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Author Topic: HR 4170 Loan Forgiveness Act  (Read 18749 times)
bash217
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« on: April 10, 2012, 6:05:09 AM »

Any legal scholars out there who can confirm that this bill is indeed to good (for my pocket!) to ever possibly pass?

http://www.govtrack.us/congress/bills/112/hr4170

I know I should just pay the danged things off, but I'd be more than happy to pay massive taxes on their eventual forgiveness, instead...
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anisogamy
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« Reply #1 on: April 10, 2012, 7:57:15 AM »

I'm not a legal scholar, but it sounds great to me (especially in that public service repayment is reduced from 120 to 60 months).  That having been said, I doubt the republicans in congress will go for it.
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prytania3
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« Reply #2 on: April 10, 2012, 8:52:07 AM »

Any legal scholars out there who can confirm that this bill is indeed to good (for my pocket!) to ever possibly pass?

http://www.govtrack.us/congress/bills/112/hr4170

I know I should just pay the danged things off, but I'd be more than happy to pay massive taxes on their eventual forgiveness, instead...

Great idea--higher taxes because I want to pay off your student loans. Not. Oh, and I'm a Democrat.
« Last Edit: April 10, 2012, 8:52:24 AM by prytania3 » Logged

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palla
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« Reply #3 on: April 10, 2012, 9:06:39 AM »

I don't understand why people should not have to pay back student loans.  I am not trying to be snarky, but why should people be allowed to borrow money (often far more than tuition and minimal expenses) and then not have to pay it back?  Isn't that a sense of entitlement that we complain about with our students? 
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glowdart
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« Reply #4 on: April 10, 2012, 10:12:58 AM »

I'm not a legal scholar, but it sounds great to me (especially in that public service repayment is reduced from 120 to 60 months).  That having been said, I doubt the republicans in congress will go for it.

The public service forgiveness option was created under Bush II, so you never know on the Republicans.

Plus, the reduction from 120 to 60 would mean, if passed, that the initial group of loans enrolled in the Public Service Forgiveness Option would be forgiven just in time for the election. 

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aristotelian
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« Reply #5 on: April 10, 2012, 11:53:20 AM »

Any legal scholars out there who can confirm that this bill is indeed to good (for my pocket!) to ever possibly pass?

http://www.govtrack.us/congress/bills/112/hr4170

I know I should just pay the danged things off, but I'd be more than happy to pay massive taxes on their eventual forgiveness, instead...

Great idea--higher taxes because I want to pay off your student loans. Not. Oh, and I'm a Democrat.

I'm with you. I believe in higher education and am a good Democrat. But I also think it is a bad idea for the government to be in the habit of bailing people out when they make bad financial decisions. Same thing with mortgage relief. You are in effect punishing people who have either paid off their debt or stayed debt free.

It is very appropriate for government to be involved in regulating the loan industry and making sure that people don't accumulate more debt than they can pay off (including housing and student loan). I would be OK with it using its role in the loan industry to put pressure on institutions to keep tuition down. Forgiving debt with taxpayer dollars addresses the wrong side of the problem and just rewards bad behavior.
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anakin
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« Reply #6 on: April 11, 2012, 5:24:51 PM »

I don't understand why people should not have to pay back student loans.  I am not trying to be snarky, but why should people be allowed to borrow money (often far more than tuition and minimal expenses) and then not have to pay it back?  Isn't that a sense of entitlement that we complain about with our students? 


One argument for loan forgiveness is that some educational tracks produce badly-needed professionals, such as doctors and other health care providers and teachers, but the payoff for incurring the "average" debt is lower in terms of salary/debt. So the argument "for" is one of serving the public good.
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kaysixteen
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« Reply #7 on: April 11, 2012, 5:28:00 PM »

Whining about loan forgiveness options for student loans would be more convincing if we did not have very generous bankruptcy laws for other types of debt.
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anakin
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« Reply #8 on: April 11, 2012, 5:39:06 PM »

Student loan debt cannot be forgiven under either chapter 7 or chapter 13 bankruptcy except in circumstances so limited that I have been unable to find any cases where student loans were actually forgiven. As for bankruptcy laws, we could argue the merits and difficulty of that elsewhere, but the rules for chapter 7 (total forgiveness except taxes, child support, and student loan debt) are very strict, based on income, and were tightened in 2006.
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prytania3
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« Reply #9 on: April 11, 2012, 6:46:28 PM »

Whining about loan forgiveness options for student loans would be more convincing if we did not have very generous bankruptcy laws for other types of debt.

Good point.
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pigou
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« Reply #10 on: April 11, 2012, 9:20:37 PM »

Whining about loan forgiveness options for student loans would be more convincing if we did not have very generous bankruptcy laws for other types of debt.
There are two reasons for that:

1) Students who take on loans generally have no assets of their own. So if they defaulted after getting their degree, what do they stand to lose? They're probably not going to buy a house within 10 years either, so the credit hit is not much of a deterrent.

2) Student loan interest rates are much lower now than they would be if students could default (assuming they would get loans at all). There's a reason students can get a 4% student loan while having a credit card that charges them 20%. While you can foreclose a house or repossess a car, you cannot repossess human capital. Rather, that's going to pay off in future earnings (certainly so on average), hence why giving students loans to pay for their education makes sense from a policy perspective.
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jonesey
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« Reply #11 on: April 12, 2012, 2:53:08 PM »

Any legal scholars out there who can confirm that this bill is indeed to good (for my pocket!) to ever possibly pass?

http://www.govtrack.us/congress/bills/112/hr4170

I know I should just pay the danged things off, but I'd be more than happy to pay massive taxes on their eventual forgiveness, instead...

Great idea--higher taxes because I want to pay off your student loans. Not. Oh, and I'm a Democrat.

Because you have so much of a say in what your taxes go to already....You'd pay, what, 1/100th of a cent more?  B
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monsterx
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« Reply #12 on: April 12, 2012, 3:56:50 PM »

Whining about loan forgiveness options for student loans would be more convincing if we did not have very generous bankruptcy laws for other types of debt.
There are two reasons for that:

1) Students who take on loans generally have no assets of their own. So if they defaulted after getting their degree, what do they stand to lose? They're probably not going to buy a house within 10 years either, so the credit hit is not much of a deterrent.

2) Student loan interest rates are much lower now than they would be if students could default (assuming they would get loans at all). There's a reason students can get a 4% student loan while having a credit card that charges them 20%. While you can foreclose a house or repossess a car, you cannot repossess human capital. Rather, that's going to pay off in future earnings (certainly so on average), hence why giving students loans to pay for their education makes sense from a policy perspective.

I haven't read any of the proposals on the table, but I don't think the discussion is about allowing default on student loans?  Is it?  That strikes me as the wrong way to go with it.  It would be sensible, however, to forgive some % on loans, maybe graduated so it is more for heavy borrowers, and perhaps taking into account income - so that people are encouraged to pay back as much as they reasonably can in a reasonable time, but are not put in a position of debt peonage. 

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bash217
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« Reply #13 on: April 13, 2012, 2:35:40 AM »

Whining about loan forgiveness options for student loans would be more convincing if we did not have very generous bankruptcy laws for other types of debt.
There are two reasons for that:

1) Students who take on loans generally have no assets of their own. So if they defaulted after getting their degree, what do they stand to lose? They're probably not going to buy a house within 10 years either, so the credit hit is not much of a deterrent.

2) Student loan interest rates are much lower now than they would be if students could default (assuming they would get loans at all). There's a reason students can get a 4% student loan while having a credit card that charges them 20%. While you can foreclose a house or repossess a car, you cannot repossess human capital. Rather, that's going to pay off in future earnings (certainly so on average), hence why giving students loans to pay for their education makes sense from a policy perspective.

I haven't read any of the proposals on the table, but I don't think the discussion is about allowing default on student loans?  Is it?  That strikes me as the wrong way to go with it.  It would be sensible, however, to forgive some % on loans, maybe graduated so it is more for heavy borrowers, and perhaps taking into account income - so that people are encouraged to pay back as much as they reasonably can in a reasonable time, but are not put in a position of debt peonage. 



The proposal is that after 10 years of making proper payments based on whatever repayment plan you pay under, the rest will be forgiven. There is also a cap for new borrowers of approximately 50,000 USD eligible for forgiveness, to ensure they don't go hog wild.

Payments already made would be counted for the 10-year requirement. Currently loans are forgiven after 25 years. So for people who ended up spending some money on their education, such as me, I might be rid of the monthly payments by the age of 39, rather than 54. With some student loan rates at 6.8% this is no joke--Together with Mr. (Dr.) Bash, we pay about 400 USD per month in interest.
« Last Edit: April 13, 2012, 2:39:28 AM by bash217 » Logged
monsterx
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« Reply #14 on: April 13, 2012, 3:27:49 AM »

The proposal is that after 10 years of making proper payments based on whatever repayment plan you pay under, the rest will be forgiven. There is also a cap for new borrowers of approximately 50,000 USD eligible for forgiveness, to ensure they don't go hog wild.

Payments already made would be counted for the 10-year requirement. Currently loans are forgiven after 25 years. So for people who ended up spending some money on their education, such as me, I might be rid of the monthly payments by the age of 39, rather than 54. With some student loan rates at 6.8% this is no joke--Together with Mr. (Dr.) Bash, we pay about 400 USD per month in interest.
That not exactly how I'd recommend it be done, but I have to admit it sounds very attractive for my situation.  However, given that Republications seem to get to call all the shots these days, I don't imagine that the bill will pass. 
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