Regardless of the political, economic and societal implications, I stand to personally gain from this as I near graduation with approximately $20k owed. Is debt cancellation a "for sure" thing at this point?
There are various terms and conditions, like your income and family status (if you are single, you have to make 125k), and whether you qualified for Pell grants when you were in college (if so, you get 20k instead).
I still have not seen the actual document that spells out the terms in detail, just some news reports.
It's been widely reported but AFAIK the official announcement is still due at 2.15pm EDT. These things often turn out to be a bit different in detail from the initial reporting, and the particular issue of student loan forgiveness has been "widely reported" before without follow through.
So don't go on a spending spree just yet. Wait until the paperwork comes through on your new balance before assuming anything.
Wow, awesome (for me personally anyway). I'm on the edge of my seat waiting to see how this resolves. $20k isnt a lot to have, but it sure is a lot to _owe_.
I disagree. $20k is 2/3 of my entire checking and savings account combined, 7 years out of college. It is quite a lot of money to have. I do agree that it's also a lot to owe, prohibitively so.
If you received any Pell grants and make less than $125k, then $20k is forgiven. If you didn't receive Pell grants and make less than $125k, then $10k is forgiven. That's what I've read so far, at least.
I've also read the estimated cost of this is $300 billion, and doing the math on that and the number of taxpayers, I've calculated that the cost to each taxpayer is about $2k, which is less than the cost of tuition for one person at public colleges (or at least, less than the tuition at a public college near me). And this is to pay for the forgiveness for all student loans for these people that have accrued over decades.
Tiny cost to help stop punishing people for wanting to learn in a society literally built upon knowledge, in my opinion. Especially if it acts as a proof of concept that paves the way for future policies applying to new loans -- which would be much cheaper than this all-at-once batch iteration.
I'm in the group of people who would qualify for this. Do I care personally? Not really, I've spent the last 7 years factoring my loans into my budget and I guess I'm content with the sunk cost fallacy now. But do I care as a member of society? Absolutely. This is a wonderful step in the right direction.
EDIT Correction: the $300 billion figure I read is not, as I first thought, annual. It is an estimate over 10 years. Which means the taxpayer cost is actually more like $208/year, not $2k. Even better!
What are the odds it gets shut down? I'm reluctant to get too excited until it's more certain (of course I'll wait to celebrate until it's reflected in my balance, but just knowing it's a relatively sure thing would take a huge load off my mind).
That I don't know. Apparently they're using a 2003 act, along with the current pandemic, to bypass the need for congressional approval, so it may just be impossible to kill, especially now that it's been announced everywhere. But I'm no politician, so there could be more factors at play that could stop it before the disbursements.
Why do you think this will lead to new loans getting cheaper? It seems like it would make loans riskier (there’s now a precedent that creates less incentive for future borrowers to make repayments) and thus more expensive.
I said that if it proves the feasibility of larger. government subsidies on student loans, it could pave the way for future government policies that subsidize new loans. Banks don't care if they're getting paid by the borrower or the government, as long as they're getting paid.
Someone in another thread suggested that universities will raise their tuition to offset the subsidies, for no reason other than profit. I hope that's not the case (it's dystopian to think education is subject to price gouging out of greed, but then I suppose if medicine is, we're already in that dystopia). But even if it is, the tuition would raise equal to the subsidies and the cost to the student wouldn't increase, it just wouldn't decrease.
Best case is universities aren't entirely heartless and realize that they're surviving and profiting just fine on the current tuition, and the education they provide is so important that they shouldn't just raise costs arbitrarily "because they can" in spite of their students. In which case, the loan principals remain the same, but the student pays less.
Worst case, as mentioned above, is we're in a true capitalist dystopia, in which case the costs won't get cheaper, but they also won't get more expensive.
You mentioned the risk of nonrepayment. There is no increased risk of that: the loan servicers will definitely get repayed by the government, and the remaining balance (if there is any) has lower risk of nonrepayment from the student because the payments will be lower, and thus easier to afford.
Are they going to do this again? Because I have some people who don't have government loans, they got private loans.
If I knew they were forgiving debts I would have had them quickly get government loans instead. I'm kind of irritated that my prudent financial planning is a bad decision in hindsight.
Why do they have to link it to loans, why can't they just give some money to every student?
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[ 3.0 ms ] story [ 57.3 ms ] threadThere are various terms and conditions, like your income and family status (if you are single, you have to make 125k), and whether you qualified for Pell grants when you were in college (if so, you get 20k instead).
I still have not seen the actual document that spells out the terms in detail, just some news reports.
Is there a considerable chance this will be blocked or shut down?
So don't go on a spending spree just yet. Wait until the paperwork comes through on your new balance before assuming anything.
I've also read the estimated cost of this is $300 billion, and doing the math on that and the number of taxpayers, I've calculated that the cost to each taxpayer is about $2k, which is less than the cost of tuition for one person at public colleges (or at least, less than the tuition at a public college near me). And this is to pay for the forgiveness for all student loans for these people that have accrued over decades.
Tiny cost to help stop punishing people for wanting to learn in a society literally built upon knowledge, in my opinion. Especially if it acts as a proof of concept that paves the way for future policies applying to new loans -- which would be much cheaper than this all-at-once batch iteration.
I'm in the group of people who would qualify for this. Do I care personally? Not really, I've spent the last 7 years factoring my loans into my budget and I guess I'm content with the sunk cost fallacy now. But do I care as a member of society? Absolutely. This is a wonderful step in the right direction.
EDIT Correction: the $300 billion figure I read is not, as I first thought, annual. It is an estimate over 10 years. Which means the taxpayer cost is actually more like $208/year, not $2k. Even better!
Best case is universities aren't entirely heartless and realize that they're surviving and profiting just fine on the current tuition, and the education they provide is so important that they shouldn't just raise costs arbitrarily "because they can" in spite of their students. In which case, the loan principals remain the same, but the student pays less.
Worst case, as mentioned above, is we're in a true capitalist dystopia, in which case the costs won't get cheaper, but they also won't get more expensive.
You mentioned the risk of nonrepayment. There is no increased risk of that: the loan servicers will definitely get repayed by the government, and the remaining balance (if there is any) has lower risk of nonrepayment from the student because the payments will be lower, and thus easier to afford.
https://www.thebalance.com/president-george-bush-tax-cuts-33...
If I knew they were forgiving debts I would have had them quickly get government loans instead. I'm kind of irritated that my prudent financial planning is a bad decision in hindsight.
Why do they have to link it to loans, why can't they just give some money to every student?
Nobody here on HN has any special insider knowledge from the Biden administration that isn't being reported publicly in the news.