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Fresh start initiative is useless unless they waive the accumulated interest and debt collection fees. Nobody wants to come out of default when sitting waiting for them is another $100K in interest and fees waiting to be capitalized onto the principal. That is a major reason there are loans in default over a decade - so long in fact they are already off the credit report. Coming off default and going into repayment with accumulated interest and fees means their income to debt ratio will skyrocket - so even if the fresh start removes the delinquency, the credit will still plummet because of the ratios.
Fresh start initiative will not help the credit rating of those coming out of default if the accumulated interest and debt collector fees are not waived - the sheer amount of the capitalized interest and fees will not only double a loan size - but will cripple credit for loans in default over 7 years and already off a credit report because the income to debt ratio will be so high. Coming out of default and being put right into the new IDR plan is a genius idea - but not without first waiving interest and fees. That will make up for the incompetence and deceit suffered all these years of usurious interest and misdirected plans caused by ACS, NELNET and a useless FSA. It will not be money the taxpayers will have to pay because it just projected profit - and it will save administration and collection fees so more of the principal gets paid before forgiveness - wait till people start asking for proof of fees and calculations and they can't show it or find errors. Better to waive and start anew then open that can of worms up.
So many of you have no clue WHY this happened do you? Before you open your big mouth - educate yourself. Literally. Reasearch ACS, NELNET, NAVIENT and the deceitful mishandling of loans - miscalculations, usurious interest rates, debt collectors passing loans around and adding fees - this is what it is about. Not the DEBT - the way the debt doubled and tripled due to mishandling. And if you had used the education - you would learn the taxpayers will pay MORE by continuing the administration of these loans- paying to keep that up costs more then forgiveness. And if they waive the interest and fees - that costs nothing because it is projected profits that just won't be realized - not money actually outlayed. You may have paid off your loans - but your education failed you. https://www.npr.org/.../1114560119/s...n-program-cost
This does not help my wife because she earns too much. A better solution would be:
1. Student loan interest is 100% deductible regardless of income. No more $2500 cap.
2. Remove accrued interest accumulated during loan deferment period.
3. Slash loan interest to .01% as long as payments are made on time starting Jan 1 2023.
I agree the income cap was just to appease the people who are petrified that "rich" people might be helped but it should be based on average income over the period of the loan. People got into trouble and had financial hardships, unemployment and defaulted on these loans - just because they are going to finally do the right thing and correct years of mishandling and usurious interest rates this year - if someone happened to just find a job and get back on their feet - now they don't qualify although they suffered for years before this.
Student loan forgiveness is not going to happen without congress. Biden can NOT spend billions with an executive order. He proposed this in order to gain dem votes in the mid-term elections. He can't do it and it will be swept under the rug in December. Good luck all.
What do you consider "usurious" rates? My kids are paying between 3.76% and 5.05% on Stafford loans taken out in the 2010's. Are older loans higher?
I suppose it would be nice to allow borrowers to refinance Stafford loans if rates drop, though that's going to be a moot point for a few years now.
I have loans capped at 9%. Others have even higher rates. There used to be numerous types of loans and most of them are gone now. The interest compounds daily so don’t get excited over 5%. I’ve never a mortgage or car loan anywhere 9%. My mortgage is 1/3 of that and my car loan is 1/2 and it’s only that high because I got it a few months ago when my lease ended.
I have loans capped at 9%. Others have even higher rates. There used to be numerous types of loans and most of them are gone now. The interest compounds daily so don’t get excited over 5%. I’ve never a mortgage or car loan anywhere 9%. My mortgage is 1/3 of that and my car loan is 1/2 and it’s only that high because I got it a few months ago when my lease ended.
Thanks for the info. What kind of government loans are at 9.00% and what years were they taken out?
I've said before that our younger son had a private loan at 9.99% but we rolled that into a HELOC at a much lower rate as soon as we could.
Thanks for the info. What kind of government loans are at 9.00% and what years were they taken out?
I've said before that our younger son had a private loan at 9.99% but we rolled that into a HELOC at a much lower rate as soon as we could.
Mine were always 5% or greater. Even the small batch I have now for my Master's is fixed at 5.28%. This is through the fed's lending program, not private.
Student loan forgiveness is not going to happen without congress. Biden can NOT spend billions with an executive order. He proposed this in order to gain dem votes in the mid-term elections. He can't do it and it will be swept under the rug in December. Good luck all.
Lol, what? The applications open in October for the program. It's said that the process for approval will take 4-6 weeks. By December, most will have been forgiven.
It is not a matter of if, but when.
At this point, it will be career suicide for any candidate to not back this sort of relief program. The only ones I could foresee surviving that storm are the reps from extremely rural, red parts of the country.
It's the same reason why you'll never see a repeal of Medicare or Medicaid or SSI. It's all talk. No one (of material importance) is going to stand in the way of this going through. They will be annihilated in their next election.
What a lot of people might not know is that after one pays a certain percentage of their student loans, the Dept of Education sends you a letter with a form stating that you can apply for forgiveness. I never did. I kept paying.
For me, it happened because of the percentage AND my age AND disability. I paid for 12 years prior to the pandemic. I held my breath on August 1st, thinking that the deduction might resume. It didn't. And that's a good thing. The recent spike in inflation had already forced me to take a part time retirement job.
I do have to say that my loans were not astronomical, so it was easier to reach the percentage. I can't remember the exact number. Might have been 30.
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