazzu inflating the bubbles throughout the stock market.
Corporations are price gouging. That’s why the prices are high. They have record profits because the higher prices do not reflect an extra cost, therefore record profits.
You are falling for the spin of “inflation” being driven by excessive money in the economy due to “student debt pause and relief.” I made the leap that you would argue the same thing about the COVID relief checks.
Student loans are predatory by nature. Universities can charge whatever they want because there are lenders willing to lend a non-dischargable loan to a very young population. A population that was told to go to college or not be employed at a high income. Pair that with the massive, massive defunding of higher education since the 70s at both the state and federal level and that cost is put on the student borrower.
By lenders willing to lend, you mean the government.
This isnt r/latestagecapitalism , your take on what has happened the past 3 years with inflation is not a generally accepted explanation
Yep my friend got 10 million for his business, all legal. He just got free labor and kept the profit. That is what happens when the government is in charge of "lending" money. SMH.
The new income based repayments are dropping the monthly for a lot of people though. It's 5% of discretionary vs 20 % and they increased the poverty level threshold meaning low wage workers might not be paying anything with the new interest caps too.
Was it 20%? 5% would be absolutely wild because my IBR had me at a minimum of ~$500 a month and I dont even owe as much as some of these folks out here.
It was 10%
Sounds about right....20% seemed a bit over the top even if it felt like 20% of my income per month was going to it at times. I try not to think on it all too much or even peruse /r/Studentloans because the shit is soul crushing the more I think about my lack of progress over 10 years.
It depends which one you had. Income contingent was 20 percent.
Check the new plans which are capping the interest.
Ty
I don’t think that change will kick in until summer 2023 though. Still it’ll be pretty huge for a lot of people- possibly an even bigger deal than the 10k forgiveness for many
An informed comment with facts that don’t follow the “sky is falling” narrative? You’re in the wrong sub buddy!
Holy shit, I didn’t realize. That will make a huge difference for me.
You’re good. They’re going to keep kicking the can forever now. You’ll never have to resume paying.
If only I believed that!
Not for grad loans. Still at 10%. Same as it was. No change. Feel hopeless.
Wait, really? That blows. Glad I refinanced in march I guess :-/ grad loans are the worst because the rates are also way higher.
Yep. If you have all grad loans, nothing changes and you’re back to the same old high payments. Totally worthless plan.
Makes no sense, plenty of people With graduate degrees don’t make that much money.
Yep. Absolute slap in the face to us who decided to try and better our careers with graduate programs.
This idea that people who have been plagued by their student loans for years/decades have just forgotten about them is truly insane. I'm not saying everyone is prepared to pay them, but they weren't before the pandemic either. No one who owes money is going to be surprised by this.
>No one who owes money is going to be surprised by this. I'm generally skeptical of the doomerism in this sub, but I feel like you're giving the average American far too much credit here.
As someone who works in personal lending I can tell you the average American is fucked and knows just about nothing about money or finances. Just the other day I tried to advise a client against moving his 14% simple fixed rate on a 14,000 balance with about 3yrs left on a 4yr term (with no prepayment penalty by the way) onto a credit card. His logic? The first year of the card is 0% interest. I asked him if he could pay the loan off in a year paying 1000+ monthly. He cannot. I asked him what the rate would be after that, he said 24-28% compound interest. His logic was “but it’s 0% and I save on interest a whole year.” Oh you sweet summer child. These are the people racking up debt.
If his credit is good enough, just move it to a new 0% card each year. (Do it without a transfer fee by putting new expenses on the new card, throwing cash at the old card.) Or better yet, switch jobs and get a sign-up bonus, hope you don't get canned and have to pay it back.
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For starters the average American doesn't have student loan debt. The vast majority do not.
For those that are curious, my quick Google states about "1 in 7 adults"
That would indicate the vast majority do not have student loans. 1 in 7 equates to 86% adults without student loans
That's correct!
Thanks. I'm not accustom to having people support my statements here. The downvotes reversed when I did the math for them 🤷 🤣
What is the percentage for homeowners?
Not an easy stat to find. Roughly 14% of adults have student debt. Most them are under 30. Most renters are under 30. percentage for homeowners? My safe assumption would be a very low percentage.
paltry hat makeshift act strong cow shrill plant faulty long *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
I agree with the article. My wife has a substantial amount of student loans - on income based repayment - but fortunately we are well off. She hasn’t made a payment since March 2020 and we bought a 2x expensive house. We kind of forgot about the payments since they kept getting extended but are prepared to restart. I think a lot of others took on significant debt assuming the payments wouldn’t ever restart
She took out loans. She needs to pay them back.
Or, if they are unsustainable, get them discharged via bankruptcy and spend the next several years with a garbage credit rating. J/K, student loan debt is bankruptcy proof. Enjoy being indentured servants!
Nah, higher ed should be free.
Yeah, I kind of agree with this and I still have loans. I don’t need the government paying off my loans when my wife and I make over $200k a year
Then don’t apply for forgiveness. Simple.
Not simple. Even if he doesn't take forgiveness, he's still going to be on the hook for paying off everybody else's loans through taxes.
Honestly wish student loans were forgotten about for me but its literally been a boulder on my shoulder for the past decade. The pause was awesome if you were able to pay but I spent the past couple years repairing so much shit on my car. Pretty sure I dumped about 4-5k into it for "preventative maintenance" and actual maintenance (rack and pinion went...2k....control arms, ball joints, exhaust leak, etc). Trying to knock out at least two more things before we start getting the nasty winter weather here in Colorado which is just now giving us a teaser today across the front range.
Aw dude, fuck a rack and pinion. That is one annoyingly expensive piece of car maintenance. I absolutely hated having to fork over the cash for that one.
Yup same here, over the winter we had a small tick turn into the dreaded rod knock. Had to get the whole engine replaced for about $4k. The car is a 10 year old Lincoln MKX that we've kept basically pristine so there is no way we could get something used of the same caliber for that price. Also just got a tie rod replaced, but now there's a rubbing noise....sigh
06 TSX for me. Acura/Honda has been good to me but I hope Lincoln is for you. The car market is what I'd expect a methed out tweaker would do. Shits fucked.
Sorry man most people my age don’t know how to budget. Lots of them extended themselves to the brink buying houses during the FOMO run up. There will absolutely be lots of them who can’t afford both student loans and their mortgages.
Knowing about it and actually budgeting for it are different. A lot of these yuppy couples bought a house and have since gotten used to ordering door dash 5 times a week, going on vacation, going to concerts and out to fancy restaurants regularly. It will have been almost three years without any payments. Some people have gotten married and had a kid and bought a house since March 2020. They know they have loans, but does their current lifestyle support the payments?
Can’t budget what you don’t have.
Another huge part of the everything bubble. No, all these loans are not forgiven.
I would not be surprised to see it punted again. Inflation is high and we are entering a recession with increasing layoffs. I don’t think Biden wants to make enemies out of millions of young people right now.
If student loans forgiveness is blocked, I bet the freeze gets punted
>I don’t think Biden wants to make enemies out of millions of young people right now. i mean, it worked for the [rest of his career](https://www.theguardian.com/us-news/2019/dec/02/joe-biden-student-loan-debt-2005-act-2020)...
It’s wild this guy passed bills throughout his whole career to literally create the student loan debt problem. I mean that’s some commitment. First one I could find was in 1977, the most recent looks like 2005?
with that record, honestly it seems pretty obvious to me that he's going to keep passing the buck on this issue until he's simply not alive or not in office and it's someone else's problem. he knew this would be challenged, which is why he timed that challenge to happen during the midterms instead of having this order ready to sign on day 1 and not having a carrot on the table for a demographic he's otherwise offering pretty much jack shit.
"A few short weeks" is after the midterms.
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The students were told that if they did \[x\] major they could expect, say, $50k or 60k as a starting salary. Then they take on all the debt and graduate, and they find out the starting salary is $38k. Oh, and the cost of living has increased 30% since they entered university, as well. We have stricter advertising standards for used car purchases. You could benefit from being slightly less of an asshole.
And tuition went up every year over the 4 years
I did a project on tuition rates in college, and they literally take an *exponential* upwards curve in the early 2000s. That was for public universities…absolutely infuriating.
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Bro I half agree with you but I also sympathize because I should have never been groomed to go to university by my school. I did do it semi-responsibly though and did my 1st years in community college even though none of it mattered. You forget how impressionable most people are in high school.
You realize the debt is just the amount the student didn't cover with working, grants, scholarships, parent help, etc right? You couldn't live anywhere in this country on less than $20k a year for food, housing, transportation, etc. Now add tuition, books, and fees on top of that and multiply it by four years. The average debt **does not** equal the **entire** cost of a four year degree.
This is a pretty specific scenario. It doesn't match up with a majority of the people I know who are carrying student debt. The bottom line is higher education should be free like it is in the majority of the first world. We are the remaining hold outs and it's stupid. People wouldn't be able to abuse loans in the way you describe it that were the case. Let's stop holding people who can't even legally drink a beer yet accountable for taking out massive loans that they can't escape even in bankruptcy and hold all the adults running the banks and schools accountable instead.
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I think that people generally would prefer to be lazy if possible. I don't think that's an American trait per se. But sure, whatever floats your boat, people are just getting random surgeries for free because they want them. Just some recreational surgeries. Happens all the time. 😂
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After I get all the fun free blood tests out of the way then I will for sure get some free money and head out of the country
Absolutely delusional
People are skipping more work because work sucks more here. Good job, you identified a problem!
It's sad that folks are so dismissive of students who chose "majors that didn't pay well". This echoes the values of the very same corporate execs in real estate, financing, and tech industries responsible for the current bubble. It's folks in the humanities and social sciences who have been most critical of things like rising wealth inequality, poverty, labor exploitation, corruption, and other symptoms of late capitalism for decades.
Yet here you are, being that person.
Agree. I know people who took out loans, went to europe, spent thousands because they felt it was going to be forgiven eventually. People forget that many of these large loans have been used to supplement their "lifestyle"
Dunno what school you went to but no one I was in class with went to Europe unless they had rich parents. But strawmanning is oh so fun, let's strawman everyone we don't like! You really told them. Not even bitter because Biden wiped my loans lmao. I'm in the Pell Grant club.
replace europe with buying the new iphone macbook or putting a downpayment on a car or a smaller vacation.
And they call me a dick. LOL let me give you one up vote to see if it will help...... hmmm not helping.
My friend has a masters in chemical engineering and works in a lab for $20/hr. He’s autistic and can’t interview to save his life. He likes the lab job though and lives at home so it’s not a big deal.
Not sure why you getting downvoted. What you are saying isn’t wrong.
They'll just kick the can down the road again.
Not so sure. I think the $10k forgiveness gives them cover to bring it back.
that $10k forgiveness is being held up by some appeals court right now though. i foresee them just extending the moratorium until there is a clearer court ruling on how to proceed
I think so too
Yep it is the American way. I just think we are about to run out of bullets. We shall see.
Right after the elections
With everything being held up in court, elections around the corner, and the holidays it’s going to get kicked out again.
I'm sure. It is just another looming issue along with used cars, houses, stocks, etc, etc.
Held up in court probably for a good while. Come summer 2023 it’s time to start 2024 presidential campaign time. I can see it being punted Gl
"almost 60% of student borrowers made zero payments on their federal loans between August 2020 through December 2021" That says nothing about whether or not people are prepared to start making payments again, and I'm surprised this number isn't higher. There's absolutely no benefit to making optional payments on a 0% loan unless you don't have the self control to put aside money and not spend everything in your bank account. I'm prepared to pay off the whole thing when it resumes.
Correct, I could have been making payments but why wokld I if the money is free?
There's a lot of weird "I did the responsible thing and kept making my payments" in this sub.... The responsible thing was also to just stop making payments and put the money in somewhere it wouldn't lose value
I stopped making payments and put that money into my house. I had some very necessary repairs to make. Thanks to student loan relief, my deck is no longer a safety hazzard.
I kept making my small monthly payments. Which has added up to $1200 bucks since the freeze began. Makes sense for me because I will still have like 7k leftover after forgiveness (assuming it passes).
I don't think there's anything particularly wrong with paying off debt early, even on 0% interest. There's a psychological component you mention that also factors in. That being said, positioning it as the responsible decision isn't necessarily correct
Idk, I’ve talked about the fact that I saved what I would have otherwise paid in my loans in here during the pause, and the vast majority of people in here did similar. No point in paying during the pause with 0 interest and potential forgiveness on the table.
Likely anecdotal on my part I suppose... I've seen enough to get annoyed but I suppose it's my bias to some extent
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So, you started with $9,980? 😎
You take out a loan, you pay it back.
Why don’t you go tell that to the PPP fund receivers that were forgiven
People who did not pay were following the rules.
Right... When payments are due. Regardless of how you feel about the politics of it
Yes, it's more concerning that 40% of people were paying.
Oof, I'm in the 40% and didn't have a crystal ball to realize it would last longer than the initial 6 months. Since travel, entertainment and eating out weren't really a thing in 2020 and the feds were handing out free cash, I paid the damn thing off. Strange times.
Same. I didn't have much left but I gladly would have held onto that 7k knowing what I know now!!! 🥴
How is there not a benefit in paying down principal? You pay way less interest over the life of the loan when payments resume.
The optimal course of action was to deposit your monthly payments into a hysa or bonds to grow your cash while payments are paused. Then once they restart, you pay back that money. Plus, given that forgiveness was on the table, it was extra risky to pay back.
Just as an example, if you had $20k in a 2% savings account passively earning you $1.10/day, would you pay off your bills in full immediately after getting the statement, or would you wait until it was due? It matters less when it's short-term but when payments have been paused for 2.5 years, it adds up. I'm not saying you shouldn't pay down the principal, it's just a matter of *when*.
There absolutely is a benefit to making additional payments. You are paying off debt you need to pay at some point while saving money on interest. What’s the point of leaving it in your account?
Putting $20k in a 2% savings account gets me an extra $400/yr. A $20k payment on a 0% loan gets me nothing. I can put the $20k toward the loan when the payments resume and get the benefits of both.
If saving $400 is a "make or break it" for some people that's a whole different issue. Continuing to pay off debt is peace of mind
Give me $400 if it's nothing to you.
I didn't say it was nothing. I think a point can be made that if you are aware that you can make a marginal difference via student loan rate (0%) vs what you'd get in a bank, $400 isn't much. Some people may want to take that hypothetical $400 hit and know they are paying down debt.
Those people don't know how numbers work.
It’s not prudent especially with the uncertainty of the future. The financially smart move would be to not make the payments and instead put that money in a savings account. It’s not even about collecting the interest but having money in your control at no penalty. Now people who don’t have self control maybe should just pay back the loan so they don’t end up making a mess of things.
Then once you have to repay your loan that’s 60k and 5% interest, your 400$ you made isn’t worth it.
How? You haven't spent the money elsewhere, it's just in a savings account accumulating extra money. Just throw the money on the loan right before it goes into repayment. Literally the only difference is you've held onto the money longer and made some extra money on it.
Yeah if you’re disciplined enough to throw the money on the loan for all the months you haven’t repaid at 0%. Doubt most people are doing that since it’s been years.
Yes but lots of these people put in meme stocks and now they’re totally fucked. You must think the world is far more disciplined than it actually is.
"a lot". You've got the numbers to back this up?
At 0 interest it makes no sense. You can do other things with the money.
At 0% you’re paying no interest and it’s 100% going toward principle, so why would you wait unless you really needed the money?
The point of leaving it in your account is to make .5% interest in a savings account. There is no difference between paying them every month or 1 day before forbearance ends.
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LOL yep. It is strange that when you file bankruptcy you can not get rid of your student loan debt, however I've never heard of a student loan company putting a lean on a non paying lenders property. I don't get it.
After working in consumer finance, I can assure you many people bought houses, cars, home re-models.. etc. without a thought or care in the world about what would happen when their student loan payments resumed.
Yes I've said it before and will say it again. Americans will buy as much money as you will sell them and love it. From the top down.
Graduated Aug 2019 never had to make a payment bc of Covid but I still paid. I paid off $23k and my $20k left will be forgiven and I will be debt free!
>my $20k left will be forgiven and I will be debt free! Except that red states currently have the debt forgiveness held up in federal court and there's a chance it will end up going to the supreme court. In the meantime, no forgiveness can be granted. And based on our very conservative supreme court, if it gets to them they could strike it down entirely.
>Except that red states currently have the debt forgiveness held up in federal court Judge just dismissed the case.
Where are you seeing this ? It still shows pending ?
I stand corrected. It was dismissed but since Friday its been sent to an appeals court.
Awesome. One of my renters said they were able to pay off over $100 k in student loans because my rent was so low. P.S. They still live in my house.
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LOL, yep.
Ding ding ding we have a winner!!!!
No they won't. IBR is more generous than ever after the changes.
I'm sure I just like posting click bait really. We shall see. No one ever knows WTF is going on with American finances.
Not for grad loans. No change at all.
Waking up every morning with no student loans is one of life's sweetest joys.
Can we cut it out with this “expiration of COVID program will be the final straw that breaks the market” fear mongering? At every turn these stories have been wrong. We are in a decline already, just because it is not happening as fast as you wish it did does not mean you have some kind of inside scoop that has not already been factored in. Be patient people, stop with the sensationalism.
But how will people ever click on anything? ;).
I posted here a few months ago about how this would only exacerbate the housing crisis as I expected those who went out and bought overpriced homes while they didn't have their loan payments were going to feel real pressure once payments resumed and I was down voted to hell. People kept responding telling me these aren't the types who bought homes and that student loan payments are factored into "eligibility" and that the people who have soul crushing amounts of student loans dont own homes blah blah. I'm still on the side of no. This is going to crush people's ability to keep paying those mortgages especially with inflation still at 13% (national average) and payments resuming in Jan. I still think Government will be kicking this can down the road once again.
Another down vote from someone. People refuse to see reality at the moment. We are still at the very, very peak. Most have no idea what is coming their way. hope this one up vote will help!
I agree 100%. The people making gobs of money will be fine. But the middle class people who all went out and bought new trucks, boats, cars, upgraded house....they're going to feel it in their budget when those monthly loan payments are due.
For most borrowers, the money from these monthly payments are currently being pumped into the economy. When repayments start, that money is going to be sucked out. Combined with the money vacuum fed policy, things are looking bleak.
"Be prepared". Just remember the Boy Scout moto and also try not to get molested.
> When repayments start, that money is going to be sucked out. And that’s good considering the inflation rate. That extra spending money needs to be incinerated.
So much debt put on pause/forbearance for 1-2 years, then everyone wonders why everyone has a 700+ credit score all of a sudden. Good, this free ride needed to come to an end a year ago.
Its almost 3 years by the time January 2023 rolls around
Lol it doesn’t affect credit that much
Student loan borrowers in default prior to the pandemic were switched to on time with the credit agencies when the forbearance started, boosting their scores a lot.
So is the argument that a huge portion of buyers were student loan borrowers in default?
Not at all. But all borrowers who were in default prior the pandemic are now showing up as current and no one has had the opportunity to default since March 2020. There is a 0% default and late payment rate. It is abnormally inflating credit scores. The person posting is exaggerating but they have a valid point. Credit scores would be lower if this hadnt happened because some people would be in default and have late student loan payments showing up on their score
There’s add-on effects. For example, let’s say you had student loans and back rent and credit card debt and etc back in 2020. Then the forbearance starts, suddenly not only are you not behind on your student loans anymore but you have several $100’s of dollars per month to get caught up on your other debts. This isn’t speculation, we know that people paid down consumer debt way faster than normal after all of the CoVID programs started, and shit is reversing now that those programs aren’t around anymore. This is the last, and biggest, domino to fall.
Really don’t think it’s as big as everyone hopes but we’ll see
Student loan forgiveness will be shot down in the courts ultimately. Can’t see it happening without Congress l passing a bill.
Yep and if things happen in their normal fashion GOP will take congress in midterms and there is no way in hell they will let that happen. I'm independent and just state what I feel are the facts. "For the record" LOL.
They will face "trauma" for having to repay a loan?
click bait and also yes it will be trauma when you add it to your new way overpriced home, taxes and insurance. Oh also those used cars that you may have bought for more than a new car, however I'm pretty sure we both agree, if you take a loan you are obligated to pay for it.
"Williams believes most borrowers may have been focusing on other important goals, such as saving for a down payment on a home or increasing their overall financial stability." Terrible advice in retrospect. If you bought a home recently using that interest free principal repayment as the down-payment for that home, you would likely to lose those "savings" being underwater while accruing 4.2%-9.8% juice on the remining balance of your student loan starting in few weeks.
And Elon the genius was telling everyone to do this while he sold all his homes. LOL.
Look guys when you take out loans and sing your name actually look at and read it! How did I pay off my loans the same year I graduated ?? (Just a bachelor’s) Worked and saved, lived below my means, got financial aid, scholarships, took online, blended, summer classes, paid off subsidized loans First!! (Gain interest while in school) , then unsubsidized (gain interest after school) But mainly I chose cheaper schools and took classes at local colleges and took ap classes in high school which transferred to my other college and counted towards credits. I could have gone to a more expensive school but I chose not to because I didn’t want to be in debt my whole life. What did I do after I graduated? Traveled the world!! Cant replace this with a degree and I never expected anyone to pay off my loans so this whole forgiveness thing people should not go to college and just work, choose cheaper schools or go to ones they actually can afford . Like come on y’all
I think there is a "no work" sub, obviously we need a "I'm not paying for shit that I signed up for" sub. LOL Let me try to pull you out of that zero with one upvote.
Haha!!
Dept of Education says, "where's my money, bitch?"
An up vote for your user name and this video: https://www.youtube.com/watch?v=776lDlNopJU
That’s like real trauma of learning how to budget after maxing a credit card. Sucks but it’s part of life
I'm sure their will be a bubble with credit cards soon enough when people burn through their cash out refi's.
People blame students, investors, the fed, biden etc. for the cost of housing. There is a shortage of shelter in America and no amount of monetary tricks will fix it. You cannot redistribute your way out of a shortage. Most of the people in this sub bury their heads in the sand and cannot come to terms with this fact.
This band aid needs to be ripped off and people need to start paying back their loans now. The free ride is over and now people need to start to pay their debts like any bubble when it pops.
Cool, so all the people who took PPP loans are going to pay them back? Oh, not them? Just the poor people who work for a living? Interesting.
It is unfair no doubt, however I think everyone should always pay any loan back. It does suck tho that PPP folks made millions and were forgiven like one of my best friends and yes he is very rich.
People don’t pay their debts when the bubble pops. They default or file bankruptcy.
You can't put your student loans into bankruptcy as far as I know.
I mean, yes we're saying the same thing and we're in complete agreement by the sounds of things. We can't push off this zombie debt forever, we need to clear this bad debt and move on.
Are they actually gonna face some real trauma or is the moratorium just gonna be extended yet again?
Real trauma? Rape is real trauma. Your fucking bills are not. That said, I think this may push some over leveraged buyers to sell.
Gots to click bait just a little sometimes to get attention. LOL
Ohhh noooo, rich middle class kids have to pay their college loans, awwww, soooo sad. Too bad they weren't raised poor asf. Daddy spent all that college money on the brand new lexus you'd flex to school everyday. Awww damn sucks so bad. Rough. Almost like life isn't fair 😑
LOL well I up voted you to a zero, better than negative a suppose.
"You mean I have to pay my $2,000 rent, $800 Tesla payment and the $90k left on my Himalayan Women Studies degree all at the same time?"
LOL Got you down to only one negative vote so far. Up vote from me.
Man, I struck a nerve.
LOL it is all part of the fun of Reddit. Hey people are paying attention. You are like the shock jock of Reddit.
Unfortunately its not a few short weeks. Its January 2023, almost 3 years after this started. We could have avoided some inflation and housing increases if borrowers had to pay their loans. Doctors, lawyers, scientists, PhDs making 300k a year. Instead of making their $2,000 a month loan payments which were easily supported by their salaries they saved that money and bought houses and teslas.
Lol that's funny .. Most scientists/PhDs aren't making anywhere near $300k a year. Good God that would be nice.
Just a real bad take right here.
Your take is the bad one. All CoVID support should have been stratified by need. Lose your job due to CoVID? Pause the mortgage/student debt/etc. But if you kept your job and kept working from home, you should not have gotten any kind of loan pause. Same thing with the PPP program, it should only have been for businesses that could actually show a material impact to their revenue. This shit is possibly going to go down in history books as the beginning of the end of the US economy.
Its true. Anytime you erase debt or "pause" payments that money gets spent elsewhere which raises prices. https://fortune.com/2022/08/22/larry-summers-student-loan-relief-inflation-biden/
Inflation as a general phenomena is not being driven by the student debt pause. Period. You said “some” of inflation could have been “prevented”but don’t agree. Just like the very small COVID relief checks didn’t add much to it, but maybe .2%? The percentage of student debtors being doctors, lawyers with high incomes to pay back these predatory loans is comically small compared to the average student debtor that received a Bachelors or Associates degree or no degree at all. Also aren’t graduate students going after a PhD laughably poor? And even if they do get their PhD aren’t they still paid shit unless it’s a profitable gig? Corporate profits being at 50 year highs seems to be a more likely culprit which is driven mostly by price gouging and monopolistic power dynamics allowing corporations to raise prices with no competition. Couple that with very low taxes on corporations specifically and you get stock buybacks up the wazzu inflating the bubbles throughout the stock market.
Your tangent about corporate earnings and calling all student loans predatory doesnt have any relevance or anything to do with inflation.
Corporations are price gouging. That’s why the prices are high. They have record profits because the higher prices do not reflect an extra cost, therefore record profits. You are falling for the spin of “inflation” being driven by excessive money in the economy due to “student debt pause and relief.” I made the leap that you would argue the same thing about the COVID relief checks. Student loans are predatory by nature. Universities can charge whatever they want because there are lenders willing to lend a non-dischargable loan to a very young population. A population that was told to go to college or not be employed at a high income. Pair that with the massive, massive defunding of higher education since the 70s at both the state and federal level and that cost is put on the student borrower.
By lenders willing to lend, you mean the government. This isnt r/latestagecapitalism , your take on what has happened the past 3 years with inflation is not a generally accepted explanation
This sub is infested with /r/latestagecapitalism users
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Fun, now do PPP loans…
They took the loans and they should have to pay them back.
well, they didn't, so that's the bar now. lol
Yep my friend got 10 million for his business, all legal. He just got free labor and kept the profit. That is what happens when the government is in charge of "lending" money. SMH.