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Empty Promises or Possible student debt cancellation?

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  • Zaphod Zaphod 
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    Meh, politicians gonna politic. It’ll be interesting to see what Frankenstein monster of a solution one of the 20 democrats comes up with this week. I’m assuming we will only be afforded to watch 5-6 of them, with the others mostly watching.

    What if interest payment deduction didn’t have a income cap? You put a cap on the loan amount you get a deduction from (sort of like a 750k mortgage cap). You could limit to the original loan amount, and not the loan + capitalized interest.

     

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    I’ve been saying for years make all payments tax deductible, or even some amount of credit. Incentivize paying it off without the pain of it being after tax, self limiting, of course this doesnt solve much of peoples problems as they dont owe much taxes. Sure would be great for large balances though.

    People would turn around and spend in the economy after as well.

    #224998 Reply
    ENT Doc ENT Doc 
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    Interest being deducted takes away tax revenue and absolves people of the full commitment they signed on to. Expansion of PSLF has a more extreme but similar effect – those taking out loans don’t see them as “all that bad” because of back end benefits. So they take out more, which is the opposite of what we want to incentivize.

    #225001 Reply
    Liked by Craigy
    Avatar Dilaudidopenia 
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    This clown in the money makeover video doesn’t want to pay off his student debt but also wants to take on more debt to buy a house.

    I’m a millennial who paid off his student debt of 200+K < 2 yrs after residency graduation.

    These people are scrubs. SMH.

    #225002 Reply
    IntensiveCareBear IntensiveCareBear 
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    Joined: 12/22/2018

    This clown in the money makeover video doesn’t want to pay off his student debt but also wants to take on more debt to buy a house.

    I’m a millennial who paid off his student debt of 200+K < 2 yrs after residency graduation… …These people are scrubs. SMH.

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    Yeah, but you are in the minority. Democracy is a majority “wins” situation.

    …We surveyed 500 college students and recent grads on how they plan to take care of their student loan debts… Top five answers on the board… survey SaaaaYS:

    1) Loan forgiveness from govt programs, politicians, bankruptcy, etc

    2) Move to a different country and don’t pay

    3) Marry a rich guy

    4) Get inheritance

    5) Find a job making more than 99% of peers

    6) “Side hustle”

    7) BitCoin…

    …81) Van life

    82) Mega Millions

    83) Make a budget, live within my means, and actually pay the debt (didn’t make it onto the Family Feud board, shockingly)

    …There is good reason millennials and this loan issue are political cannon fodder: the way a lot of people think is actually that insane. Student loans are a great issue because you get not only the students’ support… but they also lobby their Gen X or boomer parents to vote that way (and all parents live vicariously through their kids, at least to some degree).

    Democracy means candidates promising whatever the people want at the time (health care, immigration, food, jobs, safety from war threat, infrastructure, etc… right now, college education’s near the top). It can be promising to give stuff (usually democrats) or promising to maintain/protect stuff (usually republicans). All hot air. You don’t get something for nothing… it comes from somewhere. None of them will ever audit the Fed, overhaul tax structure, or remove their hands and allegiances from lobbyist and corporate pockets. They just peddle easy answers to get elected. When they win, they gradually deliver a small fraction of that promise to hopefully get re-elected or maintain their ‘legacy’ and personal gravy train. Win by controlling your life, enjoying your life, and not playing the politico news and election games – unless you view it purely as nonsensical entertainment.

    "Hmm, that sounds risky." - motto of the middle class

    #225006 Reply
    Avatar Nysoz 
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    I try to be in the middle of things politically and lean left, but this is pretty ridiculous. I agree there’s a huge problem with students loans but just cancelling all the debt and making college free isn’t the way to solve it.

    It also isn’t addressing the underlying problem with increasing cost of higher education and push for that. Too many people are being encouraged to go to expensive colleges for degrees that they can’t do anything with. They’re also signing expensive high interest loans without knowing the repercussions of doing so. It’s also strange how jobs are requiring higher degrees that don’t benefit from that extra education on a day to day basis.

    #225008 Reply
    Avatar Brains428 
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    Interest being deducted takes away tax revenue and absolves people of the full commitment they signed on to. Expansion of PSLF has a more extreme but similar effect – those taking out loans don’t see them as “all that bad” because of back end benefits. So they take out more, which is the opposite of what we want to incentivize.

    Click to expand…

    I understand your point, but I believe that at least paying off the balance and budgeting to be accountable for that at least puts the psychology of paying a total amount of debt. It’s not like you can sell your student loan at a loss if you can’t find a job to pay it off (like buying too much house).

    Regarding blaming institutions of higher learning for raising the price… they simply followed the economics. People “can” and are willing to pay more with the thought that a higher tuition would offer better job prospects (better=higher paying). Prices will rise (or fall) to what people are willing to pay for them.

     

     

    #225027 Reply
    Avatar Tim 
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    1) Please don’t confuse education and intelligence with being “smart”.
    2) Please don’t confuse scholarships with loans.
    Financial Aid and funding uses to be about charitable donations and scholarships. Now it’s a loan factory. What could go wrong? Leverage is a dangerous thing.

    The 29 year old thinks he “should be doing other things.
    It took a masters to teach him that? He should have been doing “other things” a long time ago.

    Some people never learn. I’ll simply say he is “not smart” although some would use words like idiot, stupidand turd. Not me. Imbecile is as far as I will go.

    Should have looked for scholarships, ridiculous.

    #225039 Reply
    Avatar G 
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    Joined: 01/08/2016

    A few thoughts to ponder:

    1) Everyone, please stop bashing the debt cancellation idea.  Depending on the brass tacks, I hope to take out student loans to go study archery in Mongolia, mountain medicine in Switzerland, or whisky making in Scotland or (you get the idea)…no need to raid the kid’s 529 anymore.  As I will be FIRE, most of my income will be from qualified sources, so I should be within income limits to qualify.  (Don’t forget that I’ll have loans paying for my living expenses.)

    2) Speaking of 529s…what a great tax windfall for the gov when they are cashed out for non-education expenses.

    3) A “wealth tax” is a nonstarter, for reasons that have been discussed before.  But, a surcharge on financial transactions is brilliant.  Do the math, it’s not that much…but it hits everyone who saves any money at all, including the hallowed middle class which is putting money into 401ks.  Now they are saving 5.5% instead of 6% in their employer plan.  It’s literally like taxing you for breathing, or that CA plan to tax texting.  I predict this is the prime reason that it doesn’t pass: somebody will figure out that it is actually a flat tax.  Obviously, a flat tax is not fair in our society.

    #225045 Reply
    Liked by Craigy
    Avatar G 
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    I just watched the video in that link as well, it is a really great example of the type of voters Warren/Sanders are pandering to, I’d highly recommend people watch the video to see where people think our tax money should be sent to

    http://money.com/money/5647242/student-debt-money-makeover/

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    So I watched that video, and it has made me nauseated.  Not the vague, stomach queasiness, more like the acute posterior circulation stroke nausea.

    Although, I loved that it was filmed in his fancy pants home, complete with saltwater aquarium, and let’s face it, there are some gem one-liners in there:

    “I’m fulfilling the dream”

    “I wanna make my life today, not worry about what my life is going to look like 40 years from now”

    “I’ve cut down to part time”

    “…and beginning to save money to put down for a mortgage”

     

     

    #225059 Reply
    Avatar CREGuy 
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    The ones that get me are the sob stories about someone who has $25k in student loans.  Even if they aren’t doing IBR, the monthly payment on that is probably around $200/month.  That could be earned driving for Uber a few hours a week.  I would also wager that the majority of those sob stories are from people who have bigger cell phone bills than their monthly loan payment.  What those stories really amount to is someone bellyaching about having to spend a couple hundred bucks a month on a financial obligation that they willingly signed up for instead of getting to spend it on some other want or desire.

    The other typical sob story that is paraded out there is like the guy from the linked article, where they do have a crushing amount of debt, but it’s simply because they chose to take out a ridiculous amount of loans for degree with little value and/or a lack of effort put into their education and training to make them successful when the education part was done.  I can’t feel sorry for you if you went six figures into debt because you wanted to go to an out of state or private school with sky high tuition because it was your “dream school” or for the “experience”.

    The real issue with Student Loans is that they’re issued at one flat rate and fail to take into account what the degree is for, what the earning prospects are for that degree, what institution the degree was from, and the general likelihood of the borrowers ability to repay the loan.  Loan companies (both private and government) don’t care because loans aren’t dischargeable in bankruptcy, so they’ll get their money at some point.  Change that (only moving forward not retroactively – too many moral hazards) and the student loan market will fix itself very quickly.

    There was a thread on here about what will spur the next financial crisis.  My guess is the student loan implosion.  There are going to be a LOT of poor debt tranches out there.  Companies like So-Fi and other SL loan refinance companies have figured out that these pools of loans that have been issued at the same rates (implying the same level of risk) are simply out of whack.  They’ve figured out that targeting people who have pursued degrees in valuable fields from reputable institutions have a far lower likelihood of default, and have realized that they can cherry pick these folks and their loans from the SL pool, and get a favorable risk-return.  The refinancer loves it because they save a ton of money.  It’s a no brainer.  The problem is that all these “good” borrowers have really been subsidizing all the “poor” borrowers in the SL pool.  The physicians of the world paying their $200k in student loans in a timely and responsible manner makes up for the Fleeing Frankies of the world who are running away to Thailand to avoid paying back their six figure loan debts on their gender studies degree.  However, with these companies now separating the wheat from the chaff, all that is going to be left in these pools is the chaff.  It’s going to be NYC after all the producers have left for Galt’s Gulch.

    #225062 Reply
    Liked by Anne, RosieQ, G, artemis
    Craigy Craigy 
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    not sure lobbyists would go away with term limits, but they should probably just be illegal out right. Supreme court really needs some kind of limits.

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    Serving for life is a little antiquated.  Health used to limit this to a reasonable time frame.  Now all bets are off.

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    I disagree.  Though flawed, it is a good attempt by the founders to provide relative stability and continuity in the interpretation of the law.  And protect against tyranny and all of that.  😉  Though I’m sure I might be eager for term limits myself if the court leaned heavily the other way.

    20-30 year terms have been fairly common since the early days of the republic.  People have been living deep into old age for a long time, particularly the wealthy, which supreme court justices tend to be.  Oldest guy to retire from supreme court was back in the 1930s.  Additionally they often used to appoint them a lot younger, too.

    Though surely they will keep RBG juiced up all science-experimenty as long as there is threat of a conservative appointment.  It was fairly amusing to see the shift in the journalism, describing her as anywhere from mildly inconsiderate and selfish to absolutely horrible for refusing to retire during the Obama presidency, to now heralding her as a modern-day saint, mainstay of the court who should be encouraged to serve as long as she possibly can.

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    #225071 Reply
    Avatar G 
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    not sure lobbyists would go away with term limits, but they should probably just be illegal out right. Supreme court really needs some kind of limits.

    Click to expand…

    Serving for life is a little antiquated.  Health used to limit this to a reasonable time frame.  Now all bets are off.

    Click to expand…

    I disagree.  Though flawed, it is a good attempt by the founders to provide relative stability and continuity in the interpretation of the law.  And protect against tyranny and all of that.  😉  Though I’m sure I might be eager for term limits myself if the court leaned heavily the other way.

    20-30 year terms have been fairly common since the early days of the republic.  People have been living deep into old age for a long time, particularly the wealthy, which supreme court justices tend to be.  Oldest guy to retire from supreme court was back in the 1930s.  Additionally they often used to appoint them a lot younger, too.

    Though surely they will keep RBG juiced up all science-experimenty as long as there is threat of a conservative appointment.  It was fairly amusing to see the shift in the journalism, describing her as anywhere from mildly inconsiderate and selfish to absolutely horrible for refusing to retire during the Obama presidency, to now heralding her as a modern-day saint, mainstay of the court who should be encouraged to serve as long as she possibly can.

    Click to expand…

    I also am ok with the way the Court is set up–let’s face it, clerks do a lion’s share of the work.  However, I firmly believe that it is criminal that the last president was not allowed to fill a Court vacancy.  I find it downright head-exploding that the main culprit of that debacle is on record saying that he would not wait if the same situation arose in 2020 (with his party in the WH).

    I find amusing mental exercise to think about transporting Jefferson or Adams to the present day for their opinion on how things are going in DC.

    #225079 Reply
    Liked by Craigy
    Craigy Craigy 
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    not sure lobbyists would go away with term limits, but they should probably just be illegal out right. Supreme court really needs some kind of limits.

    Click to expand…

    Serving for life is a little antiquated.  Health used to limit this to a reasonable time frame.  Now all bets are off.

    Click to expand…

    I disagree.  Though flawed, it is a good attempt by the founders to provide relative stability and continuity in the interpretation of the law.  And protect against tyranny and all of that.  😉  Though I’m sure I might be eager for term limits myself if the court leaned heavily the other way.

    20-30 year terms have been fairly common since the early days of the republic.  People have been living deep into old age for a long time, particularly the wealthy, which supreme court justices tend to be.  Oldest guy to retire from supreme court was back in the 1930s.  Additionally they often used to appoint them a lot younger, too.

    Though surely they will keep RBG juiced up all science-experimenty as long as there is threat of a conservative appointment.  It was fairly amusing to see the shift in the journalism, describing her as anywhere from mildly inconsiderate and selfish to absolutely horrible for refusing to retire during the Obama presidency, to now heralding her as a modern-day saint, mainstay of the court who should be encouraged to serve as long as she possibly can.

    Click to expand…

    I also am ok with the way the Court is set up–let’s face it, clerks do a lion’s share of the work.  However, I firmly believe that it is criminal that the last president was not allowed to fill a Court vacancy.  I find it downright head-exploding that the main culprit of that debacle is on record saying that he would not wait if the same situation arose in 2020 (with his party in the WH).

    I find amusing mental exercise to think about transporting Jefferson or Adams to the present day for their opinion on how things are going in DC.

    Click to expand…

    The difference is that Trump has/will likely have the senate while Obama didn’t.

    But these game are nothing new.  It’s been like this as long as I can remember.

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    #225092 Reply
    Avatar Brains428 
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    Side bar (don’t think it’s worth a whole new thread, but feel free to boot me that direction). Should there be limits on purchases/financing if someone is pursuing PSLF? Like, you don’t qualify for a jumbo mortgage/car lease/car >$50k. I know it’s an extreme stance, but it irks me to see someone living it up but not paying off their obligation.

     

    #225109 Reply
    Zaphod Zaphod 
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    Interest being deducted takes away tax revenue and absolves people of the full commitment they signed on to. Expansion of PSLF has a more extreme but similar effect – those taking out loans don’t see them as “all that bad” because of back end benefits. So they take out more, which is the opposite of what we want to incentivize.

    Click to expand…

    Its small, self limited and the government gets their money in the form of higher taxes.

    #225136 Reply

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