Student Loan Payment Pause 'Gone' Under Debt Ceiling Deal - Slashdot
source link: https://news.slashdot.org/story/23/05/30/2132241/student-loan-payment-pause-gone-under-debt-ceiling-deal
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Student Loan Payment Pause 'Gone' Under Debt Ceiling Deal 87
Posted by BeauHD
on Tuesday May 30, 2023 @08:45PM from the more-details-emerge dept."What the president did, he went unconstitutionally and said he was going to waive certain people part of their debt for student loan, but then he paused everybody's student loan. So everybody who borrowed a student loan within 60 days of the signing is going to have to pay that back," McCarthy added. "The Supreme Court is taking up that case. But if the Supreme Court came back and said that was unconstitutional, the president could still say he's pausing, not waiving it. But now that this is in law, the Supreme Court decision will have to be upheld, that they would have to pay."
Earlier this month, the NY Times warned students and their families to "Expect Interest Rates on Federal Student Loans to Rise" to as high as 8.05% for new PLUS loans this fall. That news came as Apple, just days after a recent $90 billion share buyback, filed a prospectus with the SEC for a new $5 billion bond program with longer-term bonds expected to have a coupon rate of approximately 5%. The imbalance between loan rates for students and Apple shareholders was actually far more pronounced before the Fed fund rate hikes started last year in response to inflation. During the pandemic, Apple -- which reported around $166.3 billion in cash and investments on its balance sheet as of March 31 -- held a bond sale worth $14 billion for stock buybacks and dividends to benefit from borrowing rates as low as 0.70%. Direct PLUS student loan rates at that time were down to 5.30% for new loans but as high as 8.5% for existing loans (the U.S. Dept. of Education does not offer refinancing of its up-to-30-year fixed rate loans in times of much lower interest rates). Unlike the tax-deductible interest Apple pays, annual deductions on student loan interest are capped by the IRS at $2,500 (or lower, depending on the borrower's income).
Despite presumably benefiting from stock buybacks and dividends facilitated by Apple's low-interest bonds -- some of which carry rates as much as 90%+ lower than certain federal student loans -- some of the Senators identified as Apple shareholders by NBCLX are vehemently opposed to the idea of student loan relief for high interest-paying borrowers. Senator Shelley Capito (R-WV) opposes the program as "not fair", Senator Pat Toomey (R-PA) called it "grossly unfair", and other Apple-shareholder Senators joined (PDF) colleagues in a Supreme Court filing calling student loan relief "unnecessary".
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why do the schools and banks have 0% risk on them?
and have more or less umlimted room to jack up fees / books / dorm fees / etc? while takeing no risk if an student runs up an big bill with no hope of paying it back?also WHY IS chapter 11 or 7 so hard to get on them as well?
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And yet another example of how the United States is a *capitalist dictatorship.*
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Because "real" Americans don't take out student loans that they can't pay for. They pull up their boot straps and pay off those loans by working 3 jobs and never spending their money on anything frivolous like vacations and iPhones. Only the liberal elites take out loans and expect "real" Americans to pay for them while they go on vacations and buy iPhones.
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You missed the opportunity to mention Starbucks lattes and avocado toast, but yes... valid. The antipathy to education in this country remains startling to me, even after decades of living with it.
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"As people do better, they start voting like Republicans - unless they have too much education and vote Democratic, which proves there can be too much of a good thing." -- Karl Rove
"I love the poorly educated. We’re the smartest people, we’re the most loyal people.” -- Donald Trump
Clear things up? There's a quote by some Republican (senator maybe?) where he flat out says that Republicans oppose education because educated voters vote democrat.
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Yeah, I read all that stuff and wish I hadn't. I guess I'm too old or too stupid or something, but where I'm coming from here is: You want to get elected. If you're worried that the people who have more book-learnin' are not gonna vote for you, there's a simple solution - GET AHEAD OF THE CURVE and have a SMARTER solution to whatever problems are front and center to the populace. So, no matter how smart the population gets, they're gonna vote for you because you have a credible, achievable plan.
Why must the
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Because coming up with and pushing through good solutions takes effort, while yelling how bad the 'other' side is takes almost zero effort. And us dumb Americans lap it up like crazy, for some reason.
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Real Americans take out PPP loans and have them washed away.
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The main purpose of the PPP loans was for employers to keep employees on-roll even if unwarranted by financial condition (COVID) - In other words it was an indirect handout to employees. It being believed that the economy would bounce back faster if people were kept on-roll instead of being cut loose into the welfare rolls and then having to be re-hired.
To help make sure the money was used for that, the loans could only be forgiven if the business maintained its employee count and compensation levels and
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Nevertheless it has become an online truism that it was merely a gift to employers. What justifies that position?
Because these are the same people who say handouts are bad while at the same time accepting handouts. Maybe, as the saying goes, these companies should have had six months of emergency funds on hand.
Further, large numbers of ppp loans were wholly forgiven even when conditions weren't met, while others had to fully pay back their loan. Is that fair? “If you take out a loan, you pay it bac
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PPP loans were not handouts. They were compensation for government-ordered shutdowns and other pandemic restrictions. Every restaurant in America other than drive-thrus and delivery-heavy spots would have gone out of business if not for the PPP assistance. Along with all theaters and entertainment venues. The restrictions lasted far longer than 6 months in many areas.
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The government gave someone money and then didn't ask for it back. Handout.
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Probably because there were so many cases where the forgivable loans meant for "small" businesses went to businesses that are nothing like small and were forgiven even where the terms were not properly met. Only a few of the fraudsters (mostly small ones) have seen any consequences of note. See this [nbcnews.com].
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That story says up to 10% of PPP may have gone to fraudsters, which were neither employers nor employees. It focuses on cases where people simply claimed the identify of some business and filed for that company's PPP loan. That is not the same issue as Congress favoring employers over employees. It says there was even more theft from the Unemployment Relief Program - money that went straight to individuals who couldn't (or chose not to) find a job - which also was a larger program than PPP in the first pl
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Sure, it did a lot of good. The program itself was necessary. It would have done more if congress and Trump hadn't resisted tightening up the verification. That is the part that got Congress blamed for being more in support of businesses grifting than it was for the employees.
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I like your sarcasm.;)
Like with nearly anything, you tend to have problems at both ends of the spectrum.
First, simple economics: We have sold "education, any education" as the solution to poverty, low income, getting a higher income, etc... For literally generations.But if we look at college graduates as a product that businesses buy(well, rent)? If the average person paid $0 for getting a college degree, then we'd still have some, but they'd be relatively rare. Ergo, they'd be expensive and businesses
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How could one complete a 4 year degree in less than 10 years while working 3 jobs? One has to compromise somewhere if the goal is to graduate while young enough to see a substantial increase in income.
You can argue back and forth on the vacation part. Most college students I knew while in college took their vacations with their families, so those vacations were an expression of the money their families had. Things may be different now. I certainly didn't take any extravagant vacations while in undergr
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Because if you don't take the risk out then high risk students won't get loans.
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They shouldn't get them.
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The only reason anyone is willing to give an 18 year old that much money is BECAUSE they can't be discharged in bankruptcy.
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Students used to be able to get out from under your student loans, and many people did - then they changed the law.
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Because if you let students go bankrupt to wipe their loans then no one would ever pay them.
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Yeah but the loans are just a A desperate workaround for the extreme lag it's taking to bring the us up to standards with modern civilization.
Since it's implemented as a disincentivized curse through loans it seems to imply that the only responsible thing is to never go to college.
After all if the government and the people of wealth see no reason to invest in education nationally, then they demonstrate themselves to have no value in the concept of an educated Nation.
As it is it's set up as a suckers
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The real question is why are they allowed to charge significantly more than the prime interest rate for a zero risk loan? The interest is supposedly in part to cover risk.
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Because many (not all, but a significant portion of borrowers} simply don't pay back their loans, as in they stop sending money in to pay the loan off. We've had stories here about college graduates that go overseas to avoid paying for their student loans...
Why should student loans have the same interest rate as corporations that actually pay their debts?
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Huh? Schools do fail and this year has had multiple high profile bank failures.
Not really, at a certain point students will go to cheaper institutions and you'll have no tuition to pay your bills.
The problem is the US seems to have a particular obsession with making sure you go to the "right school". So schools compete to be the "right school" by investing more and more (salaries, administration, dorms, sports teams, etc), which raises prices, and students still feel compelled to go to the "best" school. A
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That's basically the reason. If you go to med school and become a successful doctor, it takes a few decades to pay off your loans. Filing for bankruptcy would be a better option for most.
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No. Why would this make sense? You're giving a college graduate a clear path to make other people pay for their education.
Why should someone that agreed to borrow tens or even hundreds of thousands and promised to pay it back be given the ability to simply decide not to? If they bought a car we could reposes it, but we can't take back a degree.
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Why should the schools have risk? As for the banks, the government has distorted the market for a while now. Way back in my day, which was the 90s, banks would do a risk analysis. So you want to study English Lit and borrow $200K? There was no way you were getting that loan. As a doctor or engineer, sure. So you were forced to make smarter decisions. What has happened is that the government has made it much easier for people to make stupid decisions like take gender studies and pay for it with studen
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Tuition. Schools jack up tuition and, to a much much lessor extent, fees. The reason books are so expensive is mostly because of unregulated publishers jacking up prices on a captive audience, and partly because the subject matter can be very esoteric - these are specialist products and they don't have a lot of competition. Though there are kickback deals that publishers have with some schools. It's usually the poorest schools which make these deals, and subsequently screw over the poorest students.
As fo
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I feel like I need to go back and get a graduate degree to understand WTF McCarthy is trying to say.
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Basically someone tried to cherry-pick his statements in order to foment outrage, and ended up with a slew of uninteligible garbage. He's basically just listing some of the stuff that will save the government money.
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Religious people are the first to try to take away food. Most of them chant the false (even by the Bible) mantra that works don't get you into heaven, so they justify themselves to do whatever evil they like.
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WTF are you talking about?
The bill under consideration has work requirements for healthy, able-bodied males, between the ages of 29-54, without dependent children that want government handouts to try and get a job.
The Horror.
If you're a woman, it doesn't affect you.
If you are a man or woman with dependent children, it doesn't affect you.
If you are a man under age 29 or over 54, it doesn't affect you.
If you are a man with a disability or infirmity, it doesn't affect you.
Please, explain to me why able-bodied,
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McCarthy's position was extremely weak to begin with. Given that he had nothing and managed to get something for it, I wouldn't call this a win for Biden.
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Ha! But you can't cause he cut the funding! Checkmate.
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Or just a good bullshit detector, really.
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Other than to get more clicks, I suppose. Maybe they should also complained about the money being given to Israel or Egypt while they're at it...
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That was my takeaway from the summary.... "WTF does this have to do with Apple?"
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Seems like. Especially funny is the bit where somehow Apple is bad because they offer a bond at 5%.
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I'm kind of glad they went on that pointless tangent, though, because now that I'm aware of those bonds I might check them out!
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It's especially infuriating to have boomers who had their college paid for by state and federal subsidies without realizing it many of whom are practically salivating at the prospect of sticking it to the younger generations...
Those subsidies are available to the young people of today. You probably make too much for them to qualify because it's expected that you'll be helping to foot the bill.
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I qualified for a full scholarship from my state based on grades and going to a state school but I never met my guidance counselor (he had a messy divorce my senior year) so I was never informed about it (this was pre-Google). Once I got to college and found out everyone was using the scholarship I looked into it but I no longer qualified because I had started college already. The whole system is broken from the bottom up.
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Everyone got those subsidies back in the day. They were direct Cash subsidies paid to the universities by state and federal government. Universities used that money to keep tuition artificially low. I was there in 1998 when the subsidies started getting caught. I remember reading your college newspapers radicals written by The economic department predicting tuition north of $10k without the subsidies. They were economists so it wasn't hard for them to do the math and they were right.
Because the governme-
No, he said scholarship, not subsidy - there's a difference. Subsidies lower tuition, scholarships pay the tuition.
NJ had a program like that, some friends qualified for it but chose to go to a more prestigious private school, much to their parent's dismay...
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The programs still exist, but the value of them has been getting slashed repeatedly since the Reagan years. You've got 3 types of aid a available - grants, subsidized loans, and unsubsidized loans. We've shifted most aid from grants to unsubsidized loans.
College funding has also shifted from mostly government funded to mostly student funded. Students are now directly paying a far higher percentage of the cost than past generations have.
College costs today aren't even in the same ballpark as they were for me
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Wow this post isn’t even slightly partisan.
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While the overwhelming consensus among legal scholars is that what Biden did is constitutional and legal
No, the overwhelming consensus is that what he did is illegal -- because Congress would have never passed the HEROES Act if they thought it let a bureaucrat forgive all government-backed college loans -- and unconstitutional -- because it grossly violates the Take Care clause -- almost nobody has standing to challenge it in court.
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1. Congress passes shit all the time that they haven't read or understood the full implications of. The law stands as written. If they want to take something back, they have to pass a new law fixing it.
2. Biden is, technically speaking, an elected official, not a bureaucrat.
3. He's hot trying to forgive all government-backed college loans, just a small subset of them.
4. "Take Care clause"? [wikipedia.org]. Never really heard this being an issue. You'd think that Trump would have been actually impeached over this b-
By forgiving student loans, even just a little bit, he's spending money, and only Congress can authorize spending money - its in the constitution.The President can not just decide a law does not need to be followed, or should not be enforced, he does have case-by-case discretion, but he can not, for example decide that immigration laws don't apply to anyone brought to this country as a minor.
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The language very explicitly gives the power to do it in the event of a national emergency. Nobody's arguing against that from a legal standpoint, only for grandstanding. The main arguments against it are:
1) The HEROES Act was passed as a response to terrorism, so some people think terrorist attacks should be the only type of emergencies that count.
2) Biden reserved this course of action as a last resort after he couldn't get Congress to act. By the time he did act, he was already publicly starting to make
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That's a good point. How much of a "giveaway" is this actually? I mean, the student loan program was supposed to start repayments when the court decision came out anyways, so dragging it into court was basically an excuse for Biden to make the giveaway even bigger - "You want to drag me into court over forgiving $10-20k per person in student loan debt? Fine, 0% interest and no required payments on student loans for even longer!"
With the decision expected to be out "at any time", that means that the actua
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Biden is in court because it appears his forgiving of $10-20K in loans is unconstitutional.
Biden had been kicking the re-starting of student loan down the road waiting for the Covid Pandemic to be over. Well, his administration has said the Pandemic is over, so student loan payments should have been starting up any day now, but Biden admin was dragging it's feet.
This proposed deal restarts student loan repayment, the suspension of collecting student loan payments was costing the taxpayer $5BN/year in lost i
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If there were no spending cuts. However when you dug into the poll it turned out they didn't know what it means to default. I don't mean they didn't understand the details and intricacies in the damage a government default would do I mean they literally did not understand what it meant to default.
I would normally blame the education system here. God knows both my economics courses and my high School civics courses were less education and more propaganda ( basically a combination of capitalism ra ra ra and America fuck yeah) but in this case the media were constantly both sidesing these negotiations and acting like the Republicans were negotiating a good faith when they clearly were not. If the Republicans weren't so weak and ineffectual at this point and so incompetent I think they would have driven us over a cliff.
The crazy thing is that 60% is largely made up of social security recipients and Medicare enrollees. If Biden had just saved their asses by outmaneuvering McCarthy it would have found out what a default was when their checks didn't show up that month and when they're pills didn't show up either. In a sort of morbid way it's a problem that would solve itself fairly quickly though. In About 3 to 6 months without those pills....-
What, another baby boom?
No, that would take 9 months.
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Why does the government need to borrow money to pay SS recipients? SS funds are separate from the general budget and COMPLETELY funded by the SS trust fund and on-going SS receipts from employers and employees.
Every month the Federal Government takes in sufficient funds to cover *most* of it's obligations, if it were to default on any of it's obligations, it would be because the President directed the Treasury Secretary to prioritize other payments over those of the national debt, for example. We spend up t
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So that is another victory because that brings in $5 billion each month to the American public
If Kevin McCarthy is so concerned about spending then maybe he should trim down the bloated military budget.
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In adjusted dollars, the 8-year Vietnam war was about $1 trillion. The year and a quarter long war in Ukraine has cost the US something like $75 billion. As the recent $3 billion adjustment the pentagon made illustrates, that's very iffy and based on approximating the market value of the materials provided to Ukraine. For example, what is the actual value of a Hawk missile system? When they gave them to Ukraine they almost certainly counted their value towards that $75 billion, but they technically had nega
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And sending our military "heroes" (haha!) to Iraq and Afghanistan cost SEVERAL trillion $.
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We currently spend more on interest on our $31 Trillion National Debt than we spend on the military each year.
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Being anti war and anti neo Nazi used to be Democratic positions. We live in times when rabidly pro war neo mccarthyism dominates our party and any dissent is quickly branded "pro Russia".
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That's because it is pro-Russian. The money we are spending in Ukraine is insignificant compared to the freedom of an entire democratic country and stopping the expansion of a fascist empire.
Our forefathers found it in their backbones to fight the Soviets and Chinese for decades during the Cold War, yet somehow a few dollars for a few months is all some of us can muster before we bend over?!?
That said, Biden is a weakling who is running the war exactly like Vietnam, more concerned with Russia's obviously e
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If only Biden had actually exercised his power of executive order and made real substantive changes . ..
then we could actually be upset because he threw it away on a deal over the fake money ceiling.
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Cuz we don't need no stinkin' DEMOCRACY!
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Student loans are really the largest and sneakiest federal jobs program ever created that has brilliantly cost the federal government almost nothing. Students feed the bloated bureaucracies of our colleges with their student loan funds which have resulted in the addition of 3 million US jobs. Staff-student ratios are less than 1:7 at many schools -- not including the actual teaching faculty which have become an odd minority in the staffing of US colleges. Many more jobs have been created in construction a
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Well, not anymore, now that Democrats are buying votes in election years by illegally paying off the loans of future lawyers and doctors, using a program explicitly designed for emergencies.
I remember years ago when, if you wanted to create a new entitlement, you first sold it to the American public, then you wrote a bill and pushed it through Congress. Instead now we use executive orders far beyond the legal breaking point and justify it without regard to the democratic legal framework.
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Assuming all the students pay their loans off, many do not - those cost us dearly.
And college doesn't guarantee a successful career - I refuse to believe that countless high school graduates wnted to borrow $40-80K so they could line up a job as a barista or a clerk in a book store.
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Apple issuing bonds at 5% while student loans are over 8% is a demonstration of risk. Student loan interest rates are higher because 1) The Student doesn't have a sufficient credit history and 2) With credit risks of defaults, it can take a long time to see repayment and they can be discharged in bankruptcy. [consumerfinance.gov]
A bond is usually secured by assets, which Apple has a lot of, and given the current cost of money for businesses, 5% is less than the WSJ Rate of 8.25 which is the typical measure of what businesses are charged for new lines of credit. Paying off lower-interest debt just made headroom to raise more capital and Apple isn't going anywhere, so it's a safe bet for an investor but keeps you barely ahead of inflation at 4.93%.
Still, an 8% loan with the Fed Prime Rate at 5.25% is cheap money, too cheap and the only reason it's that low is because the US Taxpayers guarantee the loan so lenders even don't have to worry about Bankruptcy. That needs to change and it's been long advocated that the Taxpayers get out of the student loan business, that would correct the interest rate problem by pushing more of the risk on the lenders and lowering education costs. There's been a direct correlation between the Taxypayers (via Congress) getting involved in student loan debt and higher education prices going up faster than the rate of inflation. [cato.org]
In 1987 thenSecretary of Education William J. Bennett argued that “increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase.” The higher education establishment indignantly denied the claim.
That was 1987 before the Taxpayer was put on the hook for guaranteeing student loans, it's only gotten worse.
If the Administration were truly looking out for consumers they'd work with Congress to put caps on rates lenders charge on revolving debt. Rates over 18% in this economy are usury.
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If you buy a house with a mortgage, you are expected to pay it back. If you borrowed too much, nobody is going to rescue you and say, "Oh, you poor thing, you took out too big of a loan. You don't have to pay it back after all, your fellow taxpayers will pick up the tab."
Why is it wrong to ask students to repay the loans they take out to pay for their educations?
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The problem is students defaulting on loans because they simply can't afford them. I don't know if you've noticed but grocery prices, rent, housing, and other utilities have skyrocketed in just three years. Wages have certainly not kept up with skyrocketing prices. Take your college tuition prices and run it through the inflation calculator and get back to me.
The same politicians who were forgiven for millions in PPP loans are crying because a student is getting a $10k break on crushing loan payments. Give
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How is that different from mortgage loans? Many people have taken out mortgage loans, who can't afford them, perhaps because of grocery prices or other costs that have "skyrocketed." The mortgage industry takes steps (because regulations force them to) to ensure that the borrower will be able to repay their mortgages. Student loans have no such safeguards, unfortunately, but they should.
Also, tuition costs are so high, to a great extent, *because* people are able to take out risky loans to pay those high tu
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The primary difference is that society doesn't care if someone lives in a house or an apartment, but it's in society's general interest that everyone has an education in order to be productive members of said society.
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And that education can be achieved in lots of ways that doesn't mean the enabling of crazy high tuition costs. Including vocational training and forcing colleges to reduce ridiculously bloated costs.
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If you need 2-4 more years of college education after 12 years of compulsory, free education, in order to function as a productive member of society... society is doing something terribly, terribly wrong.
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A mortgage is backed by a physical asset. If people defaulted, you could recoup. And you don't give out a mortgage until people have had a chance to build up their finances.
There's no asset backing a college education and it comes before you start building up your finances. We used to realize the problem here and dealt with it at a society level rather than an individual level.
Student loans are high because past generations had their college education almost entirely government funded, but now it's almost e
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Just because PPP loans were a huge debacle, in which the government threw money at whoever held their hands out, doesn't mean we should repeat the money-burning process in all areas of government.
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Why should a young person just out of school have to pay a huge debt? Born as a slave on the job market. It's perverted.
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The logic here seems to be to reward bad behavior at every turn.
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Sweet Christ, they "simply can't afford them?" What utter nonsense. These people have lucrative degrees that make them MORE able to afford them, and we're talking $10K per person over their lifetimes, money they AGREED to pay.
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They asked for the loans.
They choose to borrow the money.
They wasted it on a degree that didn't lead to a job that allowed them to pay back the loan.
How is that my problem?
Why am I being asked to bail him out?
Why not forgive $10K in credit card debt? Why not $10K in mortgage loans? How about a $10K write-off for everyone's car loans?
The argument that "because they can't afford the loan" is very weak, lots of people take out loans they can't afford, what makes these students so special?
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How dare you ask that question. Someone can take out loans to start a business, see it fail, but won't have their Social Security checks garnished in 50 years to pay it back. Shareholders can with their votes run a company into the ground, literally kill people and poison the earth, and have their personal assets protected.
Yet you want students to be on the hook for live. Your priorities and morals are inverted. Plus, the entire subject is a farce when almost all student loans are held by the Feds. Meaning
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We should make a law to send all those lazy idiots to other countries so they can work for a minimum wage while the H-1Bs are doing all the intelligent work here!
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