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What do you ladies think about this? My question is how is this plan actually going to work without affecting tax payers.
http://www.msnbc.msn.com/id/45039424/ns/politics-white_house/?gt1=43001#.TqgoYbI2GTU
At this point, I don't think they care. Presidents have been spending like drunk sailors, and our debt is beyond fathomable.
I say go for it..haha b/c i have loans.. The little money people don't have to pay will probably be spent and put into the economy.
I think "Thank the good Lord!" Similar reliefs and forgiveness programs are offered to business all the time, and I'd rather see this.
@Eva Peron: I know I'd be stimulating the CRAP out of the economy if I didn';t have such massive payments lol
Parts of it seem good but parts of it I don't agree with.
I'm sure it will be helpful to many to be able to consolidate multiple student loans into one loan and to reduce the maximum percentage of income that goes towards repayment.
But I don't agree with reducing the length of time until the debt is forgiven (honestly, I don't agree with forgiving student loan debt because it hasn't been paid off - period).
I don't see how the first or third thing they mention would affect taxpayers, that would just change the payments slightly but not forgive any debt.
Remaining debt is currently forgiven after 25 yrs? I had no idea that was true.
I wonder how much will actually be forgiven? How much are people going to actually save? You know?
@Eva Peron: I do think it would be nice to see some of that extra money being put back into the economy. I think every plan that comes from the top now is just a haphazard attempt at getting the economy up and going rather than solving our issues.
The part that annoys me is forgiving people of their loans. Why did I bother paying every cent back of my loans when others can just get their debt forgiven? It's like when someone is relieved of their tax debt.
@Mrs.KMM: Is this forgiveness automatic or do you need to apply for that? Obviously I would hope I have mine paid off before that but I'm just curious.
It makes no sense to assume that if people have more discretionary income they will go out and buy sh*t. Lately Americans are more apt to save it or pay a credit card bill. Same goes with all those stupid stimulous checks. They anticipate all this money flowing back into the economy and it doesn't happen.
This would be incredibly helpful.
@LGenz: Only if you qualify for income-based repayment, which you have to re-apply for each year. I'm in the process of consolidating my loans and applying for IBR--it's messy, but it's the only way I can avoid defaulting without bankrupting myself. Without IBR, I'd be paying well over $400 a month on loans, which leaves very little for other things (like being able to eat).
The ugly reality is that a lot of college grads don't have good-paying jobs, if they're employed at all. But at the same time, the loan companies want their money NOWNOWNOW. Something has to give.
I pay $350/month for student loans and this new plan won't change anything for me.
@MsBrooklynA: I don't know - the article doens't indicate.
But I don't think anyone should just be forgiven of the debt because they haven't paid it off yet - whether you have to apply for it or not.
I'm for it (because I have student loan debt)! It is stressful for new graduates who are trying to find decent paying jobs right now. I don't understand how this will effect taxpayers, but I'm not really good with politics.
My question is 20 years means what? You have to diligently pay every-month, and you are penalized for a month or time frame that you don pay, prolonging the 20 years. Or is it counted from the day you were due till 20 years?
I read another article saying that the student loan plan will only help people currently in college with loans, not people, like FI, that have been out a few years and making payments.
I think that it's good that they are going to make it easier to students to consolidate student loans but I don't think it fixes the underlying problem of students not being aware of what they're borrowing and how it will effect them once they are out of school. I think that if most students actually thought about the debt they were accumulating while in school some would make an effort to borrow less and maybe get a part-time job. When I went off to school I didn't know anyone who had a part-time job. If I had been smarter then I would have looked at things more closely and probably gotten a part time job and not borrowed as much. That being said I worked hard and paid off my student loans. I was alos smartenough to not get commercial student loans at 17%, mine were government backed loanxs at les sthan 3%. I know people who have borrowed at incrementsof $10k and when all done and said for if they pay their minimum on their monthly installments the $10k will end up being $40k, insane! I do NOT think student loans should be forgiven, ever. Forgiven loans to me seem like stealing, theft of services, food, board and education.
@2PeasinaPod: yeah, I'm kind of with you. I had to work my butt off to get through college - parents paid about $10k of a $100k education - I did get about $70k in scholarships and grants (which I took a lot of time to apply for, be involved in activities, get good grades) and the remaining $20k in loans.
They came into repayment a year ago and I have them 50% paid off. The little timeline thing they gave me said it would take 10 years and I'll be mad if it takes 3! And mind you, that's 50% while I was also paying for the majority of a wedding since DH wasn't employed until April.
I saved and scrimped through college and I'm still doing that - I want those loans paid off so I can keep that interest money. DH and I have good jobs, but we don't spend our money frivolously - which I feel a lot of college students did. I knew way too many kids who got a loan and spent it on beer money or are now spending their money on whatever they want and complaining at how much they have in loans to pay. I realize not everyone is like that, but I saw enough of it to turn me off.
This act won't really affect me as I'm sure as heck not waiting 20 years to get it forgiven and I don't qualify for the consolidation. I know college is expensive - but there are ways to do it cheaper and not end up over your head in loans. So it does kind of piss me off that I'm going to repay every penny of mine and someone else can just default on theirs at the end.
@HisIrishPrincess: That's not really fair now is it. So those people that are actually out in the world don't deserve a break but those currently in school do. That seems so frustrating to me. I'm back in school now but 99% of my debt is from my first year of college and then I decided to take time off until now. Why is it that now that I'm here I can have that but for the previous debt I can't. hmmm
@nickels: What about students who work as much as possible while going to school and STILL have to borrow a ton of money? I worked 2-3 part-time jobs the entire time I was in college as a full-time student and still have $40k in student loans. Yes, there are lazy students, but having a huge amount of loans does not always mean you didn't work and just sat on your ass. I knew what I was getting into with loans, but I had no choice. It was either accept the fact that I'd have a ton of loans or skip college and have a shitty job for the rest of my life.
@nickels: & @hisgoosiegirl: You took the words right out of my mouth. Thanks for explaining it better than I could!
@Mrs Grape: <---This! I worked 2 jobs during college, while doing internships and a bunch of other activities. I didn't have a choice either. My mom lied to me and promised she would help pay if I went to the school she wanted me to go to. She ended up cutting me off and not speaking to me anymore after she got married, so I was on my own. And the school took away my grants because her income increased by $50k. I was screwed either way.
@ Mrs Grape - I believe lots of folks skipped college and can be and are successful.
@ Nickels - Your comment makes me think of the folks with high interest rates on their homes, huge mortgages and those who aren't able to make payments because they signed up for a loan they could not fulfill.
The US economy will continue to struggle to turn around as long as the normal protocol is to "forgive debt" for businesses and individuals alike.
@Mrs Grape: Same here. I have worked all throughout college. I even took a year off and worked full-time to save up. Right now I work 25 hours a week and take a huge course load and have a year left. I also worked my butt off in highschool and have been lucky enough to get huge scholarships. Yet I'll still have 20k+ in loans when I graduate. That's about 5k on average per year which I needed to pay tuition and help cover books, supplies, living expenses, etc which is not very much. I had no choice, because my parents could not afford to help me out.
@peanuthead: I'm not saying people who don't go can't be successful. I'm saying that, given what I want to do in life, I needed a degree.
I do find it hypocritical that there are tons of laws on the books about how credit cards can be marketed to college students but we continue to hand out student loans like candy to 18 yr olds who clearly do not understand what a huge burden these loans will be once they graduate.
Does the loan being forgiven have any impact on your credit score?
@Mrs Grape: Well I know it's not ideal but I do feel like a college education is like anything else, if you can't afford it then you need to make other arrangements. A college degree I do not find to be a god given right and sometimes sacrifices have to be made. Those arrangements can be a number of things, to changing what school you attend, how many courses you take at once etc. I do not believe that just because you have WANT a certain degree form a certain school you should get it and have it paid by your neighbors. I understand it s*cks to have large student loan debt. I would have loved to attend school abroad for all 4 years of my education, but my budget would not allow it, so I chose a different school. I'm also looking into grad school, but at this time I do not see my job after grad school resulting in a big enough pay increase which would allow me to pay the loan back in a reasonable manner, so I will wait or make sacrifices, but I will never ask someone else to do that for me.
@peanuthead: "I believe lots of folks skipped college and can be and are successful."
THIS! My parents are two very good examples of this. They raised 3 fantastic children and neither of them went to college. My dad is now retired and they're still living comfortably. It's about living within your means and with what you have.
@misssydneyj: That's shit. That's absolute shit. One thing that I wish they would do is not take into account parent's income if parent's are not contributing. I think that would help a TON of students. Your mom bailed on you - so when you filed the FAFSA you should have been able to say, no, don't include her income when determing my financial need.
In my case, my parent's were 'supposed' to be contributing upwards of $15-$20k a year to me. Yeah right. They owned a dairy farm. Not the most stable industry. They have three children after me to take care of. The only reason I even got $10k is because I couldn't have an off-farm job. I worked on the farm, so pretty much that was back wages for 8 years of a 35/hour week job.
Hahahaha, I just calculated that out at minimum wage ($8) for 8 years - that'd have been over $100k!!! Sounds like I should chat with the folks!
Personally I think its great. People have complained about all the bailouts for businesses and now this is something that will help individuals rather than corporations. Of course you can never please everyone, so there will always be those that arent happy regardless of what choices are made.
While the idea behind most of this is great, it will not affect people as much as they think. This doesn't seem to affect private loans at all and that is where the bulk of most people's SL debt is. Over 25% of my income goes to SL payments and there is no way to consolidate them any more than they already are as private loans cannot be consolidated.
@Mrs Grape: What industry are you in? Because for the doctor/lawyer industry - I feel like it's high risk/high reward. They are paying a TON upfront for loans - but also looking at a lifetime earning that I can only dream of. So that I understand - but $40k for a job that will pay $40-50k a year - I don't think it's worth it.
I for one, think if you want a college degree you should get it - but maybe finding a cheaper way to do so. My dad has an associate's and my mom was just high school - they are successful but times are much different now.
Things like getting gen eds at a community college or even doing the first year or two there. Take summer classes at your university (cheap and less time) or do take summer classes at community college.
Know your schedule and work it! I had several friends graduate a year early because they took summer classes, packed their schedules. For in-state kids that was about a $10-$15k savings. For me it would have been closer to $25k.
@hisgoosiegirl: I took out $17k in student loans for graduate school. Right now, at 6 years later, I'm at $2,800 left on it. Before I started working, I paid the minimum amount. Once I started working full time, I paid a little more than necessary without advancing the loan. At the moment, I'm paying about an extra $100 a month more to get it done with by the end of next year or sooner. I took my time on it because the interest rate is freakishly low. Our income goes to other stuff. My student loans are secondary to mortgage debt. I can't wait for it to be done, but it definitely hasn't taken me 10 years to finish it.
@hisgoosiegirl: We used to joke that fafsa was assuming my parents were going to sell their house and live off ramen for the next four years.
I turned down Duke because I didn't want to take on student loans and graduated with $0 in loans. I don't think people need to skip college if they can't afford it outright but I do think people need to be smarter about attending a state/local school rather than a prestige school if it really means graduating with 50k in loans. All those stats about making 1mm more in your lifetime with a college degree are only true for a tiny subset of majors at certain schools.
@hisgoosiegirl: Yeah - FAFSA is a bit ridiculous.
My parents own their own business and therefore have no access to 410Ks for retirement. Therefore, all of their retirement savings are in mutual funds. FAFSA doesn't look at 401Ks when determining what you can contribute but they do look at mutual funds. So they looked at my parents' retirement money and expected them to spend it all on college. Apparently they aren't allowed to retire.
Also, my parents worked hard from the day me and my two siblings were born to stash away money in another mutual fund each month to be able to provide 4 years of in-state tuition for their kids. I'm the oldest and wanted to go out-of-state so when we applied for FAFSA, they said that my parents should spend the money saved for my two younger siblings on me and then they might qualify with my younger siblings. Yeah - how is that fair or right?!?
Ultimately, I ended up being awarded scholarships that, when combined with what my parents had saved for me, covered my college costs so I didn't have to take out loans. Without the scholarships, I wouldn't have been able to attend my out-of-state first choice school because I didn't want the burden of that much in loans when I graduated.
@LGenz: Sounds like me - I turned down Johns Hopkins and Washington University in St. Louis because I didn't get enough in scholarships to not be burdened with loan debt. I choose Georgia Tech cause A) I loved it and B) the scholarships allowed me to afford it without loans.
@carrieknitscake: that's awesome! I do the same thing - I set the minimum about $100 higher than it needed to be and every now and then I do a big chunk - bonus check in September - boom $2k off. And an extra $700 to actually pay off one whole set. When we get our tax refund in April - that will either go to my loans or a car for me. We're lucky that we don't have a mortgage yet and DH's loans are all through the bank of Mom and Dad - so no interest but they are out there waiting to be paid.
@peanuthead: Yes, you can still be successful witjout a college degree. I know this is an extreme example but since it's a recent one, Steve Jobs.
I understand that today people borrow money, but I do not think it should be borrowed as much as today's society does. I borrow money, we have two mortgages, but we also have a financial plan that will allow us to pay our debt if we lost our jobs. We know what our loan payments will be before we get the loans. I think a lot of times parents should try to educate their kids before they go off and get the loans on what life will be like after school. It's hard because in today's economy a degree doesn't gaurantee you a job. I kow that if I had to hire someone today, I would most likely hire based on experience than degree.
There's a an after school program in my area that I saw on a local TV show that was great. It took middle school aged kids and sent them into "life". They had the kids pick their profession, then their school of choice. They showed them how much in student loans they would require to get the degree in their chosen profession and how much that would cost afterwards and then compared it to their salary for the career they chose. They then sent them thru life. They chose a house, car (people form local dealerships were there), insurance (local agents), cable (Comcast set up a table), cell (Verizon), everything. They each took turns spinning the "wheel of life" which landed on things like "get a $100 speeding ticket, go pay ticket, after go to insurance agent and pay increased premium" haha. I watched one boy go and reduce his cable to the minimum cable package because he couldn't justify the extra money. Another little girl landed on "lost your Ipod" and decided it wasn't worth replacing. Another boy decided he would go to a state school and live at home and borrow less. To watch these kids make these decisons was great! Afterwards when they were interviewed most said they had no idea how many bills their parents had and now understand why they can't have everything.
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