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Wed Jun 26, 2019, 06:30 PM

We can alleviate outstanding student debt without total amnesty

We can alleviate outstanding student loan debt without breaking the bank

1. Allow bankruptcy discharge for those who qualify
2. Cut interest rates on outstanding debt. Compounded interest is what blows up loans so that debtors end up paying triple or quadruple the amount of the original loan, with a low percentage of monthly payments going to principal
3. Actually give forgiveness to eligible applicants. The federal forgiveness program is not functioning. 98 % of eligible applicants are turned down or their applications not processed. These are folks who have paid over several years, and fulfilled eligibility requirements.
4. Freeze interest during forbearance and hardship periods as well as the period during which payments can be suspended for those who have been out of college for up to nine months and return.
5. Make it more possible for low income seniors to discharge their loans. Right now they have to have paid regularly and on time for ten years. Make it five. Raise the income level for eligibility. Seniors 65 and over who go into default have their social security, up to 15 Percent, garnished. Currently, a very small percentage of seniors qualify for forgiveness.

These and similar or additional measures wonít cost trillions and yet still have a positive financial impact on a large number of debt carriers. At the same time, people who paid loans off diligently and at financial sacrifice over many years can feel the system fairly recognizes their effort.

We need to prioritize spending in real dollars and political capital. As to debt, many forms of debt from mortgages to credit card to medical debt seriously weigh on individuals and the economy.

People may not have taken out school loans, or have paid them off, but be losing their homes to debt they incurred while able to pay, only to find that a job lay-off, a small business decline, medical expenses or any change in fortune puts them in foreclosure. In many cases, elderly lose their homes where they thought to spend their last days.

Big ticket initiatives should not favor only one voting demographic. And we can lower the ticket price working with existing programs, giving sensible breaks to people in need, and making changes that may be less sweeping, but do not offer lopsided relief in one area at the expense of another.



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Reply We can alleviate outstanding student debt without total amnesty (Original post)
emmaverybo Jun 2019 OP
Hoyt Jun 2019 #1
emmaverybo Jun 2019 #2
smirkymonkey Jun 2019 #3
handmade34 Jun 2019 #4
emmaverybo Jun 2019 #5

Response to emmaverybo (Original post)

Wed Jun 26, 2019, 06:56 PM

1. +1. First step ought to be keeping future students from going deeply in debt.

 

That means encouraging students to go to community colleges, getting colleges to get their costs in order (college costs have ballooned partly because of availability of loans), restricting loans for worthless for-profit schools, required financial counseling, etc.


For those already in debt, there are a number of programs available including joining Peace Corps or Americorps. Joining the military is an obvious option (although I'm not much for military service when the emphasis is killing Muslims, Asians, etc.).

Doctors and nurses can get forgiveness for serving in man/woman-power shortage areas (including some inner-city areas).

Teachers can get loan some forgiveness, particularly in rural areas. Even some lawyers can get some forgiveness for working in rural areas.

https://www.moneyunder30.com/reduce-student-loan-debt-guide



Even, then, some are going to need assistance. Making discharging student loans in bankruptcy easier, will help some. Setting maximum payment levels and years, dependent upon income, will help some. Making it easier to refinance loans and deal with hardships.

I'm not one of those who cares if someone today gets loan forgiveness, while I paid mine off. It was easier 40 or 50 years ago, plus I didn't let myself get into unmanageable debt.


I do think those who didn't go to college would have a legitimate gripe about getting nothing from across-the-board loan forgiveness.

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Response to emmaverybo (Original post)

Wed Jun 26, 2019, 07:30 PM

2. Very good suggestions. And yes, you are right about students enrolled now. For profit colleges

heavily recruit students without having resources for them educationally, offer corporate designed curriculum to look good on paper, substandard general Ed courses, and at an inflated cost by no means offset in entry-level jobs after graduation.

They now recruit veterans, or rather, target them.

The average student in a for-profit college works 20 to 40 hours a week in addition to taking out hefty loans.

In California, many community college students qualify for tuition waivers, many more than apply. However, though these colleges are far and beyond educationally superior to many for-profits, and offer more student services, they face cut-backs in programs resulting in either not offering a vocational course of study at all, or enrolling students by lottery.

I would like to see substantial investment in our nation-wide community college system and hope that more students would be accommodated there instead of at non-profits. Heartily agree with cap on loans at for-profits.

Community colleges could also expand their work study opportunities.

I favor loan forgiveness program expansion. Right now, as I posted, people currently eligible are not getting forgiven.

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Response to emmaverybo (Original post)

Wed Jun 26, 2019, 07:36 PM

3. K&R

 

Some very good suggestions there.

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Response to emmaverybo (Original post)

Wed Jun 26, 2019, 07:53 PM

4. good suggestions...

I will add that the current laws allow for Income Based Repayment (IBR) and those that sign up have to pay only 10-15% of their discretionary income... roughly, that is approx. 15% of any money earned over 18,000

I am not against forgiving student loans but there are systems in place for people unable to pay... the problems with the IBR is that interest keeps accruing and that can be a very real cloud

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Response to handmade34 (Reply #4)

Wed Jun 26, 2019, 08:25 PM

5. Yes. For people in a financial crisis, for lower income or even people with higher incomes, but

other debt and expenses, programs exist to lighten the installment burden. It is just that these programs do not cut the interest. I did not understand the interest is compounded or what that meant. Yes, stupid me.

A half a percent to one percent cut in interest could make a big difference although this might be
made contingent upon a certain number of years paid or income or both.

Itís good you bring up IBR. Honestly, and though that information is easily accessed, not every on3 knows. When you feel you canít pay, you can get overwhelmed and just sit on the thing, while it grows.



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