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Old 03-10-2022, 09:28 AM
 
Location: Honolulu/DMV Area/NYC
30,529 posts, read 17,991,733 times
Reputation: 34268

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Quote:
Originally Posted by Eyebee Teepee View Post
that doesn't appear correct, so I wonder if this info from Experian is wrong, or the debtors are wrong

https://www.experian.com/blogs/insig...nt-loan-pause/

The student loan pause/freeze meant they didn't have to make payments, and interest didn't accrue during that period. They were not "credited for payments", as per this part of my link:

"Student loan forbearance, part of the Coronavirus Aid, Relief, and Economic Security (CARES Act) economic stimulus bill that paused student loan repayment, interest accrual, and collections, is set to expire on May 1, 2022.

Borrowers who carry federal student loans in the United States need to anticipate the resumption of repayment and interest accrual."

"Will balances be the same as they were before the student loan pause? Will it take the same amount of time to pay off the student loan? "

"For those on a traditional repayment plan, a student loan servicer might recalculate the amount based on the principal and interest and the amount of time left in the repayment period. Borrowers will still make payments for the same number of months in total, but the end date for repayment will be pushed forward to accommodate the payment pause.

In other words, if the loan terms originally stated that it would be repaid in full on January 1, 2030, the new terms will accommodate the pause and show full repayment on January 1, 2032."

I have italicized what might be the wording the borrowers are hanging on; clearly, they may have received such "we'll act like you paid" from the lenders/servicers.

But it doesn't appear that's the given program terms.
They count toward the number of qualifying payments for those under the Public Service Loan Forgiveness (PSLF) program, even though the loan balance isn't reduced due to nonpayment.

Quote:
Paused payments count toward PSLF and TEPSLF as long as you meet all other qualifications. You will get credit as though you made monthly payments.

To see these qualifying payments show up in your account, you must submit a PSLF form certifying your employment for the payment pause time period. Your count of qualifying payments toward PSLF updates only when you certify your employment.
https://studentaid.gov/announcements...an-forgiveness

I'm under the PSLF and haven't made payments since the pause began. For the purposes of counting how many qualifying payments I've made toward forgiveness (I only have to make 120 timely and qualifying payments while employed at a qualifying employer for the balance to be forgiven), non-payment during the pause still counted toward the number of qualifying payments I have to make. But my overall loan balance wasn't reduced during this period as I wasn't making any payments. Note, I last recertified my employment late last year, so I have seen firsthand that the paused non-payments do count as if I made payments.

For folks like me who are relying on the PSLF program, it would have been nonsensical in many ways to continue paying on the loans during the forbearance. We get credit for qualifying payments regardless of whether we actually pay. By taking advantage of the pause, I've kept at least $10k in my bank account during the period.
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Old 03-10-2022, 07:51 PM
 
Location: NJ
23,820 posts, read 33,333,344 times
Reputation: 30677
Quote:
Originally Posted by Eyebee Teepee View Post
that doesn't appear correct, so I wonder if this info from Experian is wrong, or the debtors are wrong

https://www.experian.com/blogs/insig...nt-loan-pause/

The student loan pause/freeze meant they didn't have to make payments, and interest didn't accrue during that period. They were not "credited for payments", as per this part of my link:

"Student loan forbearance, part of the Coronavirus Aid, Relief, and Economic Security (CARES Act) economic stimulus bill that paused student loan repayment, interest accrual, and collections, is set to expire on May 1, 2022.

Borrowers who carry federal student loans in the United States need to anticipate the resumption of repayment and interest accrual."

"Will balances be the same as they were before the student loan pause? Will it take the same amount of time to pay off the student loan? "

"For those on a traditional repayment plan, a student loan servicer might recalculate the amount based on the principal and interest and the amount of time left in the repayment period. Borrowers will still make payments for the same number of months in total, but the end date for repayment will be pushed forward to accommodate the payment pause.

In other words, if the loan terms originally stated that it would be repaid in full on January 1, 2030, the new terms will accommodate the pause and show full repayment on January 1, 2032."

I have italicized what might be the wording the borrowers are hanging on; clearly, they may have received such "we'll act like you paid" from the lenders/servicers.

But it doesn't appear that's the given program terms.


Thankfully, prospectheightsresident replied to explain. It's in the case of someone doing a public student loan forgiveness program with working a qualifying job. Since it counts like they would have paid it, I see now reason to actually pay it during the pause in this case. They promised to eat the loan if the person took on whatever job, let them eat it all.

It's about the only debt relief I agree with because they're giving up years of their life in lower paying jobs. It's totally different than forgiving a percent or dollar amount of everyone that went to college. People have to get out of the thinking that everyone needs or deserves to do college these days.
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Old 03-11-2022, 07:30 AM
 
9,782 posts, read 7,595,966 times
Reputation: 24344
The other thing to consider is that this long forebearance is for federal student loans. We had a couple of non federal student loans that we made extra payments on during this time. One paid off last year, the other will be paid off this spring. Then my daughter will just have her federal loans left with a couple more years of payments and then forgiven through PSLF. Crossing my fingers. This is one reason why she took this job.
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Old 03-11-2022, 07:36 AM
 
Location: Honolulu/DMV Area/NYC
30,529 posts, read 17,991,733 times
Reputation: 34268
Quote:
Originally Posted by KaraG View Post
The other thing to consider is that this long forebearance is for federal student loans. We had a couple of non federal student loans that we made extra payments on during this time. One paid off last year, the other will be paid off this spring. Then my daughter will just have her federal loans left with a couple more years of payments and then forgiven through PSLF. Crossing my fingers. This is one reason why she took this job.
Yep. There has been occasional talk of reforming the PSLF program to either seriously cap the amount that can be forgiven or to otherwise tax the forgiven amount. While I'd have less of a problem doing this for future applicants, those who are in the program now went into things with a certain expectation in this regard. To change the rules along the way is not fair, IMO.
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Old 03-12-2022, 05:06 AM
 
Location: Grosse Ile Michigan
30,707 posts, read 79,486,151 times
Reputation: 39441
We started repaying my wife's student loans again. We are paying double or ore the minimum payment to catch up. The hiatus in payments allowed us to pay off some higher interest debt, but if we do not double down, she will not get her loan paid off before she retires. Yes, you can invest the money and maybe make more than the loan interest rate (if you are lucky, you may also lose the money or part of it), but you have to pay taxes on the gains. Accounting for taxes, the idea of investing the money suddenly does not look at that appetizing compare to just paying down the loan. Not everyone has the time or the knowledge to play around with investments like that and 80% of the people who think they do end up losing money in the long term.

Personally i prefer the guaranteed return on paying down the loan over the possibility of a slightly higher return if you get lucky and time things right. I suppose I cold take the money and go play poker or craps and potentially make a lot more than the interest on the loan too, but that has no appeal to me either.
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Old 03-12-2022, 06:10 AM
 
5,902 posts, read 4,398,007 times
Reputation: 13421
Quote:
Originally Posted by Coldjensens View Post
We started repaying my wife's student loans again. We are paying double or ore the minimum payment to catch up. The hiatus in payments allowed us to pay off some higher interest debt, but if we do not double down, she will not get her loan paid off before she retires. Yes, you can invest the money and maybe make more than the loan interest rate (if you are lucky, you may also lose the money or part of it), but you have to pay taxes on the gains. Accounting for taxes, the idea of investing the money suddenly does not look at that appetizing compare to just paying down the loan. Not everyone has the time or the knowledge to play around with investments like that and 80% of the people who think they do end up losing money in the long term.

Personally i prefer the guaranteed return on paying down the loan over the possibility of a slightly higher return if you get lucky and time things right. I suppose I cold take the money and go play poker or craps and potentially make a lot more than the interest on the loan too, but that has no appeal to me either.
Money is fungible. One could have put it in a tax deferred 401k account to reduce the current year taxes. With an index fund and setting it and forgetting it, you’re not timing and you don’t need market knowledge. Then when the loans start accruing interest again, you lower the contribution and start applying toward your student loan again with tax deductible interest.

Guaranteed return is another way of saying high opportunity cost.

Investing isn’t gambling either.
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Old 03-12-2022, 10:40 AM
 
Location: North Carolina
715 posts, read 1,032,303 times
Reputation: 657
Quote:
Originally Posted by Fedupwiththis View Post
Anyone else worried what impact this will have on the markets and economy?

Over 40 million people haven't had to make student loan payments in nearly 2 years. People freaked out when their monthly child care act payments dried up, whats going to happen when inflation hits 10% and people have to start making those $500 student loan payments again?

I'm genuinely starting to get very worried.
My .00002 cents: Biden will kick the can just past the November midterms, then let the ban on having to pay back student loans expire. Not a dime will be forgiven. Get just far enough past the midterms to get those former students who owe on student loans, to vote Dem one more time, and then,... sorry suckers, time to go back to paying in full. Again, not a dime will be forgiven. Any one who thought he'd forgive anything and voted for him in 2020 on that b.s. was fooling themselves, IMHO.
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Old 03-12-2022, 01:04 PM
 
Location: Oregon, formerly Texas
10,022 posts, read 7,166,539 times
Reputation: 17121
Biden's approval rate is in the toilet among young people. He is lower than any Democrat since Michael Dukakis among age under-45 voters. Restarting student loans will drive it lower still.

Politically, the smart move for Biden is to extend the forebearance indefinitely until congress comes up with a loan relief solution or let a Republican president reverse it and take that hit.

Not too dissimilar to the strategy Obama took with the Dreamers.
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Old 03-13-2022, 12:59 AM
 
Location: NJ
23,820 posts, read 33,333,344 times
Reputation: 30677
Quote:
Originally Posted by prospectheightsresident View Post
Yep. There has been occasional talk of reforming the PSLF program to either seriously cap the amount that can be forgiven or to otherwise tax the forgiven amount. While I'd have less of a problem doing this for future applicants, those who are in the program now went into things with a certain expectation in this regard. To change the rules along the way is not fair, IMO.

I hadn't read that but it doesn't surprise me. I agree that they can't just change the rules now. If they do that, it would have to apply to new hires as of a certain date. It could get really sticky for the government.



Quote:
Originally Posted by redguard57 View Post
Biden's approval rate is in the toilet among young people. He is lower than any Democrat since Michael Dukakis among age under-45 voters. Restarting student loans will drive it lower still.

Politically, the smart move for Biden is to extend the forebearance indefinitely until congress comes up with a loan relief solution or let a Republican president reverse it and take that hit.

Not too dissimilar to the strategy Obama took with the Dreamers.


I'll be surprised if the public will not start screaming for them to start paying those loans because it's costing tax payers money lost on interest every month. $100 million so far

Joe can't kick that can for another 2+ years.
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Old 03-13-2022, 05:45 AM
 
8,081 posts, read 6,911,488 times
Reputation: 7977
Quote:
Originally Posted by Roselvr View Post
I hadn't read that but it doesn't surprise me. I agree that they can't just change the rules now. If they do that, it would have to apply to new hires as of a certain date. It could get really sticky for the government.







I'll be surprised if the public will not start screaming for them to start paying those loans because it's costing tax payers money lost on interest every month. $100 million so far

Joe can't kick that can for another 2+ years.
I doubt the public is going to scream about student loan interest. It’s more likely they scream when payments start becoming due. The older generation is out of touch. Almost voter under 40 has student loans. That’s a lot of people.
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