Student Debt Cancellation

Apparently, this will be among the first acts of the Biden Administration.

It's a great idea, obviously - which will benefit large numbers of people and the economy.

They're going to do it by executive order. I'm unclear how that's possible since this involves quite a lot of money and power over that is supposed to be restricted to Congress.

Also, it seems unfair if they cancel existing debt but then immediately allow new debt to accrue for new students, so I'd be interested in hearing the detail on that.

I'd like to see some hard data on this. Executive orders can only affect how the government does things. A president, as head of government, can tell government employees things like: "Stop turning asylum-seekers back at the border." But a president has no authority whatsoever to tell banks (privately owned): "Don't make people pay back their loans."

Nor can he simply direct federal funds to pay off all those debts, because allocation of funds is clearly the responsibility of Congress.

So I'd like to see the official sources that say Biden is going to cancel all student debt by executive order. I don't see how it could possibly be done.

Student Loans are federally backed and federally controlled. It’s why they can’t be discharged in bankruptcy (you aren’t done with Uncle Sam until Uncle Sam says you are) and also why the government can offer debt forgiveness incentives (for instance working X years in disadvantaged communities for nurses and doctors*) and how Obama was able to lower repayments by tying to income instead of flat rate. It’s also how Trump suspended repayments through the end of the year due to coronavirus.

Legally, Biden wouldn’t be spending money, which as you say only Congress can do, he is just telling people that owe the government money they don’t have to pay them back. Constitutionally it is a distinction with a difference.

*I believe @Robotech Master worked on a Native American Reservation to pay off his Dental School debt.

I don't think there's been any official announcement. But it's recieving quite a lot of media coverage, and at least some forgiveness was part of Biden's campaign platform.

I assume any actions taken will not affect private loans. But most student loans ($1.4 trillion worth according to Google) are issued by the federal government, not private banks. These are already suspended as part of Coronavirus relief (due to expire at the end of the year.)

As for how (again Google) there's something in the Higher Education Act of 1965 which he might use, but I know not the details.

I would have to agree with you there. The only thing I wonder about is if this is because student loans are federally backed? There might be something where the fed backed the money and they could pay it off and not go after the students?

Hopefully, this executive order will result in the cancelled debt not being taxable. If my taxable income for 2021 is increased by $30,000, I'm kind of fucked.

As it is, I'm on an income-based plan, my monthly payment is $0.00, any they're forgiven after 20 years. Assuming I stay fucking poor for the rest of my life, this is better for two reasons:

1: The increased taxable income is 50-Year-Old Kommander's problem instead of 37-Year-Old Kommander's problem.

2: The increase in taxable income will be spread out over three or four tax years instead of all at once. Having $3000-10000 added to my taxable income for four years would still suck, but not as much.

https://www.nytimes.com/2020/11/13/business/biden-student-loans.html

Another article I read suggested that doing it as part of a pandemic stimulus package, which would require congressional approval, but would justify it being a one time thing.

I tend to doubt that anyone has thought about people who have taken out loans that have not come due, or people who might take loans out in the future.

I seriously doubt ALL federal student loan debt will be forgiven. I would love to be wrong, though. For me, it would be like winning the lottery.

This is a can of worms. What about all the parent loans that were taken out for their kids' education? What about all the people that worked part time jobs and paid as they went? What about all the people that paid off their loans early?

I think the best you can hope for is make it possible to discharge (or easier) through bankruptcy court.

The range of what's being talked about according to the stories I'm seeing include:

• $10k to $50k forgiveness for everyone
• All debt if you make less than $125k and attended a public college or a historically black college or university
• Reform of the public service loan forgiveness program (currently only like 2..2 percent of applicants have been successful)
• Retirement of $10k in debt a year for up to 5 years for people who work in public serrvice in addition to any above reform

I assume the answers are:

Parents who took out loans on behalf of their kids would not be eligible because they did not take out loans through the federal program.
People who worked part-time jobs and paid loans as they went probably do not exist. At least, with the loans I am familiar with, they do not become due until some time. Or if you are talking about people who took out part-time jobs such that they did not need loans, what about them?
People who paid their loans off early paid their loans off early and don't get a refund.

I don't see a reason to make the perfect the enemy of the good here.

If you are a Christian, you may be familiar with the parable of the vineyard. To paraphrase, a vineyard owner needs people to work for him. So he gets a bunch of people to start first thing in the morning and agrees to pay them X. Then he decides he needs some more poeple. So he recruits them and they start at noon. And later he decides he needs still more people. So he recruits them to start in the afternoon. When it comes time to pay people, he pays the people who started in the afternoon X. And he pays the people who started at noon X. The people who started first thing in the morning are watching this, and they're like, "Sweet, I'm going to get even more money!" But when they get paid, they are given X too. They complain, "Hey, we've been busting our asses from the morning and we're getting paid the same as these dudes who just showed up! That is totally unfair." The vineyard owner basically says, you've got nothing to complain about. We agreed you would get X, you got X. It's up to me how I decide to make arrangements with anyone else.

In the case of the Bible parable, it's talking about how God can distribute grace however He wants. But the same holds true to the government. I took out my loans under terms and conditions that were generally known to me, or at least knowable. As long as the government essentially holds up its end of the bargain, I don't have a leg to stand on if going forward it decides to offer better terms to others.

The good would be to change the student loan program and higher education so going forward it's not conning kids and parents out of money.

What's under the bridge needs to be addressed, but forgiven? These are people, not corporations.

This wouldn’t significantly help me (possibly at all) due to my debt load. And my wife’s debt is actually larger. But it’s still the right thing to do.

If all goes accordingly I will have about $100,000 forgiven in April 2021. My wife will be a few years longer 2024?) so forgiving a piece of her debt won’t be helpful given it’s size and the fact that she’s on income based repayment. If the debt goes from $150,000 to $140,000 or even $100,000 it won’t help us since payments are based on income not debt load.

But apparently half of student debt holders have around $10,000 in debt. Forgiving $10,000 would serve as a massive tax cut/stimulus for many low class Americans.

The real issue is stopping this from progressing. My kids will take out loans in a decade or so. Will it still be excessively expensive to go to college? Once their generation reaches 1.7 trillion in loan debt will some government forgive them too? None of Bidens plans will address this. At best it makes forgiveness or partial forgiveness more achievable. But first a person has to assume tens of thousands in debt and HOPE that the promises of forgiveness or fairness remain intact years later.

@Faceman do your kids a favor and send them to school out of country. Yes, we rib Canada for not being a real place, but their schools appear to be much more affordable than American universities.

Not for non-residents.

It might not help short-term, but wouldn't it help long-term? I mean if your debt load is reduced by $100k for you and your wife, one would hope that would knock down the principal significantly and enable you to pay the loans off sooner than the status quo.

Not according to the numbers I crunched comparing Portland State University with University of BC. Their international tuition was slightly less expensive than PSU's resident tuition.

So would people who owe Trump University or whatever the fuck that scam was named have federally insured loans?

Just asking for a brokedick soon to be unemployed orange cheeto.

Something that was proposed in several episodes of The West Wing over a decade ago.

One of the saddest/funniest lines in Battlestar Galactica is Cally's "I just joined to pay for dental school."

If Biden tries to cancel student debt by executive order, it will rightfully be challenged in court and hopefully be struck down.

How come you're losing your job?

Why?

That’s a problem with income based repayment. Once you’re 70% in there’s little incentive to change to a standard plan.

Because his mom paid for his school and everyone else’s should too!!!

I plan to encourage them to go to a public university in California. In ten years it will technically be a different country than the US too.

I mean you aren't wrong...

Before we cure cancer we need to think about how unfair it would be to all the folks that have already died from cancer.

So it's ok to give more students "cancer" by convincing them to get loans they can't pay off? That's the first concern. The cure is to make higher education affordable and do something about predatory government backed student loans going forward.

I'm all for relief of people that got suckered as long as it includes the ones that paid off their debts or didn't incur any in the first place.

And just an FYI I won the parental lottery so combined with scholarships (between boarding school and college the scholarships covered over $160k which was quite a bit of money in the late 90s/early 2000s) had no student debt. We paid off my spouse’s loans four years ago.

For our oldest child we are over 50% funded in their GET account (Guaranteed Educational Trust - every month we buy a percentage of yearly tuition at the University of Washington [most expensive state school] that get us an equal percentage of cost when the kid goes to school) and for the youngest we are on the same payment plan. So for both we should have fully funded college by 14 and just be working on dormitory and dining hall fees (which if money is tight they can live at home and take a 22 minute train ride to one of our nation’s nine ‘Public Ivies’. Rough but I am sure they can make it). I have faith that both children will qualify for scholarships so that won’t happen and in fact some of our money will end up going back into the pot.

I KNOW THAT AND THAT IS OKAY. I’M NOT AN ASSHOLE SO I DON’T GET PISSED ABOUT PAYING FOR FUCKING CHILDREN TO GET A GOD DAMN EDUCATION, THE FUCK IS WRONG WITH YOU PEOPLE?!?!?!

you should be ashamed.

We should start a gofundme for Face. Lawyers need our help too.