student loans...what will happen when payments start

[Anonymous]

Anonymous wrote:

Anonymous wrote:They will never restart payments. The wait has been too long. Once people are used to something (in this case not paying) they will never be able to resume it. It’s a political nightmare. Look at all the Central Americans who have had their TPS renewed every two years for more than 25 years based on a hurricane that occurred in the last 90s. And these are actual citizens. Payment resumption will never happen.

From your mouth to Gods ears. If I have to restart the $700/m payment with the inflation that has occurred in the interim I will be flat broke. If I can eke out another 3 years I can make it to PSLF

Why are you on here and not at your second or third job?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think there will be a lot of babysitters available.

Seriously, did they really think this wouldn’t happen?

(Also hoping the Sup ct goes against the admin’s forgiveness program, unless I can get my car loan forgiven and the first $10k of my kids college bill written off.)

The people with these loans are teachers, building inspectors, business owners. They aren't college kids, they are middle aged people with jobs who have been paying for years. And they still can't pay off these loans.

Mine are already forgiven, thankfully, but navigating PSLF was a nightmare. What a mess.

I totally support the first $X of your kid's college being free, by the way. State schools should be low-cost to all and free to most. It's wrong to tell people they need college degrees to work (required even for many jobs that shouldn't really need them), then make those degrees unaffordable without predatory loans.

The freezes and proposed forgiveness weee never this specific or limited.

[Anonymous]

Anonymous wrote:Not a political discussion. We are discussing the ramifications of a restart on the economy if a whole bunch of people decide to not pay and go into default. Does anyone know the magnitude of student loans vs that of the housing crisis from 2008? Is it even close or not? We keep hearing the consumer is strong blah blah and I just don’t see it, who is sitting around on all this stimulus money? Is the consumer strong because they are paying their student loans? Will all this change when the pause ends? Will the economy go to shit since the consumer is not “strong” anymore?

I would have also thought that there is no way the consumer is strong, but I can go to a casual restaurant last night, and it is absolutely packed on a Tuesday. I can order a new car and hope that it gets here in three months and I get the opportunity to pay full price.

So please, please bring back student loan repayments, because the Fed’s hikes don’t seem to be doing anything.

[Anonymous]

Anonymous wrote:For those who don’t understand why student loans are different: 1) they loaned to risky candidates who had low chances of being able to repay 2) they charged extremely high interest rates 3) the interest compounds (unlike a mortgage) 4) they are not dischargeable by bankruptcy or even at death.

So quit comparing to a mortgage.

+1

Absolutely correct.

On top of soaring costs for college, the federal government further fueled higher education costs by handing out money to any college student without qualification at continuously compounding interest rates which were unjustified for the minor level of risk. What the federal student loan program did to graduate and professional students was far worse due to the amounts involved.

The US government federal student loan program placed many into debt for life.

[Anonymous]

Anonymous wrote:

Anonymous wrote:For those of you who think they’ll never restart, why? Even if the Biden plan goes through, people still owe above the $10k/$20k forgiveness threshold. Why shouldn’t people start paying that back?

PP here. I’m not saying payments shouldn’t resume, I’m just predicting they won’t. Once you pause something for three years, people get used to the new normal, and it’s a political nightmare for whoever restarts them. Do you really think Biden is going to do that one year out from an election? It would be political suicide.

Agree that restarting payments would be political suicide.

Student loans should have been issued at non-compounding rates of interest that were much closer to the prime rate since there was so little risk to the lender. The high compounding interest rates made the loans predatory in nature and, ultimately, risky.

I suspect that few object to repaying the actual loan amounts, but the compounding rates of interest have made that nearly impossible for millions of student loan borrowers.

Maybe the federal government student loan program could recalculate loan balances without the compounding of interest in order to give those with student debt a chance to fully repay the principal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:For those who don’t understand why student loans are different: 1) they loaned to risky candidates who had low chances of being able to repay 2) they charged extremely high interest rates 3) the interest compounds (unlike a mortgage) 4) they are not dischargeable by bankruptcy or even at death.

So quit comparing to a mortgage.

+1

Absolutely correct.

On top of soaring costs for college, the federal government further fueled higher education costs by handing out money to any college student without qualification at continuously compounding interest rates which were unjustified for the minor level of risk. What the federal student loan program did to graduate and professional students was far worse due to the amounts involved.

The US government federal student loan program placed many into debt for life.

There’s lots of misinformation on this thread. Federal student loans are absolutely dischargeable upon not only death but also permanent disability. The interest rates have been variable for a few years and are similar to what you’d find for a private student loan, often better unless you are super well qualified. You can pay your loan back based on your income—something that you could never do with your mortgage. So if you make no money, you pay $0 and those payments count towards 20-25 year forgiveness. The Biden admin is implementing a new Income driven plan this summer which is extremely generous, ensuring median income families pay extremely small or no monthly payments and and the debt won’t amortize if your payment doesn’t cover interest. Debt pause is tied to HEROES act authority which is expiring but Biden could do some last ditch vague extension but that’ll be it. Pausing the loans each month is super expensive and is causing us to approach the debt ceiling faster which is angering Republicans and some Democrats.

As for what will happen, unfortunately it will be messy. There will be a grace period once loans restart and borrowers who may struggle to repay will hopefully sign up for income driven repayment or secure economic hardship deferments or other forbearances. It’s tough.

[Anonymous]

So no one has been paying student loans back at all for several years? I had no idea. Jesus, no wonder inflation has been crazy.

[Anonymous]

Anonymous wrote:So no one has been paying student loans back at all for several years? I had no idea. Jesus, no wonder inflation has been crazy.

Just federal. Private student loans were never paused so those have been due all along. My husband still owes federal loans and has been paying all this time like a responsible adult that knows he owes what he took out. (Don't get me started why he won't let us just knock out the last few grand due - but whatever.)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:For those who don’t understand why student loans are different: 1) they loaned to risky candidates who had low chances of being able to repay 2) they charged extremely high interest rates 3) the interest compounds (unlike a mortgage) 4) they are not dischargeable by bankruptcy or even at death.

So quit comparing to a mortgage.

+1

Absolutely correct.

On top of soaring costs for college, the federal government further fueled higher education costs by handing out money to any college student without qualification at continuously compounding interest rates which were unjustified for the minor level of risk. What the federal student loan program did to graduate and professional students was far worse due to the amounts involved.

The US government federal student loan program placed many into debt for life.

There’s lots of misinformation on this thread. Federal student loans are absolutely dischargeable upon not only death but also permanent disability. The interest rates have been variable for a few years and are similar to what you’d find for a private student loan, often better unless you are super well qualified. You can pay your loan back based on your income—something that you could never do with your mortgage. So if you make no money, you pay $0 and those payments count towards 20-25 year forgiveness. The Biden admin is implementing a new Income driven plan this summer which is extremely generous, ensuring median income families pay extremely small or no monthly payments and and the debt won’t amortize if your payment doesn’t cover interest. Debt pause is tied to HEROES act authority which is expiring but Biden could do some last ditch vague extension but that’ll be it. Pausing the loans each month is super expensive and is causing us to approach the debt ceiling faster which is angering Republicans and some Democrats.

As for what will happen, unfortunately it will be messy. There will be a grace period once loans restart and borrowers who may struggle to repay will hopefully sign up for income driven repayment or secure economic hardship deferments or other forbearances. It’s tough.

Are student loans dischargeable upon death ? If one owes $150,000 on student loan debt at the time of death, but has an estate worth $300,000, is the loan forgiven or must the estate be without adequate funds to repay the student loan in order to be "discharged" ?

If you see permanent disability as an out for student loan debt, I would like to know who or which entity determines what qualifies as "permanent disability".

Suggesting that borrowers can seek relief through forgiveness has been shown to be unrealistic up to this point in time.

[Anonymous]

Anonymous wrote:So no one has been paying student loans back at all for several years? I had no idea. Jesus, no wonder inflation has been crazy.

Why would anyone?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:For those who don’t understand why student loans are different: 1) they loaned to risky candidates who had low chances of being able to repay 2) they charged extremely high interest rates 3) the interest compounds (unlike a mortgage) 4) they are not dischargeable by bankruptcy or even at death.

So quit comparing to a mortgage.

+1

Absolutely correct.

On top of soaring costs for college, the federal government further fueled higher education costs by handing out money to any college student without qualification at continuously compounding interest rates which were unjustified for the minor level of risk. What the federal student loan program did to graduate and professional students was far worse due to the amounts involved.

The US government federal student loan program placed many into debt for life.

There’s lots of misinformation on this thread. Federal student loans are absolutely dischargeable upon not only death but also permanent disability. The interest rates have been variable for a few years and are similar to what you’d find for a private student loan, often better unless you are super well qualified. You can pay your loan back based on your income—something that you could never do with your mortgage. So if you make no money, you pay $0 and those payments count towards 20-25 year forgiveness. The Biden admin is implementing a new Income driven plan this summer which is extremely generous, ensuring median income families pay extremely small or no monthly payments and and the debt won’t amortize if your payment doesn’t cover interest. Debt pause is tied to HEROES act authority which is expiring but Biden could do some last ditch vague extension but that’ll be it. Pausing the loans each month is super expensive and is causing us to approach the debt ceiling faster which is angering Republicans and some Democrats.

As for what will happen, unfortunately it will be messy. There will be a grace period once loans restart and borrowers who may struggle to repay will hopefully sign up for income driven repayment or secure economic hardship deferments or other forbearances. It’s tough.

Are student loans dischargeable upon death ? If one owes $150,000 on student loan debt at the time of death, but has an estate worth $300,000, is the loan forgiven or must the estate be without adequate funds to repay the student loan in order to be "discharged" ?

If you see permanent disability as an out for student loan debt, I would like to know who or which entity determines what qualifies as "permanent disability".

Suggesting that borrowers can seek relief through forgiveness has been shown to be unrealistic up to this point in time.

Yes. All federal (including parent plus) ones are, and most if not all private ones are.

[Anonymous]

Important to understand that one's student loan debt may not be discharged upon death of the borrower in various circumstances. Depending upon when the loans were taken out, the loan may be viewed as community property in the 12 community property states and be inherited by the surviving spouse.

Also, if one is behind on payments, the overdue amount may remain after the borrower's death.

Private student loans may or may not be forgiven / discharged upon the death of the borrower.

[Anonymous]

Anonymous wrote:Not a political discussion. We are discussing the ramifications of a restart on the economy if a whole bunch of people decide to not pay and go into default. Does anyone know the magnitude of student loans vs that of the housing crisis from 2008? Is it even close or not? We keep hearing the consumer is strong blah blah and I just don’t see it, who is sitting around on all this stimulus money? Is the consumer strong because they are paying their student loans? Will all this change when the pause ends? Will the economy go to shit since the consumer is not “strong” anymore?

There won’t be any ramifications bc the money is owed to the govt who made a massive profit from it. It’s just a paper debt. There’s no fallout to the private economy.

[Anonymous]

Anonymous wrote:Important to understand that one's student loan debt may not be discharged upon death of the borrower in various circumstances. Depending upon when the loans were taken out, the loan may be viewed as community property in the 12 community property states and be inherited by the surviving spouse.

Also, if one is behind on payments, the overdue amount may remain after the borrower's death.

Private student loans may or may not be forgiven / discharged upon the death of the borrower.

Nope.

What happens to my loans if I die? If you die, then your federal student loans will be discharged after the required proof of death is submitted.

[Anonymous]

Even with possible--not certain--relief from student loan debt upon the borrower's death or permanent disability, this is little consolation to those still living with student debt. And forgiveness / discharge of student debt is not a certainty for those living in community property states if the loans were borrowed during the marriage.