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Old 08-29-2022, 03:19 PM
 
10,890 posts, read 6,981,264 times
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To the specific topic. Funds can only be expended as appropriated by Congress. I don't see how any President can expend funds for this without Congressional approval. That's a completely separate issue from the political one.
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Old 08-29-2022, 04:56 PM
 
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Quote:
Originally Posted by jtab4994 View Post
There aren't any banks involved. At least not in the traditional sense. You and I are the banks because the student loans were all issued by the Federal Government.

Actually the "permanent" 0.00% idea is something I floated earlier, but in reading further it may not be so simple. The POTUS is supposed to be acting under a "war or national emergency" scenario, and the pandemic is all but over in any real sense. We have record low unemployment which means people should be able to get jobs and pay back loans.
There are federal student loans and private bank loans.

The government would have to buy the student loan debt from private banks.

Quote:
Private student loans make up 7.89% of the total outstanding U.S. student loans, according to MeasureOne.
Total outstanding private student loan debt: $131.10 billion.

Private student loans

Borrowers can also postpone private student loan payments via deferment or forbearance, but interest always accrues regardless of whether the borrower is making payments.

Percentage of outstanding private loan balance in deferment: 17.49%.

Percentage of outstanding private loan balance in forbearance: 2.44%.

Percentage of private loans in repayment that are 90+ days past due: 0.94%.
https://www.nerdwallet.com/article/l...dent-loan-debt
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Old 08-29-2022, 05:14 PM
 
Location: Sioux Falls, SD area
4,343 posts, read 6,089,880 times
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Quote:
Originally Posted by jtab4994 View Post
There aren't any banks involved. At least not in the traditional sense. You and I are the banks because the student loans were all issued by the Federal Government.

Actually the "permanent" 0.00% idea is something I floated earlier, but in reading further it may not be so simple. The POTUS is supposed to be acting under a "war or national emergency" scenario, and the pandemic is all but over in any real sense. We have record low unemployment which means people should be able to get jobs and pay back loans.
The banks are STILL involved. The only difference as of the Obama administration is the loans are now guaranteed by the U.S. government. At THAT MOMENT, all the federal student loan interest should have been dropped to 0% or close to it.
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Old 08-29-2022, 06:14 PM
 
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Regarding the legality, read this PDF:

https://www2.ed.gov/policy/gen/leg/f...ncellation.pdf

The document is about 4 or 5 pages long. It begins:




One thing to note on such legal opinions - they are called "opinions" for a reason. Two highly competent legal scholars might come to different conclusions given the same set of facts and findings of law.


NOTE: The above document is publicly available and is not subject to copyright.
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Old 08-29-2022, 06:21 PM
 
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Quote:
Originally Posted by jmgg View Post
The banks are STILL involved. The only difference as of the Obama administration is the loans are now guaranteed by the U.S. government. At THAT MOMENT, all the federal student loan interest should have been dropped to 0% or close to it.
I disagree. Interest charged reflects a combination of the time-value-of-money and risk incurred above the risk-free rate of return. An interest rate of zero is inappropriate as it does not incorporate either the time-value-of-money or the risk to the taxpayers of the borrower defaulting.
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Old 08-29-2022, 07:15 PM
 
Location: Sioux Falls, SD area
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Quote:
Originally Posted by moguldreamer View Post
I disagree. Interest charged reflects a combination of the time-value-of-money and risk incurred above the risk-free rate of return. An interest rate of zero is inappropriate as it does not incorporate either the time-value-of-money or the risk to the taxpayers of the borrower defaulting.
Here's how you're getting this messed up. You're trying to use basic, common sense economics for your argument. OF COURSE an interest rate of zero is inappropriate. So is having a President dissolving a federally owned debt PURELY for political purposes. As recognized EVEN BY THE SPEAKER OF THE HOUSE, the action being taken by Biden should be something instigated by congress and should be illegal if done any other way. Now ask yourself, since both actions are economically unsound, which one is a greater burden on the country? If a debt is totally forgiven and it's guaranteed to the banks by the government, then you know the interest is still going to be paid by the government along with the principal.

This entire action is just plain wrong every way you look at it.
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Old 08-30-2022, 06:16 AM
 
9,447 posts, read 5,335,440 times
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Quote:
Originally Posted by moguldreamer View Post
I disagree. Interest charged reflects a combination of the time-value-of-money and risk incurred above the risk-free rate of return. An interest rate of zero is inappropriate as it does not incorporate either the time-value-of-money or the risk to the taxpayers of the borrower defaulting.
Except it doesn’t always match that. I know people who are essentially paying rates of 12%. I have a coworker who told me he has no way of ever paying off his debts because the interest rate is so high that he can’t even make up for the interest rates. The interest just keeps growing and growing. Now certainly I agree that there should be some minimal interest for holding/administering the loans, but certainly not 12%. Someone is far more likely to default and not pay if they can’t even make progress.
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Old 08-30-2022, 09:18 AM
 
Location: Shawnee-on-Delaware, PA
6,978 posts, read 6,059,680 times
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Quote:
Originally Posted by jmgg View Post
The banks are STILL involved. The only difference as of the Obama administration is the loans are now guaranteed by the U.S. government.
No. Stafford loans are given, not just guaranteed, by the federal government. These are the loans that would potentially be forgiven. When my sons make their payments, they pay a "Loan Servicer" not a bank. The Loan Servicer did not make, grant, or guarantee the loan.

You can get a private loan from a bank (we did) but the interest rate is higher than a federal loan and the federal government can't adjust the rate or forgive those loans.

P.S. If you know something I don't know, spell it out. Which bank(s) give federal student loans?
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Old 08-30-2022, 09:33 AM
 
Location: Shawnee-on-Delaware, PA
6,978 posts, read 6,059,680 times
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Quote:
Originally Posted by moguldreamer View Post
One thing to note on such legal opinions - they are called "opinions" for a reason. Two highly competent legal scholars might come to different conclusions given the same set of facts and findings of law.
It may come down to 9 people in black robes deciding whether it can be done. And if the decision is less than 7-2 either way we can expect the usual chorus blaming either the SCOTUS Liberals or the SCOTUS Conservatives.
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Old 08-30-2022, 09:45 AM
 
9,447 posts, read 5,335,440 times
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Quote:
Originally Posted by jtab4994 View Post
No. Stafford loans are given, not just guaranteed, by the federal government. These are the loans that would potentially be forgiven. When my sons make their payments, they pay a "Loan Servicer" not a bank. The Loan Servicer did not make, grant, or guarantee the loan.

You can get a private loan from a bank (we did) but the interest rate is higher than a federal loan and the federal government can't adjust the rate or forgive those loans.

P.S. If you know something I don't know, spell it out. Which bank(s) give federal student loans?
Exactly. My understanding was that before the feds took over, there were FFEL loans offered through banks and guaranteed by the feds. I think people finishing school through around 2010 got these loans, while loans after that were issued directly through the feds. I think I got mine through Sallie Mae. I got private loans as well with MUCH lower interest than federal loans. I have never paid more than 4% while my lowest fed interest rate was 5.8%. I am still paying those off and should be done in about 3 years.
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