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Biden stung by student loan legal loss days before taking effect
(www.newsweek.com)
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this post was submitted on 25 Jun 2024
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2.5 million people qualified for this plan, one of 5 that were put in place.
The plan was largely targeting dropouts, because they tend to be most trapped by loans. They don't get any income benefit from a college degree, and tend to have lower paying jobs. If you're doing income based repayment at minimum wage, it's possible for your loan principle to grow continuously.
I'm not saying it's perfect, but it definitely would have helped people.
They claim 2.5 million but I doubt the real numbers would have been that high or, after 10 years of payments, that the outstanding debt would have been anything significant.
This comment displays a privileged, ignorant position
It's basic math... you have to have borrowed less than 12K and not missed a monthly payment for 10 years.
There's no way, given those two conditions, that there's any significant balance left.
Some people can only pay the minimum, and in certain loans that gets you no closer to paying it off.
This type of principle based trap is a very common issue
Income based repayments such as SAVE calculate your payments as a percentage of your disposable income. This means it can be as low as $0 per month if you happen to be unemployed for even a short time. Interest still accrues, but doesn't capitalize with SAVE. This can result in a "significant" balance.
The federal government tracks all student loans, they know very explicitly how many people qualify.
If you're making income based payments, and you have low income, the debt grows over time because the payments aren't even enough to cover interest on the debt.
You are underestimating the amount of people who make very low payments based on their income. My SO can pay off their loan in 5-6 years based on our income, but if they didn’t have a proper job they could make minimum payments and pay off the loan in 25 years. You obviously will pay a lot in interest but people do that if they don’t earn a lot of money or make bad financial decisions.
So I'm not going to go into detail. Instead I'm going to ask you to truly challenge your belief here and look into it personally. Consider the interest rates, average wage, rate of inflation, and total cost for rent and other bills. Factor in food and gas costs appropriately.
I say this as someone who has had multiple sub-$12,000 loans and never taken over 10 years to pay off.
That doesn't matter though. I do celebrate that you have managed to pay off several loans succinctly without defaulting. Sincerely, well done. However, that in no way relates to what I asked.
It's up to you, of course. No one here can force you. All I did was challenge you to examine what you are certain you know, that's all.
I am certain, after paying to put my kid through college, that student loans are more than $12,000.
He graduated from a state school in 2018, his tuition was $10,000 a year, and he had a scholarship that paid $5,000 a year. I paid the other $5,000, laundered through my Amazon card for points. ;) But if we had done a loan, it would have been $20K.
So problem #1 - I'm not buying the stated number about how many people it will help. $12K is NOTHING when it comes to student loans.
Problem #2 is how much of that sub-$12K loan is still out there after 10 years.
In the end, it doesn't matter since it's all shut down anyway.